Risk and Systems Theory

The last few decades have seen increasingly widespread use of risk assessment and management techniques as aids in making complex decisions. However, despite the progress that has been made in risk science, there still remain numerous examples of risk-based decisions and conclusions that have caused great controversy. In particular, there is a great deal of debate surrounding risk assessment: the role of values and ethics and other extra-scientific factors, the efficacy of quantitative versus qualitative analysis, and the role of uncertainty and incomplete information. Many of the epistemological and methodological issues confronting risk assessment have been explored in general systems theory, where techniques exist to manage such issues. However, the use of systems theory and systems analysis tools is still not widespread in risk management. This article builds on the Alachlor risk assessment case study of Brunk, Haworth, and Lee to present a systems-based view of the risk assessment process. The details of the case study are reviewed and the authors' original conclusions regarding the effects of extra-scientific factors on risk assessment are discussed. Concepts from systems theory are introduced to provide a mechanism with which to illustrate these extra-scientific effects The role of a systems study within a risk assessment is explained, resulting in an improved view of the problem formulation process The consequences regarding the definition of risk and its role in decision making are then explored.     

An analytical tool for managing environmental risks strategically

In this article, Dr. Robert Repetto and Duncan Austin of the World Resources Institute present an approach for analyzing and communicating the financial implications of a company's environmental exposures through an empirical application to companies in the U.S. pulp and paper industry. The methodology is based on a sequence of steps: A) identifying salient impending environmental issues; B) developing multiple scenarios for each issues; C) assessing the company (or facility's) exposure under each scenario; D) estimating scenario-specific financial impacts; E) constructing overall risk measures; and F) analyzing options to minimize risks or maximize advantages.Within the pulp and paper industry there are varying levels of exposure and associated risk from environmental issues. For some companies, environmental issues will have little or no impact on financial performance, while for others, they could be a source of increased value. For others, environmental issues may entail costs that approach fifteen percent of a company's current valuation. In environmentally sensitive industries, the approach presented can help companies to benchmark themselves against rivals, identify major sources of environmental risk and opportunity, assign financial values to risk-mitigating options, and communicate their environmental strategies to the investment community and other stakeholders.     

Evolution of Quality: First Fifty Issues of Production and Operations Management

Many contributions have been made to the field of quality since the inaugural issue of Production and Operations Management in 1992. The first issue called for more research and teaching on TQM, which resulted in two special issues dedicated to TQM. Many other articles related to quality have also been published in the first fifty issues of the journal on topics ranging from technical methods to the Baldrige Award and ISO 9000. As we review these articles, we assess their contribution and the progression of the field of quality. Although past research has advanced our understanding of quality, there still exists many research opportunities in developing more theory, using additional research methodologies, and studying emerging topics in this field.     

Exposure Factors for Wastewater‐Irrigated Asian Vegetables and a Probabilistic Rotavirus Disease Burden Model for Their Consumption

Many farmers in water‐scarce regions of developing countries use wastewater to irrigate vegetables and other agricultural crops, a practice that may expand with climate change. There are a number of health risks associated with wastewater irrigation for human food crops, particularly with surface irrigation techniques common in the developing world. The World Health Organization (WHO) recommends using quantitative microbial risk assessment (QMRA) to determine if the irrigation scheme meets health standards. However, only a few vegetables have been studied for wastewater risk and little information is known about the disease burden of wastewater‐irrigated vegetable consumption in China. To bridge this knowledge gap, an experiment was conducted to determine volume of water left on Asian vegetables and lettuce after irrigation. One hundred samples each of Chinese chard (Brassica rapa var. chinensis), Chinese broccoli (Brassica oleracea var. alboglabra), Chinese flowering cabbage (Brassica rapa var. parachinensis), and lettuce (Lactuca sativa) were harvested after overhead sprinkler irrigation. Chinese broccoli and flowering cabbage were found to capture the most water and lettuce the least. QMRAs were then constructed to estimate rotavirus disease burden from consumption of wastewater‐irrigated Asian vegetables in Beijing. Results indicate that estimated risks from these reuse scenarios exceed WHO guideline thresholds for acceptable disease burden for wastewater use, signifying that reduction of pathogen concentration or stricter risk management is necessary for safe reuse. Considering the widespread practice of wastewater irrigation for food production, particularly in developing countries, incorporation of water retention factors in QMRAs can reduce uncertainty regarding health risks for consumers worldwide.     

