Quantitative risk assessment: a critique

Abstract

The aim of risk management is identify and reduce risks. But how far do managers need to go in reducing the level of risk? How low is low enough? The law provides one answer to this question. Risks must be reduced “so far as is reasonably practicable”. A great deal has been written about what this means, and although no clear cut criteria have emerged, there is general agreement about what needs to be considered. One consideration is the severity of the risk: how serious are the possible consequences? Another is the question of foreseeability: would a reasonable employer have been able to foresee what might happen? A third consideration is whether means are available to control the risk and a fourth is whether the cost of installing these controls is justified in the circumstances. According to one influential view, if there is a “gross disproportion” between the cost of the precautions and the level of risk, that is, if the risk is insignificant in relation to the financial sacrifice involved in rectifying it, a reasonable employer is not bound to take the precautions in question. These considerations do not generate a set of rules which can be automatically applied to determine whether the risk is as low as is reasonably practicable, and ultimately a judgment must be made in each situation about what a reasonable employer would do. Such judgments are to some extent subjective, which is not to say that they are arbitrary. One guide which courts use as to what is reasonably practicable is current good practice in the industry. Employers who fail to comply with current good practice are likely to be found not to have done what was reasonably practicable, should the issue arise. One implication of this is that what is reasonably practicable will vary, from industry to industry, and over time, as industry standards improve. It is not a concept which can ever be given a fixed meaning. Anglo-Saxon law is content with this approach. There is a general assumption in the common law that inflexible principles cannot be laid down in advance, that human circumstances are too varied and complex to be reducible to any formula, that each case has to be considered on its merits, and that the law evolves as a result of case by case decision making. Only after a series of cases has been decided can general principles be discerned, but these are always provisional and subject to modification as new cases arise. On the other hand, Western civilization is characterized by a drive for consistency and systematization, and from this perspective, the common law approach to deciding what level risk is low enough appears unacceptably arbitrary and subjective. Hence the trend towards quantitative risk assessment (QRA). The premise of QRA is that if levels of risk can be estimated numerically, we can specify an acceptable upper limit and require managers to drive risk below this level. Provided the determination of the acceptable numerical level is agreed beforehand and is based on some coherent reasoning, this is presumed to be a more objective and hence more satisfactory way of deciding how low is low enough. This thinking has emerged in industries such as nuclear power, petroleum production, and railways, and is driven, in part, by regulators seeking objective ways of justifying their demands that companies carry out further risk reduction activities. It is, however, intuitively obvious that where risk is being imposed on workers, or passengers, or members of the public, the concept of acceptable risk is contentious. “Acceptable to whom?” we are entitled to ask. Moreover, to say in some context that a risk is acceptable is to say that it is not worth spending money to further reduce it. Thus the notion of acceptable risk carries with it an implicit notion of the value of a human life, again an obviously contentious idea. Quantitative risk assessment therefore poses profound moral dilemmas, as well as a variety of other conceptual and practical problems. The aim of this chapter is to examine some of these problems, as they have emerged in current attempts to apply the QRA framework. Before moving on, it should be recognized that the moral dilemmas which confront QRA are inherent in the legal approach as well. But they remain dilemmas, which are never finally resolved. QRA on the other hands purports to resolve the dilemmas by developing objective criteria to decide whether risks are low enough. This apparent claim to objectivity amounts to a denial of dilemma and contributes to the controversy about QRA. Show more