RISK RADAR
The world of risk is becoming very different from what it was. We are moving from objective assessment of risk as the guiding principle to the perception of risk; from how much risk is safe to how little damage is acceptable. This is not so much a cost-benefit analysis as it is a question of how safety can be guaranteed.

In environmental issues, this has led to “the precautionary principle”, the effort to determine ahead of time not only how much damage to the environment might occur, but how little is acceptable to the affected parties. The current dispute over drilling for oil in the Alaskan National Wildlife Refuge is illustrative.

Almost unnoticed, the precautionary principle has spread and has become a major factor in decision-making elsewhere. It is leading to a belief that we should be able to anticipate—and perhaps even quantify—all risks. And that there will—and should—be a liability for not doing so.

The old English common law principle of "unavoidable ignorance" said that if it were not possible for you to know something, you could not be held liable for not knowing it. That principle now seems to be invalid. Consequently, decision-makers want to be informed of all possible risks before they decide. With technologies, particularly new ones, this is impossible. All technologies produce unforeseen hazards: the automobile, vaccines, cancer treatments, cell phones, etc. The controversy regarding genetically modified food shows the dilemma: what may be an enormously beneficial development is impeded because we cannot currently forecast all the risks accurately.

Other areas where we see the growing influence of the precautionary principle:
• The growing amount of health information available, as on the Internet, including branding and marketing pharmaceuticals directly to the public, creates risks arising from the removal of the learned intermediary.
• Gordon Moore points out that, as hardware gets more powerful, software can be sloppier, creating more possibilities of risk for users.
• Software that gives legal advice cannot be licensed to practice law, so who is liable for bad advice?
• As robots and other machines become intelligent (robo sapiens), what will be the results of their interactions with humans?
• Technology is giving us an increasing ability to anticipate crime, based on analysis of behavior patterns and electronic surveillance. Is this a high tech version of racial profiling that can lead to violations of civil rights? For example, the police videotaped everyone attending this year's Super Bowl and checked against computer files for terrorists and criminals. If it is possible to identify possible perpetrators, can authorities be held liable for not doing so?
• Automobile insurance can increasingly be individualized based on real time driving behavior (driving as if your insurance company is in the back seat).
• In other areas, technology is also creating increased ability to track and monitor people, raising privacy risks.
• Australian researchers have accidentally created a mutant virus that kills mice by crippling their immune systems. This could presage or even result in deadlier human viruses and new kinds of biological weapons.

Implications:

The belief that we should be able to anticipate all risks seems to be increasingly accepted. The Law of Unintended Consequences is in the process of being repealed. Guarantees of safety are being demanded, even from unimagined and unanticipated risks. The result, of course, will be significant increases in liability.

Businesses, governments and all other organizations will have to substantially improve their risk forecasting capabilities. On the one hand, insurance costs are likely to go up; on the other hand, insurance companies will have new—and perhaps riskier—opportunities.

We are already seeing bigger jury awards in defective product cases, reflecting a growing anti-corporate sentiment. This seems likely to accelerate, and the thought that it might increasingly focus on unanticipated—and perhaps unanticipatable—consequences is cause for alarm.

Henry I. Miller of the Hoover Institute recently wrote in The Wall Street Journal that continued application of the precautionary principle will result in "unscientific, discriminatory policies that inflate the costs of research, inhibit the development of new products, waste resources and restrict consumer choices."

Everything from employment policies to distribution policies, from marketing messages to use of new technologies, will have to be subject to rigorous risk and hazard analysis. The costs of doing so will be large; the costs of not doing so could well be very much larger.

Issues Analysis provided by: Weiner, Edrich, Brown, Inc.
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