RISK SHARING,COMMITMENT, AND INFORMATION: AN EXPERIMENTAL ANALYSIS

This paper describes and analyzes the results of a unique field experiment especially designed to test the effects of the level of commitment and information available to individuals when sharing risk. We find that limiting exogenously provided commitmentis associated with less risk sharing, whereas limiting information on defections can be associated with more risk sharing. These results can be understood by distinguishing between intrinsic and extrinsic incentives, and by recognizing that social sanctions are costly to inflict or that individuals suffer from time‐inconsistent preferences. Comparing the groups formed within our experiment with the real life risk‐sharing networks in a few villages allows us to test the external validity of our experiment and suggests that the results are salient to our understanding of risk‐sharing arrangements observed in developing countries. (JEL: C93, D71, D81, O12)     

Environmental Management — the European Way

While international agreements, international standards, and internationally operating companies have left behind the idea of national borders for environmental management issues, research is still lagging behind in describing developments in this area from an international perspective. The European Business Environmental Barometer (EBEB) is a quantitative survey of the state and development of environmental management in Europe and one of the first to regularly provide results on this issue at a European level. It covers topics such as perceived environmental impact, environmental stakeholders, corporate environmental activities, and environmental management (systems).The results presented in this article are drawn from the latest completed round of the EBEB during which data was gathered in 1997/98. The questionnaire-based survey includes information on more than 2,800 companies from the producing sector with 50 or more employees in 11 European countries.¹     

Desired Risk: Broadening the Social Amplification of Risk Framework1

Recently Kasperson et al.⁽⁶⁾ have proposed a conceptual framework, “The Social Amplification of Risk,” as a beginning step in developing a comprehensive theory of public experience of risk. A central goal of their effort is to systematically link technical assessments of risk with the growing findings from social scientific research. A key and growing domain of public risk experience is “desired” risk, but this is virtually neglected in the framework. This paper evaluates the scope of the “Social Amplification of Risk Framework,” asking whether it is applicable to desired risks, such as risk recreation (hang gliding, mountain climbing, and so forth). The analysis is supportive of the framework's applicability to the domain of desired risk.     

An Effective Statistical Approach for Comparative Risk Assessment1

Comparative risk assessment is an evaluation process designed to rank environmental problems based on the severity of potential hazards. The purpose of this paper is to provide an effective statistical approach to analyze perceived environmental risks. Environmental problems, evaluative criteria, and other potential moderator variables need to be determined first, and then the risk perception data collected. Repeated measures analysis is used to first test for interactions between environmental problems and potential moderator variables. If there are no significant interactions, then the risk difference among environmental problems is tested unconditionally; otherwise the risk difference is tested conditionally. Cluster analysis for environmental problems is performed only when the risk difference is significant. The clustering results can be objectively determined by using the simultaneous T² confidence intervals. Risk-based priority setting is made according to the clusters obtained. To illustrate this approach, an empirical study of comparative socioeconomic risks in Taiwan was conducted. Socioeconomic impacts areas including social security, quality of life, production cost, investment willingness, and economic resources are used as evaluative criteria. Results indicate that selected impact areas do affect relative risk differences among 24 environmental problems, and the difference is significant for each area. Therefore, cluster analysis is conducted separately for each impact area. Risk-based priority settings for clusters of environmental problems are reported.     

Changes in Aleut Concerns Following the Stakeholder-Driven Amchitka Independent Science Assessment

There is widespread agreement that stakeholders should be included in the problem‐formulation phase of addressing environment problems and, more recently, there have been attempts to include stakeholders in other phases of environmental research. However, there are few studies that evaluate the effects of including stakeholders in all phases of research aimed at solving environmental problems. Three underground nuclear blasts were detonated on Amchitka Island from 1965 to 1971. Considerable controversy developed when the Department of Energy (DOE) decided to “close” Amchitka. Concerns were voiced by subsistence Aleuts living in the region, resource trustees, and the State of Alaska, among others. This article evaluates perceptions of residents of three Aleutian village before (2003) and after (2005) the Consortium for Risk Evaluation with Stakeholder Participation's (CRESP) Amchitka Independent Science Assessment (AISA). The CRESP AISA provided technical information on radionuclide levels in biota to inform questions of seafood safety and food chain health. CRESP used the questions asked at public meetings in the Aleut communities of Atka, Nikolski, and Unalaska to evaluate attitudes and perceptions before and after the AISA. Major concerns before the AISA were credibility/trust of CRESP and the DOE, and information about biological methodology of the study. Following the AISA, people were most concerned about health effects and risk reduction, and trust issues with CRESP declined while those for the DOE remained stable. People’s relative concerns about radionuclides declined, while their concerns about mercury (not addressed in the AISA) increased, and interest in ecological issues (population changes of local species) and the future (continued biomonitoring) increased from 2003 to 2005. These results suggest that questions posed at public meetings can be used to evaluate changes in attitudes and perceptions following environmental research, and the results are consistent with the hypothesis that the AISA answered questions about radionuclides, and lowered overall concern about radionuclides, but left unanswered concerns about the health effects of mercury.     

