Public Policy and the Rise of Precautionary Regulation

When risks affect society at large, our governing bodies have a legal mandate to regulate or otherwise oversee those activities. Risk regulation is part of our government’s promoting the “greater good”. As such, regulation becomes a reflection of a society’s philosophy of risk. As we have shown, on this societal level, risks of sufficiently large proportions can overwhelm the ability of us, and our governments, to manage them statistically. As the catastrophic risks at the societal level become all that much greater in the number of people they may affect, the decision process must obviously get more complicated. As recognition of the failure of expected value cost/benefit decisions in the realm of low probability/high-stakes losses becomes more widespread, so has opposition to regulation based solely on expected value. As an alternative, many governments are turning to explicitly precautionary regulation in a variety of areas. While legislation does not necessarily make an idea “right”, the risk manager must be aware of the status of legislation in this arena, and the proper place of precaution in it. These rules and regulations will undoubtedly have an effect on how he or she performs his or her task. With a better understanding of high-stakes decision-making criteria, the risk manager is in the position to influence such regulation as well.