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When risk‐based regulation aims low: Approaches and challenges

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  • Julia Black
  • Robert Baldwin

Abstract

Risk‐based regulation is becoming a familiar regulatory strategy in a wide range of areas and countries. Regulatory attention tends to focus, at least initially, on high risks but low‐risk regulatees or activities tend to form the bulk of the regulated population. This article asks why regulators need to address low risks and it outlines the potential difficulties that such risks present. It then considers how regulators tend to deal with lower risks in practice. A body of literature and survey‐based research is used to develop a taxonomy of intervention strategies that may be useful in relation to low‐risk activities, and, indeed, more widely. In an article to be published in the subsequent issue of this journal, we will then develop a strategic framework for regulators to employ when choosing intervention strategies and we will assesses whether, and how, such a framework could be used by regulatory agencies in a manner that is operable, dynamic, transparent, and justifiable.

Suggested Citation

  • Julia Black & Robert Baldwin, 2012. "When risk‐based regulation aims low: Approaches and challenges," Regulation & Governance, John Wiley & Sons, vol. 6(1), pages 2-22, March.
    • Handle: RePEc:wly:reggov:v:6:y:2012:i:1:p:2-22
    DOI: 10.1111/j.1748-5991.2011.01124.x
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    References listed on IDEAS

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    1. Sunstein,Cass R., 2002. "Risk and Reason," Cambridge Books, Cambridge University Press, number 9780521791991.
    2. Hood, Christopher & Rothstein, Henry & Baldwin, Robert, 2004. "The Government of Risk: Understanding Risk Regulation Regimes," OUP Catalogue, Oxford University Press, number 9780199270019, Decembrie.
    3. Baldwin, Robert & Cave, Martin & Lodge, Martin (ed.), 2010. "The Oxford Handbook of Regulation," OUP Catalogue, Oxford University Press, number 9780199560219, Decembrie.
    4. Black, Julia & Baldwin, Robert, 2010. "Really responsive risk-based regulation," LSE Research Online Documents on Economics 27632, London School of Economics and Political Science, LSE Library.
    5. Productivity Commission, 2009. "Performance Benchmarking of Australian and New Zealand Business Regulation - Food Safety," Research Reports, Productivity Commission, Government of Australia, number 38.
    6. Giandomenico Majone, 2002. "The Precautionary Principle and its Policy Implications," Journal of Common Market Studies, Wiley Blackwell, vol. 40(1), pages 89-109, March.
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    Cited by:

    1. Andreas Klinke & Ortwin Renn, 2021. "The Coming of Age of Risk Governance," Risk Analysis, John Wiley & Sons, vol. 41(3), pages 544-557, March.
    2. Przemysław Brzuszczak, 2020. "Regulacja oparta na ryzyku jako refleksyjna strategia regulacyjna," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 139-151.
    3. Henry Rothstein & Olivier Borraz & Michael Huber, 2013. "Risk and the limits of governance: Exploring varied patterns of risk‐based governance across Europe," Regulation & Governance, John Wiley & Sons, vol. 7(2), pages 215-235, June.
    4. Charles Sabel & Gary Herrigel & Peer Hull Kristensen, 2018. "Regulation under uncertainty: The coevolution of industry and regulation," Regulation & Governance, John Wiley & Sons, vol. 12(3), pages 371-394, September.
    5. Reinout A van der Veer & Markus Haverland, 2018. "Bread and butter or bread and circuses? Politicisation and the European Commission in the European Semester," European Union Politics, , vol. 19(3), pages 524-545, September.
    6. Paul Almond & Mike Esbester, 2018. "Regulatory inspection and the changing legitimacy of health and safety," Regulation & Governance, John Wiley & Sons, vol. 12(1), pages 46-63, March.
    7. Paul Sanderson & David Seidl & John Roberts, 2013. "The Limits of Flexible Regulation: Managers' Perceptions of Corporate Governance Codes and 'Comply-or-Explain'," Working Papers wp439, Centre for Business Research, University of Cambridge.
    8. Katalin Mérő, 2021. "The ascent and descent of banks’ risk-based capital regulation," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(4), pages 308-318, December.
    9. Julia Black & Robert Baldwin, 2012. "When risk‐based regulation aims low: A strategic framework," Regulation & Governance, John Wiley & Sons, vol. 6(2), pages 131-148, June.
    10. Max Boholm, 2019. "Risk and Quantification: A Linguistic Study," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1243-1261, June.
    11. Kristian Krieger, 2013. "The limits and variety of risk‐based governance: The case of flood management in Germany and England," Regulation & Governance, John Wiley & Sons, vol. 7(2), pages 236-257, June.
    12. Ben A. Rissing, 2022. "Trust but sometimes verify: Regulatory enforcement in attestation‐based immigration programs," Regulation & Governance, John Wiley & Sons, vol. 16(1), pages 327-354, January.
    13. Jeroen van der Heijden, 2021. "Risk as an Approach to Regulatory Governance: An Evidence Synthesis and Research Agenda," SAGE Open, , vol. 11(3), pages 21582440211, July.
    14. Juan Carlos Henao & Carmen Eloísa Ruiz López, 2018. "Corrupción en Colombia Tomo 3 Corrupción privada," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1026, October.
    15. Tobias D. Krafft & Katharina A. Zweig & Pascal D. König, 2022. "How to regulate algorithmic decision‐making: A framework of regulatory requirements for different applications," Regulation & Governance, John Wiley & Sons, vol. 16(1), pages 119-136, January.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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