Risk governance in an age of wicked problems: lessons from the European approach to indirect land-use change

In this article, the success of a risk communication programme conducted in two municipalities in Sweden is evaluated. The communication efforts were initiated in order to comply with the Seveso II Directive, passed as a national law in July 1999. Data from two different questionnaires are used. Between the distribution of the two questionnaires, an information campaign took place in the communities. The first questionnaire was aimed at measuring the public's opinion and understanding of the risks related to chemical industries in their communities, as well as the public's knowledge of emergency behaviour in the event of an accident. The second was aimed at measuring the effects or impact of the risk communication programme on the public. A total of 346 respondents participated in the study by answering two questionnaires. An evaluation of the risk communication efforts was focused around three dimensions: comprehension, audience evaluation and communication failures. The results showed differences between the two campaigns that gave significantly different results in the two communities. In the community with the multimedia channel campaign, the respondents showed greater knowledge of the production process at the local industry, they also judged the health threats for that industry to be less after the campaign, and they saved the information material to a greater extent. However, the overall effects of the information campaigns were weak. Future research is needed to explore the relation between people's emergency behaviour and risk communication.     

Das Versicherungsvermittlerrecht nach der Reform

The EC Directive on insurance mediation has been implemented into German Law two and a half years late by the Insurance Intermediary Law Revision Act of 19^th December 2006, which has been enacted on 22^nd May 2007. On the one hand, this Act contains regulations on the professional law which are provided in the Industrial Code (Gewerbeordnung — GewO). In principle according to section 34d GewO, professional insurance intermediation is an activity requiring a licence. This licence is only granted under the condition that the applicant is able to present the conclusion of a professional indemnity insurance and a certificate that the applicant has passed an examination of knowledge and ability held by the chambers of industry and commerce (IHK). In fact, the exceptions from this principle prevail. Tied insurance agents are exempted from both conditions by act of law. Product accessory intermediaries can be exempted from the examination of knowledge and ability upon application. Employees of an insurance intermediary need to prove their knowledge and ability only to their employer. On the other hand the Insurance Intermediary Law Revision Act contains besides the regulations on professional law also new obligations of information, communication and consultation for the insurance intermediary. These obligations have been implemented into a professional law ordinance and into sections 42b und 42c Insurance Contract Act (VVG). The ordinance regulates the obligations of the insurance intermediary to provide the customer with information about his status. Sec 42b (1) VVG regulates the obligation of an insurance broker to give an advice on the basis of an analysis of a sufficiently large number of insurance contracts and insurance undertakings. Sec 42b (2) VVG regulates obligations of an insurance agent to inform the customer before the conclusion of an insurance contract about the market conditions and information basis he uses for his service, if the customer has not waived this right (sec 42b (3) VVG). Sec 42c (1) VVG further provides an obligation of the insurance intermediary to ask questions depending on the situation, an obligation to give advice depending on the situation and on the price of the product including an obligation to tell the reasons for the advice and finally an obligation of documentation. Sec 42c (2) VVG gives the consumer a right to express a waiver in writing to advice and documentation. Sec 42e VVG awards the costumer damages in the event that there has been a breach of the obligations regulated in sec 42b and 42c VVG. The Insurance Contract Law Reform Bill still has to be passed by parliament. Sec 1 of this Bill contains the new Insurance Contract Act. It is planned that this new Insurance Contract Act shall be enacted on 1^st January 2008. Sec 69 to 73 new Insurance Contract Act provide a complete revision of the law of the insurance agent’s representative authority which is now regulated in sec 43 to 48 of the old Insurance Contract Act (VVG). At the moment the law of insurance agent’s representative authority established by the courts differs extremely from the written law. Therefore the new Insurance Contract Act will bring only minor changes of the actual law. For most parts, the only aim of the reform is to adapt the law in action with the law in the book.     

