Risk, Uncertainty and Rational Action

Carlo C. Jaeger, Thomas Webler, Eugene A. Rosa, Ortwin Renn

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781134203093
• Edition: 1
• Topic: Business
• Subtopic: Assicurazioni
• Index: Business

Risk as we now know it is a wholly new phenomenon, the by-product of our ever more complex and powerful technologies. In business, policy making, and in everyday life, it demands a new way of looking at technological and environmental uncertainty.

In this definitive volume, four of the world's leading risk researchers present a fundamental critique of the prevailing approaches to understanding and managing risk - the 'rational actor paradigm'. They show how risk studies must incorporate the competing interests, values, and rationalities of those involved and find a balance of trust and acceptable risk. Their work points to a comprehensive and significant new theory of risk and uncertainty and of the decision making process they require. The implications for social, political, and environmental theory and practice are enormous.

Winner of the 2000-2002 Outstanding Publication Award of the Section on Environment and Technology of the American Sociological Association

1. General Introduction

1.1 Risk, Ontological Security, and Uncertainty

Automobile and plane crashes, toxic chemical spills and explosions, nuclear accidents, food contamination, genetic manipulation, the spread of AIDS, global climate change, ozone depletion, species extinction, and the persistence of nuclear weapon arsenals: the list goes on. Risks abound and people are increasingly aware that no one is entirely safe from the hazards of modern living. Risk reminds us of our dependency, interdependency, and vulnerability. Catastrophic risk is an even stronger reminder.

Untoward, sometimes catastrophic consequences of risk are newsworthy events. Catastrophic accidents attract the media. Technological disasters receive worldwide coverage. These events grab headlines and headlines grab public attention. Headlines across the globe testify to the pervasiveness of risk and to the growing embeddedness of risk in the public consciousness. So, at this, the mature stages of modernity, public awareness of risks common to people everywhere has, perhaps, never been as widespread. Risk, it seems, is embedded in a contemporary, worldwide culture (Rosa and Wong 1992).

Our contemporary world is clearly stretching the social fabric of modernity – making it more interdependent and, consequently, more vulnerable. Dominant patterns of the social fabric today include the worldwide spread of industrial production, called by some theorists “a new world manufacturing order” (Ross and Trachte 1990), and the internationalization of the division of labor, “the new international division of labor (NIDL)” (Fröbel, Heinrichs et al 1980). These labor and production patterns are accompanied by the availability everywhere of a wide assortment of consumer goods. The market baskets of people widely distanced around the globe are becoming increasingly similar, at least among the growing affluent classes.

These production and consumption patterns are also accompanied by another unshakable traveling companion: risk. The globalized interdependencies of production, consumption, and geopolitical arrangements mean that people everywhere are coming to share a common set of risks. No one could escape a nuclear holocaust, ozone depletion, the consequences of monoculture and species extinction. Toxic chemical exposure, industrial accidents, and global climate change pose increasing threats. Since risk is a central feature of the contemporary world, and since the imposition and management of many risks are the charge of others, there is a strong public interest in how societies manage or cope with risks.

Innovation can reduce risk. So can safety and vigilant management practices. Technical risk managers tell us that the world is measurably safer today than it was only one hundred years ago (Wilson 1979). They point to significant reductions in infant mortality and to the marked improvements in life expectancy as tangible indicators that life is getting less risky. But each wave of innovation and each new effort at safety also seem to bring with them the unintended consequences of new risks. The contemporary world continues on a trajectory of pervasive industrialization, underpinned by the application of technologies of increasing complexity and risk. It must, therefore, struggle to reconcile the fervent desire for progress and betterment for people everywhere with the consequences of technologically induced uncertainty and the possibility of disasters.

1.1.1 Risk and the Human Condition

Far from a transient annoyance, risk is constitutive of the human condition, as it has been from the beginning of human existence. While we worry about the risk of a nuclear disaster, our ancestors worried about the risk of being devoured by other species. We worry about the risk of global warming, while they worried about the risk of finding shelter to protect themselves from the Arctic cold. How have things changed?

There are three key differences between risks in the past and now: (1) in the past, most risks were proximate and local in impact, while today many risks are “eco-systemic” risks; (2) in the past, most risks were geographically circumscribed, while today many risks are global; and (3) in the past, many risks were likely thought of in terms of a group’s unique circumstances, while today – as noted above – there is growing public awareness of common risks around the globe. The first type of risk refers to systemic environmental risks that can occur at a local level, but are cumulative (such as the destruction of moist forests in certain parts of the world), or that can occur at the level of entire ecosystems (such as air pollution over a wide area). The second type of risk implicates the globe as a whole (such as the risk of a nuclear disaster or risk of global warming). And the third change refers to a growing risk conscience in the contemporary world of high technology (Rosa 1994).

