Risk Management Framework: Step 4

Initiation Preliminary Analysis Risk Estimation Risk Evaluation Risk Control Risk Communication Action/ Monitoring Risk Management Framework: Step 4 RISK EVALUATION The Risk Evaluation step examines the economic and social issues influencing the selection of control options intended to ensure acceptable levels of risk. These considerations deal extensively with individual and societal values, and thus they go far beyond the scientific notion of objective analysis of ‘empirical’ (measurable) physical quantities. Instead, risk evaluation techniques focus on the exploration of ‘normative’ issues related to what ‘ought to happen’ in a society that seeks to provide effective protection of the health its citizens in an equitable, but affordable, manner. Most of us will rely to some limited extent on governmental or private-sector organizations to assist us in controlling the major sources of risk—violent crime, fraudulent financial dealings, incompetent medical treatment, and similar uncontrollable hazards. But otherwise we expect to manage a large portion of our personal risks by the independent personal decisions we take as informed, responsible adults. In contrast, environment risks are often seen as different than the other common risks we encounter in modern society. We tend to value our personal and family health above all other goods. But when undetectable environmental hazards such as toxic chemicals, radioactive substances, and pathogenic organisms invade our immediate environment, most of us feel powerless as individuals to control or manage these risks. Because it is so difficult for us as individuals to effectively control personal exposure to environmental contaminants, we collectively depend to a great extent on societal safeguards. These may be either government environmental regulations that have the force of law, or private-sector guidelines that require voluntary adherence by corporate members of business organizations. However, the complexities of dealing with environmental health risks means that scientific risk estimates have little intuitive meaning to non-experts like ourselves, in part because we tend to focus on the severity of consequences for a given risk rather than the numerical probability of its occurrence. We often evaluate risks according to our subjective perception of the threatening characteristics of a particular hazard that most stand out in our minds as memorable and menacing. In order to compensate for such distortions in public perception of risk, decision-makers and stakeholders must rely, in part, on a systematic review of the economic and social dimensions of risk to provide a more pragmatic approach to the identification and selection of effective risk reduction strategies. Two major classes of normative societal issues are considered in the Risk Evaluation step: Economic evaluation—estimating the expected health benefits and anticipated costs of control associated with varying degrees of reduction in risk, using monetary criteria which are amenable to quantitative economic analysis Social evaluation—characterizing the social issues that reflect value judgments and societal preferences which are not amenable to formal economic analysis, as well as the factors that influence political perceptions of equity and fairness. Economic Evaluation Economic evaluation considers the projected costs of implementing an environmental improvement program, together with the corresponding benefits of expected future improvements in population health. This approach provides risk managers with the ability to evaluate and select the best available environmental control strategy from a range of proposed options. As the term suggests, economic evaluation involves the assigning of subjective values, usually expressed as money values, to quantify health benefits gained from the reduced incidence of disease (morbidity) and lessened risk of premature death (mortality). 0RQHWL]DWLRQ RI +HDOWK 5LVNV Risk assessors are responsible for providing quantitative estimates of the projected amount of health risk incurred from an existing contaminant exposure, as well as the degree of risk reduction that might be anticipated from various levels of reduced exposure. Health economists must then convert any projected decreases in population morbidity and mortality into monetary values expressed in dollar terms. This technique is termed the monetization of risk, and it involves 5,6.(9$/8$7,21± putting a ‘price tag’ on various harmful outcomes to human health. For example, the ‘cost of a life’ that is terminated by premature mortality might be assigned a dollar value according to incurred costs. These costs are based on economic estimates of diminished future income, such as the lost wages for an ‘average’ wage earner of a specified age, or on the amount of damages typically assigned by the courts in lawsuits related to premature death. Similar methods can be used for monetizing the subjective value of avoiding a brief illness or a chronic illness not related to premature mortality. One of the most common methods for monetizing a life lost (or saved) is called contingent valuation. Polling organizations periodically survey large numbers of people across the country by administering a series of questions to determine how much the respondents feel an increase in their life expectancy (e.g. 6 months) due to reduced risk of ill health would be worth to them in dollar terms. The ‘cost of a life’ can then be then calculated by scaling up the dollar values for the smaller gains of life expectancy to encompass the entire life expectancy (70–80 years) of a person. In Canada and the United States, the average dollar value for a life lost, estimated by the ‘willingness to pay’ method of the contingent valuation, spans a range of monetary values from about 1.5 to 4 million dollars. The actual value depends on the phrasing of the survey questions and the characteristics of the population sample (it is unclear whether the life of Canadians is less valuable than the life of Americans, given the lower exchange value of the Canadian dollar). Similar valuation methods can be used for valuing various morbidity outcomes, from mild illnesses lasting a few days, to severe illnesses that are chronic and sometimes incapacitating. The practice of monetizing health risks through life valuation methods is frequently criticized as fundamentally immoral—trading off people’s lives versus money. In fact, its primary purpose is to allow the estimated costs and anticipated health benefits of a control strategy to be directly compared using ‘commensurable’ quantities expressed in the same units of measurement. After projected costs and benefits have been quantified in dollar terms, the ultimate decision to introduce more stringent environmental controls is a subject for risk decision-making. Economic evaluation can inform the decision process for risk managers, but it does not compel decision-makers to adopt a particular course of action It is also important to note that monetization of life or health is based on the projected statistical probabilities of disease or death, as defined by the risk estimates and the assigned monetary values for particular health outcomes. Given that most risk estimates and monetized health effects contain several conservative assumptions, a typical economic evaluation will usually represent the hypothetical worst-case scenario for a potential harmful outcome. Actual health consequences are likely to be considerably smaller than those predicted in the formal economic 5,6.(9$/8$7,21± analysis, and they may in fact be as small as zero. Therefore, what is being monetized is the ‘statistical value of a life’ according to mathematical projections, not actual human lives being placed in obvious peril. Virtually all stakeholder groups, including most The economic analysis may be government regulators and business organizations, consistently assert misleading if the value assumptions that they would never intentionally sacrifice a human life or impair included within the economic model human health under circumstances where harm to people is a clear and are biased or unrealistic. For present danger. example, if the cost-of-a life is valued at, say, four million dollars, does this mean that all lives are to be valued at In practice, there is greater concern among many economists about the this level? In theory, many people general over-estimation of expected health benefits, given the inflated would answer in the affirmative. But estimates of health risks predicted by conventional risk assessment what about toxic air contaminants methods. It is therefore essential that risk estimates and their associated that shorten life by only a few days or uncertainties, underlying exposure assumptions, and monetized dollar weeks, for example, by causing respiratory failure or heart failure in values assigned to various morbidity and mortality outcomes should all elderly people with advanced lung be explicitly stated and clearly explained whenever an economic diseases, such as emphysema? analysis of risk reduction strategies is presented. Similarly, a detailed Clearly their lives are worth description of the predictive economic model, which economists use to something, but how do we monetize compute projected costs and benefits, must be made fully accessible to the value of a life that is almost over? public scrutiny, so that any potential weaknesses and underlying assumptions can be made more transparent. Otherwise, the projected cost and benefits

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