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DEALING WITH UNCERTAINTY ABOUT RISK IN RISK MANAGEMENT 51 original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. resources are shifted from significant risks to small, exaggerated risks. Under this fixed-allocation or zero-sum case, risk reductions are maximized when the cheapest and easiest risk reductions are given highest priority. Here, conservative estimates shift resources to uncertain risks, increasing expected health consequences. Which perspective on regulatory resources is correct? Both have their merits. Regulatory agencies may be limited in the actions they can take by the availability of scientific or administrative resources within their own staffs. But risk-management responsibility assigned to the agencies by Congress is fragmented and suggests nothing in the way of an overall ceiling on risk spending. The major cost of control is borne by producers, not regulatory agencies, so agency budgets are not a direct constraint. But while regulatory expenditures appear to be variable and flexible, dependent on the perceived appropriate action in each case, there may be a political feedback from the regulated parties that limits the amount of money an agency can require a producer to spend. A subtler consideration is that, to the extent that the public finds uncertain risks discomforting, greater expenditures for risk control may be politically feasible if funds are directed to deal with uncertain (and unpopular) risks. Risk Transfers Often a regulatory action that reduces one risk will increase another (Whipple, 1985). This is especially true when the particular benefit obtained is considered essential but the method for achieving the benefit carries risks. The important issue here is the recognition that the appropriate measure for analysis of a risk-reducing action is the net risk reduction. In that event, uneven conservatism in risk assessment can have a perverse effect by leading to the substitution of a large risk for a small one. The cyclamate ban, leading to greater use of saccharine, may be one such instance. (Risks from both subtances are significantly uncertain.) Electricity production is also a good example, because utilities are obligated to provide service. A restriction on coal use can lead to greater oil use. If regulatory considerations make nuclear power unattractive, then perhaps a utility will choose coal instead; the net change in public risk would need to be evaluated. In some casesâfor example, those involving carcinogensâit may be possible to compare risks that have common conservative assumptions and arrive at a reasonable relative ranking. But for dissimilar technologiesâfor example, coal and nuclear electricityâthe comparison of conservative risk estimates does not include conservative assumptions common to both estimates. In these cases, conservatism is less useful and less protective than are mean estimates of risk.
