Global Threats
and regulatory negotiations/solutions

CARR Director Bridget Hutter discusses the challenge of identifying and negotiating regulatory solutions in an age of global threats, contingencies and uncertainties.

The global dimensions of risk figure large in this issue of Risk&Regulation, most particularly in relation to the management of environmental risks. There are contributions from academics, regulators and business and these demonstrate a striking level of agreement over many of the issues discussed. This may well be because environmental risks are one of the few topics where talk of regulation, even strict regulation, seems more acceptable than others, even amongst businesses. And the contributors to this issue give us interesting insights as to why this might be the case.

In Talking Point there is broad agreement about the need to regulate to reduce carbon emissions and also to maintain public support. The risks of not regulating are understood to be multiple. There are concerns that private businesses left to their own devices will only manage environmental risks where this contributes to the bottom-line. There are concerns about the detrimental impact of not regulating the environment and about public reaction if action is not taken. This latter point is crucially important. Many risk regulation studies have highlighted the critical role played by the social environment, within which businesses respond to risk management pressures. Where there is perceived to be strong public interest in the management of risks there is much more likely to be regulatory attention and a greater readiness on the part of businesses to comply or even go ‘beyond statutory compliance’. Indeed the power of social pressure often resides in non-governmental organizations and community groups. In the case of the environment these may be powerful at local, national and also transnational levels.

Recognition that there are many complex reasons for business compliance with risk regulation demands is reflected in how the contributors believe environmental risk should be regulated. They advocate a mix of regulatory sources and methods, some state-based and some beyond the state; some incentive-based, others sanctions-based; some appealing to social responsibility and ethical arguments and some to self-interest and deterrence. While participants in the debate agree that environmental risks are global risks and that there is a division between developing and developed countries, there is not unanimity about whether there are global solutions. Whether or not the solutions to this global problem should be mandated across all countries is a point of controversy as are the bases upon which to make these decisions, and whether or not the specification of any targets should be fixed, incremental or differentiated.

Risk-based approaches to regulating environmental and nuclear risks are one of the foundations upon which UK regulation is presently built. The Environment Agency sees this as a cornerstone of their modern approach to regulation. It may also be a means of satisfying the demands of the better regulation agenda upon them, as they can ‘reduce the burdens on business’ by decreasing the visits they make to low risk operators. Such an approach implicitly re-emphasizes that responsibility for risk management lies with business and not regulators as it removes a major source of education for small businesses: much risk regulation research tells us about the reliance of this sector on regulatory guidance and advice and while they may not have the burden of an inspector visiting and demanding change they may need to seek out alternative, most probably commercial, sources of regulatory and risk management advice. Risk-based regulation carries its own risks and these are discussed by Michael Huber who analyses why some environmental problems may not be amenable to risk management approaches at all. There may, for example, be uncertainties about the cause of specific problems and the probability of risk events occurring. Moreover, the framing and definition of risk events is often shaped by managerial demands and practical and strategic decisions. The example used is a highly topical one, that of flooding. His discussion of the definition of floods with respect to insurance and also in different national contexts is a salutary account of the social and political shaping of risk anticipation and management in the public and private sectors.

Prevention is of course a key aspect of environmental regulation but so is a preoccupation with how to respond when this fails. Arjen Boin discusses how the failures in the case of Hurricane Katrina underlined the urgent need for research upon which to design response systems in the wake of environmental disasters. The emphasis upon anticipating risk is also evident in the area of information security – a topic rendered especially topical by recent governmental data losses. Recently, a CARR event on this topic formed part of the ESRC Festival of Social Science and considered the new challenges governments and business face in achieving safety and security.

The regulation of environmental risk is perhaps the foremost challenge of the twenty-first century and poses questions for regulators, business, publics and academics alike. With increasing social and political awareness of the implications of environmental change, and in the face of apocalyptic prophecies of disaster and catastrophe, the formulation and organization of risk regulation presents both state and society with a regulatory dilemma of a different scale and time frame.

Bridget Hutter is the Director of CARR.

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