Accident and Design: Contemporary Debates in Risk Management

By Christopher Hood; David K. C. Jones | Go to book overview
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Liability and blame: pointing the finger or nobody's fault


The second key area of debate in risk management turns on the extent to which risk management regimes should be more or less “blame-orientated”.

Those who favour a high-blame approach argue that effective risk management depends on the design of incentive structures that place strict financial and legal liability for risk onto those who are in the best position to take action to minimize risk. This principle has a long history in law and economics, particularly in discussion of the famous “Hand formula” in American law and its analogues (Posner 1986:147-51). The claim is that, if liability is not precisely targeted on specific and appropriate decision-makers, a poorly designed institutional incentive structure will allow avoidable failures to occur. Without close targeting of liability, there will be too little incentive for care to be taken by those key decision-makers in organizations who are capable of creating hazards, and (the argument goes) “risk externalization” will be encouraged. Policies should, therefore, aim to support expanded corporate legal liability, more precisely targeted insurance premium practices, and regulatory policies that have the effect of “criminalizing” particular management practices and of laying sanctions directly on key decision-makers within corporations, rather than trusting corporations as undifferentiated legal persons (cf. Fisse & Braithwaite 1988).

The “blame” argument manifests itself in several ways. Some large business corporations build into their corporate safety policies a strategy for the dismissal of individual employees found to be responsible for safety violations. And some contributors to the risk management debate argue that avoidable accidents and failures may result from insufficiently individualized insurance (as in the case where government acts as its own insurer or where it introduces “insurance asymmetry” (Shrader-Frechette 1991:88) by limiting third-party liability, as in the case of the us Price-Anderson Act limiting third-party liability of nuclear power plant opera


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