How (not) to talk about the uncertain: siting geological disposal for highly radioactive waste in the Czech Republic

There is an ongoing controversy in the Czech Republic over where to site a deep geological repository for the country’s radioactive waste. Recently, the negotiations between municipalities and state authorities responsible for radioactive waste management experienced a sharp turn: after several years of dialogue guaranteed by the promise of the state authorities not to start site investigations at preselected sites without the consent of affected municipalities, the state authorities suddenly decided not to keep this promise, and to start site investigations without the municipalities’ consent, saying that time for dialogue will come after the site investigations will have been completed. This article explores the period of the failed dialogue with respect to how risks and uncertainties were treated in the negotiations. Drawing on two strands of scholarship on risk and uncertainty, the risk governance school and the STS perspectives on sociotechnical controversies, two paradigms for dealing with risk and uncertainty are outlined. These are used as a framework to analyse how implementers and local stakeholders articulated possible risk or uncertainty issues in negotiations about the Czech geological disposal between 2009 and 2013. The analysis shows that whereas the implementers adopt (sometimes even an extreme version of) the risk-based paradigm, the positions of the local stakeholders seem to be mixed. These observations lead to two conclusions: first, at the theoretical level, perhaps some of the STS literature was too quick to assume that people ‘want’ uncertainty. Second, at the practical level, it is suggested that in the light of the failed dialogue, it might be worth for the implementers to take a lesson from the uncertainty-based paradigm, and consider the possibility that perhaps still more work needs to be done in order to turn uncertainty into risk.     

Pillar 2: tax competition in low-income countries and substance-based income exclusion

Pillar 2 of the OECD's global tax reform proposal will have significant direct and indirect impacts for low-income developing countries (LICs). Most interesting and problematic is the question as to how the global anti-base erosion (GloBE) rules for a proposed global minimum effective tax will affect tax competition behaviour in LICs, and how LICs should respond when a critical mass of higher-income economies adopt the new structure. Most LICs are source-only countries, and they are very much in competition to attract foreign direct investment. Do LICs want to continue to compete using the tax system to the extent possible, to step back from that competition, or to take some intermediate course? Pillar 2 does not itself change a country's desired position on the competition spectrum – it merely affects how, and to what extent, that position can still be obtained. This paper posits that LICs should adopt qualified domestic minimum top-up taxes, and that this will not itself have a negative impact on their competitiveness. The primary focus of the paper, however, is on the design of the substance-based income exclusion (carve-out), examining the following three questions. Should the GloBE have been designed without a carve-out? Would there have been a better way of designing it? How will LICs be affected? The paper concludes that, as little real advantage is likely to accrue to LICs from intangible assets, minimising tax competition for those assets will have relatively little impact on them; and that, from an economic efficiency standpoint, shifting the tax burden away from a normal return and toward economic rents – albeit imperfectly – is a reasonable solution.     

A report of TRUSTNET on risk governance--lessons learned

During the 1990s, the current regulatory frameworks and decision making processes in the European Union for hazardous activities such as nuclear and chemical waste management, hazardous industrial facilities, food production, and genetically modified organisms (GMOs) in agriculture and health care, were confronted at both national and local levels with significant difficulties in trying to meet the different concerns of the various categories of stakeholders involved. The TRUSTNET concerted action was established to assess these difficulties and their consequences and to propose more coherent, comprehensive and equitable approaches for evaluating, comparing and managing health and environmental risks. This paper presents the outcomes of this programme. A European network of some 80 participants was established comprising an interdisciplinary team of regulators, experts and stakeholders with experience of industrial, natural and medical risks. The participants identified the main challenges to the governance of hazardous activities on the basis of a detailed analysis of some 11 case studies, and determined criteria for assessing what can be considered as 'good' governance of hazardous activities. As a result of these investigations, an interdisciplinary model describing the available approaches to governance of hazardous activities is proposed in the form of two main paradigms: Top-Down Governance and Mutual Trust Governance. Using this model the difficulties encountered by current approaches to risk regulation are interpreted. The new perspective describes how the two paradigms can interact in the continuous social dynamic to allow the maintenance of social cohesion.     

