Dealing with Uncertainty about Risk in Risk Management

Abstract

Conservative assumptions in risk analysis are shown to be protective of human health when the social costs of misestimation are highly asymmetrical, when risk management actions do not incur significant opportunity costs, when risk management actions do not lead to the substitution of significant new risks, and when risk managers do not compensate for perceived conservatisms when setting standards or making other risk management decisions. An issue central to the effect of systematically conservative assumptions is the ability of risk analyses to distinguish large risk from small risk; here it is argued that conservative assessments can fail to make adequate distinctions. The influence of these factors on the protectiveness of conservative analytical methods is examined.