Risk Analysis for U.S. Offshore Wind Farms: The Need for an Integrated Approach

Wind power is becoming an increasingly important part of the global energy portfolio, and there is growing interest in developing offshore wind farms in the United States to better utilize this resource. Wind farms have certain environmental benefits, notably near‐zero emissions of greenhouse gases, particulates, and other contaminants of concern. However, there are significant challenges ahead in achieving large‐scale integration of wind power in the United States, particularly offshore wind. Environmental impacts from wind farms are a concern, and these are subject to a number of on‐going studies focused on risks to the environment. However, once a wind farm is built, the farm itself will face a number of risks from a variety of hazards, and managing these risks is critical to the ultimate achievement of long‐term reductions in pollutant emissions from clean energy sources such as wind. No integrated framework currently exists for assessing risks to offshore wind farms in the United States, which poses a challenge for wind farm risk management. In this “Perspective”, we provide an overview of the risks faced by an offshore wind farm, argue that an integrated framework is needed, and give a preliminary starting point for such a framework to illustrate what it might look like. This is not a final framework; substantial work remains. Our intention here is to highlight the research need in this area in the hope of spurring additional research about the risks to wind farms to complement the substantial amount of on‐going research on the risks from wind farms.     

Risk Governance for Mobile Phones,Power Lines,and Other EMF Technologies

Power‐frequency electric and magnetic fields (EMFs) have been present in industrialized countries since the late 19th century and a considerable amount of knowledge has been accumulated as to potential health effects. The mainstream scientific view is that even if there is a risk, it is unlikely to be of major public‐health significance. EMFs from cellular communications and other radio‐frequency technologies have increased rapidly in the last decade. This technology is constantly changing, which makes continued research both more urgent and more challenging. While there are no persuasive data suggesting a health risk, research and particularly exposure assessment is still immature. The principal risk‐governance issue with power frequencies is how to respond to weak and uncertain scientific evidence that nonetheless causes public concern. For radio‐frequency electromagnetic fields, the issue is how to respond to large potential consequences and large public concern where only limited scientific evidence exists. We survey these issues and identify deficits in risk governance. Deficits in problem framing include both overstatement and understatement of the scientific evidence and of the consequences of taking protective measures, limited ability to detect early warnings of risk, and attempted reassurance that has sometimes been counterproductive. Other deficits relate to the limited public involvement mechanisms, and flaws in the identification and evaluation of tradeoffs in the selection of appropriate management strategies. We conclude that risk management of EMFs has certainly not been perfect, but for power frequencies it has evolved and now displays many successful features. Lessons from the power‐frequency experience can benefit risk governance of the radio‐frequency EMFs and other emerging technologies.     

Perceptions of Risk and Vulnerability Following Exposure to a Major Natural Disaster: The Calgary Flood of 2013

Many studies have examined the general public's flood risk perceptions in the aftermath of local and regional flooding. However, relatively few studies have focused on large‐scale events that affect tens of thousands of people within an urban center. Similarly, in spite of previous research on flood risks, unresolved questions persist regarding the variables that might influence perceptions of risk and vulnerability, along with management preferences. In light of the opportunities presented by these knowledge gaps, the research reported here examined public perceptions of flood risk and vulnerability, and management preferences, within the city of Calgary in the aftermath of extensive flooding in 2013. Our findings, which come from an online survey of residents, reveal that direct experience with flooding is not a differentiating factor for risk perceptions when comparing evacuees with nonevacuees who might all experience future risks. However, we do find that judgments about vulnerability—as a function of how people perceive physical distance—do differ according to one's evacuation experience. Our results also indicate that concern about climate change is an important predictor of flood risk perceptions, as is trust in government risk managers. In terms of mitigation preferences, our results reveal differences in support for large infrastructure projects based on whether respondents feel they might actually benefit from them.     