Board gender composition and waste management: Cross-country evidence

Extant literature on board gender diversity focuses on the main pillars of sustainability while ignoring the important subdimension – waste management. Using a sample of 8365 firm-year observations for the period 2002–2017 from 37 countries, we provide novel empirical evidence that board gender diversity significantly reduces (increases) waste generation (waste recycling) in firms. We also note that the impact is significant with two or more female directors and is primarily driven by female directors’ independence. Moreover, the relationship is moderated by the masculinity dimension of national culture and sustainable compensation policies. Our analysis also shows that waste management activities of gender-diverse boards accompany the better financial performance. Our findings are robust to several identification strategies and estimation techniques. Our study provides new insights into the governance–sustainability nexus and presents important policy implications for regulators across countries.     

Life Insurance Liabilities at Market Value: An Analysis of Insolvency Risk, Bonus Policy, and Regulatory Intervention Rules in a Barrier Option Framework

This article takes a contingent claim approach to the market valuation of equity and liabilities in life insurance companies. A model is presented that explicitly takes into account the following: (i) the holders of life insurance contracts (LICs) have the first claim on the company's assets, whereas equity holders have limited liability; (ii) interest rate guarantees are common elements of LICs; and (iii) LICs according to the so‐called contribution principle are entitled to receive a fair share of any investment surplus. Furthermore, a regulatory mechanism in the form of an intervention rule is built into the model. This mechanism is shown to significantly reduce the insolvency risk of the issued contracts, and it implies that the various claims on the company's assets become more exotic and obtain barrier option properties. Closed valuation formulas are nevertheless derived. Finally, some representative numerical examples illustrate how the model can be used to establish the set of initially fair contracts and to determine the market values of contracts after their inception.     

萨班斯法案的实施环境与CEO会计责任的追究——以南方保健公司前CEO法庭审理为例

本文以美国南方保健公司前CEO斯克鲁西的法庭审理为例,从公司高管人员的信息权利和信息优势分析CEO的会计责任,讨论萨班斯法案以及法律对惩治公司会计舞弊的作用、探讨营造良好的法律实施环境的重要性。     

Risk and safety analysis in long-term perspective

This paper analyses how the tension between safety demands and uncertainties in calculations and management is dealt with in discussions of mercury and radioactive waste disposal in Sweden. Mercury and radioactive waste management can be seen as extreme cases where modern notions of risk management and control are called into question. The hazards associated with these categories of waste entail a request for safe handling over an unusually long time span; at the same time, it is infeasible to fully predict the consequences of a chosen method of waste disposal. In safety analyses, uncertainties are dealt with with reference to margins, further research, dilution in time and space, the role of nature and by consideration of the risk and prolonged time perspective relative to other risks and even longer time spans. The suggested solutions to the waste problem are moulded and defined to correspond to the demands of long-term safety. However, even though the definition of the suggested solutions to the waste problem as safe is politically satisfactory at rhetorical level, it will not necessarily be successful when the waste disposal policies are put into practice.     

Central supervision and earnings management: Quasi-experimental evidence from China

Earnings management is costly to society because it decreases the informativeness of earnings and hence distorts capital market efficiency. Drawing upon a natural experiment generated by the staggered random on-site inspection programme initiated by China's central government between 2013 and 2017, this paper finds that highly intensive central supervision significantly decreases local firms' earnings management behaviours. Moreover, the effect of central supervision is found to be more pronounced in provinces with severe GDP exaggeration, provinces with local governors facing impending promotion, and firms controlled by the government. These findings suggest that on-site inspections by the central government may alleviate local officials' political incentives and ability to pressure local firms to engage in earnings management. However, the estimation results of timing tests indicate that this monitoring effect is short-lived, calling for a more comprehensive strategy to enhance the supervision of local officials and consequently improve the reliability of firms' financial reporting quality. These findings highlight the importance of addressing the agency problem between central and local governments in curbing firms' earnings manipulation to improve the capital market efficiency of economies characterized by strong government intervention.     

