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Dealing with Major Technological Risks

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  • Bernard Sinclair-Desgagné

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  • Carel Vachon

Abstract

This article is concerned with the management of major hazards stemming from technology and entailing potentially dreadful consequences. It proposes a brief survey of the0501n difficulties and policy issues arising both in public and private decision making when dealing with major technological risks. Three themes are considered: risk assessment, risk sharing and risk control. Issues related to evaluation methods, to risk perception and to the acceptable level of risk are first examined. The article then goes on to explore the problem of optimal risk sharing between the different stakeholders. The firm's liability and extended liability to the firm's partners are considered. Insurance issues are also discussed. Lastly, the survey addresses the control of risks both from a prevention and from a damage mitigation point of view. The various instruments available to the State to reduce risks are reviewed and several issues are also raised with respect to the measures firms can take to reduce risks. Investment in safety, human error, organisational design and information disclosure are addressed in this section. The topics of siting and urban planning are analysed as mitigation strategies, and the important aspect of emergency planning ends the survey. Cet article d'intérêt général porte sur la gestion des risques d'origine technologique aux conséquences potentiellement catastrophiques. Il s'agit d'un document de synthèse destiné à cerner les problèmes fondamentaux en matière de gestion publique et privée des risques technologiques majeurs. Trois thèmes y sont traités: l'évaluation, la distribution et le contrôle des risques. Les questions se rapportant aux méthodes d'évaluation, à la perception des risques et aux difficultés liées à l'établissement d'un seuil de tolérance sont d'abord passées en revue. La seconde partie du document met en lumière les difficultés que présente le partage optimal du risque entre les différents agents. La responsabilité civile de la firme et de ses partenaires est alors examinée. Les problèmes liés à l'assurance contre ce type de risque sont aussi brièvement décrits. Cet article traite enfin du contrôle des risques en couvrant à la fois les approches préventives et les stratégies d'atténuation des dommages. On y aborde premièrement les instruments de contrôle dont dispose l'État pour réduire les risques. Du côté des firmes, les sujets tels que l'investissement en sécurité, l'erreur humaine, le design organisationnel et la divulgation de l'information sont passés en revue. L'aménagement du territoire et la gestion des urgences sont ensuite abordés de façon succincte dans la dernière partie de l'article.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 99s-29.

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Date of creation: 01 Sep 1999
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Handle: RePEc:cir:cirwor:99s-29

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Keywords: Safety; major risks; risk assessment; risk sharing; risk control; prevention; mitigation; Sécurité; risques majeurs; évaluation des risques; distribution des risques; contrôle des risques; prévention; atténuation;

References

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  1. Marcel Boyer & Jean-Jacques Laffont, 1995. "Environmental Protection, Producer Insolvency and Lender Liability," CIRANO Working Papers 95s-50, CIRANO.
  2. Gollier & Jullien & Treich, 2000. "Scientific progress and irreversibility : an economic interpretation of the Precautionary principle," Working Papers 156240, Institut National de la Recherche Agronomique, France.
  3. Kunreuther, Howard & Hogarth, Robin & Meszaros, Jacqueline, 1993. " Insurer Ambiguity and Maarket Failure," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 71-87, August.
  4. Marcel Boyer & Georges Dionne, 1983. "Variations in the Probability and Magnitude of Loss: Their Impact on Risk," Canadian Journal of Economics, Canadian Economics Association, vol. 16(3), pages 411-19, August.
  5. Chichilnisky, G. & Heal, G., 1993. "Global Environmental Risks," Discussion Papers 1993_03, Columbia University, Department of Economics.
  6. Lanoie, Paul & Laplante, Benoit & Roy, Maite, 1998. "Can capital markets create incentives for pollution control?," Ecological Economics, Elsevier, vol. 26(1), pages 31-41, July.
  7. Steven Shavell, 1983. "Liability for Harm Versus Regulation of Safety," NBER Working Papers 1218, National Bureau of Economic Research, Inc.
  8. Itoh, Hideshi, 1994. "Job design, delegation and cooperation: A principal-agent analysis," European Economic Review, Elsevier, vol. 38(3-4), pages 691-700, April.
  9. Sinclair-Desgagne, Bernard, 1999. "How to Restore Higher-Powered Incentives in Multitask Agencies," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(2), pages 418-33, July.
  10. Boyd, James & Ingberman, Daniel E, 1997. "The Search for Deep Pockets: Is "Extended Liability" Expensive Liability?," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 232-58, April.
  11. Pitchford, Rohan, 1995. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk," American Economic Review, American Economic Association, vol. 85(5), pages 1171-86, December.
  12. Shavell, Steven, 1993. "The Optimal Structure of Law Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 255-87, April.
  13. Manning, Richard L, 1994. "Changing Rules in Tort Law and the Market for Childhood Vaccines," Journal of Law and Economics, University of Chicago Press, vol. 37(1), pages 247-75, April.
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Cited by:
  1. Picard, Pierre & Chemarin, Sophie, 2004. "Appréhension et prévention des risques industriels," CEPREMAP Working Papers (Docweb) 0502, CEPREMAP.
  2. Jean-Grégoire Bernard & Benoit A. Aubert & Simon Bourdeau & Éric Clément & Caroline Debuissy & Marie-Josée Dumoulin & Marc Laberge & Nathalie de Marcellis-Warin & Ingrid Peignier, 2002. "Le risque : un modèle conceptuel d'intégration," CIRANO Project Reports 2002rp-16, CIRANO.

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  1. Technology Assessment

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