Risk Perception and Technological Development at a Societal Level

This article tests the hypothesis that the exposure to the threat to societies posed by the introduction of new technologies is associated with a normalization of risk perception. Data collected in 2000 by the International Social Survey Programme (ISSP) on environmental issues were used to explore this hypothesis. Representative samples from 25 countries were employed to assess the national levels of perceived threat to the environment associated with a series of technologies and activities. These values were correlated with economic indicators (mainly from the World Bank) of the diffusion of each of the technologies or activities in each country. Results indicate a negative association of risk perception with the level of technological prevalence (societal normalization effect) and a positive association with the rate of growth of the technology (societal sensitivity effect). These results indicate that the most acute levels of perceived environmental risk are found in those countries where the level of technological prevalence is low but where there has recently been substantial technological development. Environmental awareness is a mediator of the relationship between risk perception and the indices of technological diffusion. This result means that: (1) societal normalization of risk is not a direct consequence of prevalence of the technology, but is driven by awareness of technological development and that (2) societal sensitivity to risk is associated with lower levels of environmental awareness.     

Major Sources of Exposure to Benzene and Other Volatile Organic Chemicals1,2

The major sources of human exposure to about a dozen volatile organic chemicals (VOCs) have recently been identified.¹ For nearly every chemical, the major sources of exposure are completely different from the major sources of emissions. This finding implies that current environmental regulations and control strategies are misdirected. Important sources of exposure are typically not regulated in any way, whereas unimportant sources are heavily regulated. Vast sums of money are spent on problems involving little risk (e.g., hazardous waste sites), whereas few resources are expended on problems involving higher risk (e.g., indoor air pollution). The following paper summarizes recent findings regarding major sources of exposure to several VOCs. Benzene is selected as a case study. Brief discussions of tetrachloroethylene and paradichlorobenzene are also included.     

The Role of Cancer Risk in the Regulation of Industrial Pollution

The extent of carcinogen regulation under existing U.S. environmental statutes is assessed by developing measures of the scope and stringency of regulation. While concern about cancer risk has played an important political role in obtaining support for pollution control programs, it has not provided the predominant rationale for most regulatory actions taken to date. Less than 20% of all standards established to limit concentrations of chemicals in various media address carcinogens. Restrictions on chemical use are more frequently based on concerns about noncancer human health or ecological effects. Of the chemicals in commercial use which have been identified as potential human carcinogens on the basis of rodent bioassays, only a small proportion are regulated. There is an inverse relationship between the scope of regulatory coverage and the stringency of regulatory requirements: the largest percentages of identified carcinogens are affected by the least stringent requirements, such as information disclosure. Standards based on de minimis cancer risk levels have been established for only 10% of identified carcinogens and are restricted to one medium: water. Complete bans on use have affected very few chemicals. The general role that carcinogenicity now plays in the regulatory process is not dramatically different from that of other adverse human health effects: if a substance is identified as a hazard, it may eventually be subject to economically achievable and technically feasible restrictions.     

MADE IN THE WORLD: THE GLOBAL SPREAD OF PRODUCTION

We are moving rapidly into an age of transnational manufacturing, where things made in one country are shipped across national borders for further work, storage, sales, repair, remanufacture, recycle, or disposal; but our laws, policies, and management practices are slow in adjusting to this reality. They are often based on inaccurate premises. This article examines these premises and suggests what they imply for management of manufacturing. First, a common view is that manufacturing investment in the industrialized nations is declining and shifting to the developing countries. This is not true. Investment in manufacturing in both industrialized and developing nations is increasing and, in absolute value, there is a lot more investment in industrialized countries than in developing countries. Second, a related view argued by many is that manufacturing does not have a bright future in the rich countries. I argue that manufacturers can thrive in the industrialized countries if they learn how to add more value for the end users. They must go beyond productivity improvement to producing more technologically advanced and customized products, responding faster to changing customer demands, and appending more services to their products. Doing all this is easier in the industrialized countries because the needed skills and infrastructure are more readily available there. Third, another potentially misleading notion is related to why companies invest in manufacturing abroad. Access to low-cost production is not the main motivation in most cases; rather it is access to market. Superior global manufacturers use their foreign factories for much more: to serve their worldwide customers better, preempt competitors, work with sophisticated suppliers, collect critical marketing, technological, and competitive intelligence, and attract talented individuals into the company. They build integrated global production networks, not collections of disjointed factories that are spread internationally. Thus their investment in manufacturing abroad is not a substitute for investment at home, it is a complement. Building and managing such integrated global factor networks is the next challenge in manufacturing.     