1.1.2 Imprimatur for the Age

The global changes outlined above represent the most recent of a number of fundamental “transitions” in the world (from feudalism to capitalism, for example). Our transitional age is witnessing social change that is huge, that is fundamental, and that is far-reaching – resulting in the evolution of worldwide institutions never seen before. These changes are profound because of their depth (they go to the foundation of how societies organize themselves) and because of their spread (societies nearly everywhere are experiencing these changes ). The pervasiveness and profundity of this social change has not gone unnoticed by social theorists; quite the contrary. A central preoccupation of a number of social theorists has been to understand this transformation of the globe into a “new social world.” Alexander (1994), for example, writes: “Recently, a new social world has come into being. We must try to make sense of it. For the task of intellectuals is not only to explain the world: they must interpret it as well.” In a subtle way, these two tasks are related to a third, namely, to label this new world, to give it a suitable imprimatur.

In the view of two leading European social theorists, Anthony Giddens and Ulrich Beck, risk is that imprimatur. Both have developed – independently – theoretical frames that place risk at the core of the world transition. Risk is theorized as a fundamental of the emergent social order. For Giddens and Beck, the spirit of our age is the universal concern with hazards in the contemporary world, the vulnerability of the environment, and of the human species itself. Beck (1986/1992) calls the new social world – new age – the “Risk Society.” The transition to this “other modernity”, he argues, transforms our collective consciousness: we are now preoccupied with risk. The social world has become a world of risk, a world that makes transparent our vulnerabilities.

The adoption of “risk” as the imprimatur of our age marks a significant refocusing of social thought. The foundation of Western thought since the Enlightenment – from Comte, Spencer, Marx, Parsons, Habermas, and others – has been the expectation of progress, of continued improvement in the social world. The emergence of a “Risk Society,” abruptly challenges that assumption. “Risk society means an epoch in which the dark sides of progress increasingly come to dominate social debate” (Beck 1991/1995, p 2). The focus of attention shifts from the “goods” of modernization, social and political, as well as economic, to its many – often unintended – “bads.”

1.1.3 Ontological Security

Social fabric is a root metaphor for collective life. It is a webbing of interdependencies embedded in expectations, obligations, actions, and interactions – bonds and mutualities that are the essence of social life. They ensure a degree of regularity or orderliness to social action and are pivotal to a reflexive self-identity and to a weaving of the individual into the social fabric. They provide “ontological security,” in the terminology of Anthony Giddens (1984; 1991). Ontological security refers to “the confidence that most human beings have in the continuity of their self-identity and in the constancy of the surrounding social and material environments of action” (1991, p 92). The reappearance of the sun each morning is a form of ontological security for humans everywhere.

We expect the astronomical, more generally: the material world to be more or less the same each day. For some prescientific societies an eclipse of the sun poses a serious threat to that security. Such threats are not typically taken lightly, for the eclipse often elicits worrisome responses, such as the rush to worry beads or to an appeasement of the gods. For modern societies, threats to ontological security increasingly take the form of uncertainties, and risks associated with them. Less and less do risks emanate from the natural world; more and more they are the result of human choice. As threats to ontological security, risks, then, threaten both environmental conditions and individual identity. Managing risks – and concomitantly threats to ontological security – has, therefore, become a major activity and a gauge of success for modern societies (Covello, Mumpower et al 1985; Royal Society 1992; Somers 1995).

Understanding how and why people and organizations and societies deal with risk by reducing uncertainties in order to maintain ontological security is clearly a task worthy of sociological investigation. In this book we approach such a study by essentially paraphrasing Kant’s two central questions: “How did things get this way?” and “How can we understand what needs to be done about them?” Kant’s questions invite sociological analysis because worries about risks are not just individual problems, but problems of a growing collective consciousness. Our task in this book is to exercise the sociological imagination in service to Kant’s questions.

We begin by defining risk. Next, we sketch the dominant intellectual worldview – rational action – for understanding and managing risk. We then critically evaluate that position, pointing out both its strengths and weaknesses. Our critical evaluation leads to the recognition that there are other rationalities for explaining social life and for explaining risk. These other rationalities are the foundation of alternative approaches to understanding risk: reflexive modernization, critical theory, systems theory, and postmodernism. Key questions organize our inquiry: What is meant by risk? How do we perceive and respond to it? What means have evolved to analyze it and to manage it? What can be done about risks? What should be done? How do risks reproduce social structure? How is risk embedded in the social fabric?

1.2 What is Risk?

In common usage, risk has a wide range of connotations: fear of specific hazards, concern for the interdependency of humans and technological systems, uncertainty regarding financial gain or loss, fear of the malevolent forces of nature, or the thrill of adventure, or worry about the competence and trustworthiness of those who manage risks. Despite variation in usage, however, there are unifying features that ground the meaning of risk. All conceptions of risk presuppose a distinction between predetermination and possibility (Evers and Nowotny 1987; Markowitz 1990; Renn 1992a), for if the future were either predetermined or independent of present human activities, the notion of “risk” makes no sense.² Whatever the variation in connotation, risk implies the possibility of some outcome – possibility is, indeed, the first indispensable element of the idea of risk.

