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Risk communication, mitigation and uncertainty.

Having the ability to communicate concise information about potential risk in terms that the public can grasp is an important aspect of any business strategy. And this becomes all the more true I where potential risks are considered life threatening. Armed with this belief, William Leiss, vice president of research at Simon Fraser University in Burnaby, British Columbia, offered risk managers some suggestions for properly managing the flow of risk communication.

The first recommendation offered was that companies should take a very proactive stance on issues that may have elements of risk. "Don't sit around waiting for others to seize the initiative" because their studies and public relations efforts may fashion a negative perspective that could spell disaster for the company. Dr. Leiss says risk managers should prepare for the public "the fairest and most accurate technical representation of risks, benefits and tradeoffs possible" in language that is easily understood, and should tell the public what steps are being taken to uncover that which is still unknown. They should also point out that their companies are committed to keeping the public informed however long it may take to make a final determination of the risks. He notes that activist groups such as Greenpeace, and even rival companies, are willing to fight very dirty communications battles: "There are very few clean hands when it comes to fights over the environment."

Risk communication is therefore a crucial component of any successful venture involving public perceptions of high risk. A case in point is the siting of hazardous or noxious material, where the "NIMBY" - or "Not in My Backyard"- syndrome takes hold. However, Howard Kunreuther, professor and director of the Risk and Decision Center at the University of Pennsylvania's Wharton School in Philadelphia, discussed how policy tools such as mitigation and compensation can be used to smooth over what can be a difficult process. He notes that mitigation is "what measures need to be taken to make the facility safer. It should be viewed not just in the context of an engineering approach to the problem, but also the whole monitoring, control and inspection process. Mitigation measures also include maintenance and the ability to shut down the facility or halt the process if something goes wrong.

Compensation - or in more positive terms, benefit sharing as Dr. Kunreuther prefers to call it - can mean many things, not just giving money. It can mean more jobs, lower taxes, a new park, new hospital or educational facilities, or perhaps company guarantees to maintain or make up the difference in property values should an owner decide to sell. Dr. Kunreuther adds that considering all of the negatives that the siting of hazardous or noxious materials can bring, "one has to think creatively of how you can go about compensating that community or region and give them something in return." He cautions, however, that simply pumping in a lot of money to buy off the affected community won't work: "You have to make that facility at least viewed as acceptably safe."

The process for siting hazardous materials provides a good example of the importance of people's perceptions of risk. To address concerns based more on values than on money, Robin Gregory, senior researcher and professor at the University of Oregon's School of Business at Eugene, advocates utilizing decision analysis -"a systematic procedure designed to assist people in making choices in the presence of conflicting objectives and uncertainty."

The key to effective decision analysis - which stresses the importance of values - is separating facts (technical data that comes from experts) and values (preferences and beliefs that come from stakeholders) that are quantified. It is values that studies should be taking into account. Uncertainty also needs to be divided into quantifiable degrees of probability based on clearly defined and uniform terms. In the end, Dr. Gregory reminded that "no analyses make decisions, they aid decisions."
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Title Annotation:Canadian Risk Management Conference
Author:Kurland, Orin M.
Publication:Risk Management
Date:Dec 1, 1992
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