On the Tightness of the Alternating-Cycle Lower Bound for Sorting by Reversals

We give a theoretical answer to a natural question arising from a few years of computational experiments on the problem of sorting a permutation by the minimum number of reversals, which has relevant applications in computational molecular biology. The experiments carried out on the problem showed that the so-called alternating-cycle lower bound is equal to the optimal solution value in almost all cases, and this is the main reason why the state-of-the-art algorithms for the problem are quite effective in practice. Since worst-case analysis cannot give an adequate justification for this observation, we focus our attention on estimating the probability that, for a random permutation of n elements, the above lower bound is not tight. We show that this probability is low even for small n, and asymptotically (1/n⁵), i.e., O(1/n⁵) and (1/n⁵). This gives a satisfactory explanation to empirical observations and shows that the problem of sorting by reversals and its alternating-cycle relaxation are essentially the same problem, with the exception of a small fraction of pathological instances, justifying the use of algorithms which are heavily based on this relaxation. From our analysis we obtain convenient sufficient conditions to test if the alternating-cycle lower bound is tight for a given instance. We also consider the case of signed permutations, for which the analysis is much simpler, and show that the probability that the alternating-cycle lower bound is not tight for a random signed permutation of m elements is asymptotically (1/m²).     

Ethylene Oxide Cancer Risk Assessment Based on Epidemiological Data: Application of Revised Regulatory Guidelines

Ethylene oxide (EO) research has significantly increased since the 1980s, when regulatory risk assessments were last completed on the basis of the animal cancer chronic bioassays. In tandem with the new scientific understanding, there have been evolutionary changes in regulatory risk assessment guidelines, that encourage flexibility and greater use of scientific information. The results of an updated meta-analysis of the findings from 10 unique EO study cohorts from five countries, including nearly 33,000 workers, and over 800 cancers are presented, indicating that EO does not cause increased risk of cancers overall or of brain, stomach or pancreatic cancers. The findings for leukemia and non-Hodgkin's lymphoma (NHL) are inconclusive. Two studies with the requisite attributes of size, individual exposure estimates and follow up are the basis for dose-response modeling and added lifetime risk predictions under environmental and occupational exposure scenarios and a variety of plausible alternative assumptions. A point of departure analysis, with various margins of exposure, is also illustrated using human data. The two datasets produce remarkably similar leukemia added risk predictions, orders of magnitude lower than prior animal-based predictions under conservative, default assumptions, with risks on the order of 1 × 10^–6 or lower for exposures in the low ppb range. Inconsistent results for lymphoid tumors, a non-standard grouping using histologic information from death certificates, are discussed. This assessment demonstrates the applicability of the current risk assessment paradigm to epidemiological data.     

Analyzing Disaster Loss Trends: A Comparison of Normalization Methodologies in South Korea

Increasing concern for climate change adaptation and disaster risk reduction is driving the need for more accurate and sophisticated tools of analysis to protect populations. Standards of analysis that can normalize measurements under various contexts are particularly valuable in the global arena of disaster management. One concern that may benefit from normalizing is the analysis of disaster loss trends. Previous studies have used a combination of inflation, wealth, and societal factors in their normalization of disaster loss methodologies. This study examines the various normalization methods in previous research and applies a selection of eight formulae to 50 years of disaster data in South Korea. The results show both decreasing and increasing trends in disaster damage losses based on the methods, but there are curious biases under the results that may be artifacts of Korea's unique experiences in economic development. The conclusion discusses how the case of Korea may help to clarify the optimal normalization methodology for other countries.     

A Comparison of Methods of Benchmark-Dose Estimation for Continuous Response Data

Methods of quantitative risk assessment for toxic responses that are measured on a continuous scale are not well established. Although risk-assessment procedures that attempt to utilize the quantitative information in such data have been proposed, there is no general agreement that these procedures are appreciably more efficient than common quantal dose–response procedures that operate on dichotomized continuous data. This paper points out an equivalence between the dose–response models of the nonquantal approach of Kodell and West⁽¹⁾ and a quantal probit procedure, and provides results from a Monte Carlo simulation study to compare coverage probabilities of statistical lower confidence limits on dose corresponding to specified additional risk based on applying the two procedures to continuous data from a dose–response experiment. The nonquantal approach is shown to be superior, in terms of both statistical validity and statistical efficiency.