Risk implies both the possibility that an event or outcome can happen with the denial that either occurs with predetermined certainty. Risk thus necessarily implies uncertainty, the second indispensable element of risk. A further consideration is the fact that possible outcomes – consequences – are rarely neutral, but carry with them rewards or penalties, as the case may be. Humans evaluate the outcomes of their actions. As a result, humans try to make causal connections between present actions and future outcomes, and they exercise agency in attempting to shape the causes of future outcomes.

The foregoing considerations imply that certain states of the world which are possible but not predetermined can be identified objectively as risk. The lack of predetermination implies probability and, therefore, uncertainty. Not all uncertainty is risk, however; hence, a third essential feature is that risk is present only to the extent that uncertainty involves some feature of the world, stemming from natural events or human activities, that impacts human reality in some way. Risk, in human terms, exists only when humans have a stake in outcomes.

1.2.1 Defining Risk

With these considerations, we adopt, after Rosa (1998), the following definition (see also National Research Council 1983; Fischhoff, Watson et al 1984; Luhmann 1990):

Risk: A situation or event in which something of human value (including humans themselves) has been put at stake and where the outcome is uncertain.

In order to avoid certain confusions contained in other definitions of risk, it is important to point out several key features of this definition. First, it expresses an ontological state of the world. Risk captures the duality that humans are embedded in uncertain environments – natural and humanmade. Second, it explicates states (uncertain but involving human stakes) that are properly conceptualized as risk. Third, it embeds the conventional definition of risk (as the probability of an occurrence or event multiplied by the value of the outcome of that event). Fourth, it is robust, in that it subsumes both undesirable risks (the dominant concern of the field) and desirable risks (Machlis and Rosa 1990), such as adventurous undertakings or investments in which risks are engaged in for thrills or similar satisfactions.

Although risk may be viewed as an ontological state of the world, humans neither ignore that world nor are they passive about it. By definition, stakes are involved. Individuals, collectivities, and institutions perceive some risks, but not others. Some risks engender concern, or alarm, while others are unconsciously or willfully ignored. Some attract professional attention, including management practices; some do not. Thus, while we define risk as an ontological entity, our understanding of risk is an epistemological matter. Humans everywhere seek to identify and understand risks. This involves perception, investigation, judgment, evaluation, and claims about our knowledge of risk.

Risk, as noted above, is closely tied to human agency in that it involves choices among various possibilities. Anticipating the consequences of alternative possibilities, evaluating their desirability, and choosing the most desirable option lie at the core of human agency. These volitions, too, lie at the core of the idea of rational action, the foundation of inquiries into risk and uncertainty. The first institution specifically devoted to risk, dating from the Italian Renaissance, was the insurance industry. The idea of rational action, too, has been the foundation of inquiries into risk and uncertainty since the beginning of probability theory in the seventeenth century by Pascal and others (Hacking 1975).

Because all risks carry with them either danger or opportunity – potential for loss or gain – the notion of risk adds incentive to make causal connections between present actions and future outcomes. The task of risk management is to anticipate outcomes of risk situations and to incorporate uncertainty into decision making. Risk management implies that undesirable outcomes can sometimes be avoided, and where unavoidable, can be mitigated if connections between cause and effect are made properly. Thus, risk typically is normative, as well as descriptive or analytic. That is, risk involves evaluative judgment about the desirability of outcomes.

Taken together, our ontological definition of risk, the epistemology of risk, and the normative and management aspects of risk, contain three key elements that distinguish the various conceptualizations of risk: type of outcome (typically, but not always, undesirable consequences); some gauging of the possibility of occurrence (typically, but not always, probability); and type of entity affected (individual, corporate, or institutional) that also judge outcomes, their possibility, and their desirability. Different risk perspectives conceptualize these three elements in quite different ways. They can be distinguished on the basis of the manner in which they address four questions that emerge from these elements:

• What concept of possibility is used?
• What types of outcomes and their consequences are considered?
• How are the concepts of possibility and outcome combined?
• Who is the actor that judges the three questions above?

In the following sections these four questions – the conceptualization of uncertainty, the scope of consequences, the combination rule, and the actor involved in making decisions – will provide the framework for explicating and evaluating a variety of perspectives on risk.

1.2.2 Analytical Perspectives

Because of its centrality to modern decision making, risk has developed an analytic infrastructure consisting of scientists, engineers, economists and other social scientists, decision theorists, and many agencies charged with managing risk. The roots and branches of this infrastructure are grounded in the idea of rational action. A variety of approaches have emerged to study risk from the perspective of rational action. Other approaches ...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Foreword
• Preface
• 1. GENERAL INTRODUCTION
• I. THE RATIONAL ACTOR WORLD
• II. LOOKING FOR OTHER WORLDS
• References
• Index