The effectiveness and efficiency of corporate insolvency law—part two

Little empirical research has been done in the Netherlands (or internationally) into the effect of corporate insolvency proceedings. The Dutch legislature has made several attempts in the past decades to revise the current Dutch Bankruptcy Act (Faillissementswet) of 1893, while almost nothing is known about the effectiveness and efficiency of the Dutch corporate insolvency law. I have studied the effectiveness of the current Dutch insolvency law and of European Directive 2001/23/EC which is incorporated in this law, on the basis of theoretical and large‐scale empirical research. The study concerned all 4167 of the corporate insolvencies that ended in 2004. In the first part of this Article (International Insolvency Review, Volume 17, 3, Winter 2008, pp. 189–209), the research results showed that the Dutch Bankruptcy Act achieved the goals set on it only to a limited degree and that the informal restructuring procedure is of great social importance. In this second part, I concentrate on the conditions imposed by European Directive 2001/23/EC on the European national legislatures to protect employees' rights: automatic transfer of employment contracts in the event of transfers as part of insolvency proceedings, together with measures to prevent misuse of insolvency proceedings in such a way as to deprive employees of the rights provided for in this European Directive. The study shows that, in the Netherlands, not applying automatic transfer of employment contracts when an undertaking or business is transferred as part of an insolvency proceeding does not result in large‐scale misuse of insolvency law. It appears that automatic transfer of employment contracts outside insolvency proceedings can actually impede the informal restructuring of financially unsound companies. These surprising results are interesting for corporate insolvency proceedings worldwide. Copyright © 2009 John Wiley & Sons, Ltd.     

The innovation consequences of mandatory patent disclosures

We investigate the effect of patent disclosures on corporate innovation. Using the American Inventor's Protection Act (AIPA) as a shock that increased patent disclosures, we find an increase in innovation for firms whose rivals reveal more information after the AIPA and a decrease in innovation for firms whose own disclosures are divulged to competitors as a result of the law. These findings suggest patent disclosures generate both spillover benefits and proprietary costs. Our findings provide justification for patent disclosure requirements by demonstrating positive externalities: rivals' disclosures facilitate a firm's innovation. However, we also highlight that mandatory patent disclosures can impose proprietary costs on firms. These results broadly contribute to our understanding of the real effects of disclosure, such that forcing firms to share proprietary information can be privately costly but beneficial to other firms.     

Stepwise Approach to the Long‐Term Management of Radioactive Waste1

Stepwise decision making has long been utilised as a tool for handling the technical complexity of radioactive waste management (RWM). Recently, it is being recognised as a useful means to address social complexities. This paper reviews—through a number of examples—the current developments regarding the stepwise approach to managing long‐lived wastes from a societal point of view with the aim of pinpointing where it stands, highlighting its social dimensions, and identifying guiding principles and issues in implementation. It is observed that there is convergence between the approach taken by the practitioners of RWM and the indications received from social research, and that general guiding principles can be distilled from the analysis of RWM case histories. The paper concludes that a stepwise approach to decision‐making indeed constitutes an effective tool, and that competing requirements of social sustainability and efficiency, openness and analytical rigour will need to be balanced. A long‐term process of decision‐making incorporating the views of national and local stakeholders will very likely be a difficult process to implement. The concrete arrangements for sketching out and agreeing on decision phases, for selecting and involving stakeholders in a participatory process, and for adapting institutions to meet long‐term requirements, will require careful reflection and tuning in each national context.     

Ethical assessment in radioactive waste management: a proposed reflective equilibrium‐based deliberative approach

Radioactive waste management facility siting has often been surrounded by political controversy. By attempting to overcome accusations of technocracy, radioactive waste management organisations are reframing the problem in terms of socio‐technical issues requiring the integrative assessment of complex scientific, political and ethical issues and establishing analytic‐deliberative decision‐making processes involving public and stakeholder involvement. One important aspect of a publicly supportable radioactive waste management strategy is that adequate ethical assessment is incorporated throughout the process. There are, however, certain incompatibilities between pluralistic public and stakeholder‐led engagement processes and the types of ethical justification stemming from normative ethical theory and the input of ethical expertise. An evaluation of previous work on ethics by the UK Committee on Radioactive Waste Management highlights some of the pitfalls of utilising these types of ‘top‐down’ inputs in a primarily ‘bottom‐up’ decision‐making process. This paper then proposes the development of a new approach inspired by John Rawls's concept of ‘reflective equilibrium’, to better bridge the divide between pluralistic analytic‐deliberative decision‐making and ethical assessment.     

