Comparative Risk Analysis: Limitations and Opportunities

By Swaney, James A. | Journal of Economic Issues, June 1996 | Go to article overview

Comparative Risk Analysis: Limitations and Opportunities


Swaney, James A., Journal of Economic Issues


Risk analysis is the study of the likelihood that an agent or hazard will produce an unwelcome outcome or "adverse effect" and the severity of that adverse effect. Having jelled into a distinct discipline only about a quarter century ago, risk analysis was recently discovered by Congress and has been embraced by those who wish to roll back regulation. Risk analysis is synonymous with risk assessment, although risk analysis sometimes refers to risk management as well. Risk assessment is the study of the adverse effects of hazards, primarily through estimating probabilities or establishing exposure thresholds. It involves collection and analysis of data, traditionally to estimate human morbidity or mortality, now expanded to include ecological health and economic well-being. Risk management develops or evaluates strategies for dealing with hazards. It uses risk assessments and values to (hopefully) provide better ways for individuals and groups to reduce hazards or cope with their effects.

Comparative Risk Analysis

Comparative risk analysis (CRA) is a policy application of risk analysis designed to provide a framework for systematically evaluating risk reduction programs and budgets for the purpose of ascertaining whether different approaches or different priorities might go further or faster to produce environmental improvements. In short, CRA attempts to look at the big picture to see if we are getting the "most bang for the (risk management) buck." Initially, CRA used the opinions of risk analysts and other scientists to compare and rank risks. More recently, some comparative risk projects have produced risk rankings that also incorporate public opinion. The United States Environmental Protection Agency introduced CRA with its 1987 report, Unfinished Business: A Comparative Assessment of Environmental Problems [EPA 1987]. The objective of Unfinished Business was to employ "sound science" to identify manageable but neglected risks and refocus policy toward them.(1) Thirty-one environmental problems were examined for their effects on human health, ecology, and welfare, and an integrated risk ranking was produced (Appendix 1). Some high profile risks, such as hazardous waste sites, were ranked fairly low, and some low profile risks, such as indoor air pollution, were ranked fairly high.(2) The basic message of Unfinished Business was that new regulatory initiatives were needed to address some higher ranked risks that had received relatively little regulatory attention. About a year later, two nationwide Roper polls produced a citizen ranking of a similar list of problems, exposing a gulf between public and expert opinion in several areas, including hazardous waste, indoor air pollution, and global warming. The "consensus interpretation" of Unfinished Business and the Roper polls, respectively, is that regulatory resource allocation could be improved and that better communication of scientific opinion to the public is needed both to facilitate low-cost risk reduction strategies and to build political support for new regulatory initiatives. These points are well taken, yet risk analysts will have to admit that "we do not have (and may never have) good methods for comparing different types of risk" [Davies 1995, 8]. Specific risks, and by extension classes of risks, are difficult to compare because "risk assessment is still a relatively crude science, and, depending on which methodological assumptions are used, its results may vary a hundredfold or more" [Davies 1995, 8]. But even if these measurement hurdles could be cleared, three fundamental, interrelated problems inhibit the comparison of different types of risk: the values problem, the dimensions problem, and the rationality problem.

The values problem lurks in the definition of risk analysis. The terms "hazard," "harm," "unwelcome outcome," and "adverse effect" all imply value judgments. As risk analysis has expanded from its initial focus on human mortality to other harms or adverse effects, its value foundations have become apparent.

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