A fifth area of debate in risk management concerns the cost of risk reduction and the extent to which reduction in risk has to be traded off against other basic goals. The much-invoked doctrine of BATNEEC (“best available technology not entailing excessive costs”) explicitly recognizes this trade-off problem, although it does not tell us how to choose among competing interpretations of what is “best available” and “excessive”.
The conventional “no-free-lunch” trade-off model of economics offers a clear starting-point for risk management, since it focuses attention very sharply on discounted costs and benefits. Those who adopt a trade-off position argue that increases in safety must normally come at the expense of other valued objectives such as wealth creation, international competitiveness in productivity or economic dynamism, and environmental degradation. Breyer (1993:11-12) argues that, in the absence of attention to costs, attempts to regulate small but significant risks to human health tend to be characterized by “tunnel vision” (which he see as arising “when an agency so organises or subdivides its tasks that each employee's individual conscientious performance effectively carries single-minded pursuit of a single goal too far, to the point where it brings about more harm than good” (ibid.: 12), for example in disproportionate expenditure and effort to remove the “last 10 per cent” of hazards. The debate over the costs of risk reduction has included discussion of the economic consequences of extended product liability in the USA, although there is no clear overall evaluation of the economic effects of those legal trends (Reuter 1988). At the limit, the cost of risk reduction can be framed not simply as the trading-off of risk reduction against other competing values, but also as the trading-off of some kinds of risks against others (e.g. botulism risks versus cancer risks in relation to nitrites in food, or risks of dumping sewage sludge at sea versus cancer risks from incineration on shore).
Much of public policy on risk management can be represented as an implicit trade-off between safety and economic surplus. By the use of analytical techniques designed to make those trade-offs explicit, an effort can be made to assess the consistency with which the trade-off is made in different areas of public policy, and why it varies from one case to another: for example, why the trade-off appears to be different for aviation