‘It is all about getting the volumes down’. Organizational framings of risk in relation to waste,waste management and temporality

Abstract

Drawing on an ethnographic fieldwork at a waste facility site in the northern parts of Sweden, this article investigates organizational framings of risk (Hutter and Power 2005 Hutter, B., and M. Power. 2005. “Organizational encounters with risk: An introduction.” In Organizational Encounters with Risk, edited by B. Hutter and M. Power, 1–32. Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, Sao Paulo: Cambridge University Press.[Crossref] , [Google Scholar]) in relation to waste and practices of waste management, employing the concept of temporality. The suggestion is that organizational framings of risk, as it contributes to steering the risk perception of the employees, also cater to a particular temporal register. In relation to the purposes of this article, the risks that my informants mentioned and/or perceived – as part of a particular organizational framework – were most often seen in terms of situated inconveniences and hazards that required technical, and logistic solutions. While this enabled them to take action, it also contributed to bounding risk and risk perception to a particular temporal register, intimately linked to what Barbara Adam (1998 Adam, B. 1998. Timescapes of Modernity: The Environment and Invisible Hazards. London and New York: Routledge. [Google Scholar]) refers to as the logics of industrial time. The logics of industrial time also suffuse formulations of current environmental policies and waste management plans, on a national as well as on an EU level where waste is seen primarily as a resource that continuously needs to be invented anew. As such, the logics of industrial time follow closely the beat of market fluctuations. Talking to representatives for the current waste facility site and observing some of their daily activities, potential risks with waste and practices of waste management were often weighed against other factors such as effectiveness, swiftness, and economic profits or losses: factors that also corresponded to short-time temporalities. While this reasoning, at first seemed to outperform any notion of risk, it actually conformed to the risks acknowledged by the organizational setting of which my informants were part.     

Die Überwachung des versicherungsaufsichtsrechtlichen Risikomanagement durch den Aufsichtsrat

§ 64a VAG intensifies control of insurance undertakings through their supervisory board concerning risk management. These extended duties and the new risk management specific qualification standards will result in higher liability risks for the members of the supervisory board. However, the new law does not ensure that the supervisory board is supplied with the information necessary to comply with these requirements. Particularly information of the supervisory board of insurance undertakings in a group is seriously insufficient. On the other hand the Federal Financial Supervisory Authority in its MaRisk VA Circular concedes rights to information to the supervisory board which conflict with the basic conception of corporate law, e.g. permanent direct contacts between the supervisory board and staff of the risk management function. Insurance undertakings can react to the new challenges by professionalizing the supervisory board, establishing audit committees, internal limitation of the admissible maximum number of supervisory board’s seats and/or by purchasing D &; O insurance.     

Evolution of Bilateral Capital Flows to Developing Countries at Intensive and Extensive Margins

Motivated by the rise in capital flows to low‐income countries (LICs), we examine the nature of these flows and the factors affecting foreign investors' decision. Recognizing the presence of fixed investment costs, we analyze capital flows at both intensive and extensive margins. To fix ideas, we resort to the gravity literature for the estimating relationships which we embed into a two‐tier econometric framework with cross‐sectional dependence. Our main finding is that market entry costs are statistically and economically very detrimental to LICs. We also obtain the gravity‐type relationship for the destination income unconditionally but not after conditioning on relevant variables, as well as establish labor productivity as a robust attractor of capital inflows.     

The impact of SOX on opportunistic management behavior

An innovative aspect of this study is the use of a relatively new metric to capture opportunistic earnings management behavior. We define opportunistic earnings management as the difference between a firm's US-GAAP earnings and ex post earnings consensus derived from forecasts of financial analysts who follow that firm. Using over 24,500 quarterly reports of over 2,500 publicly-traded companies spanning two three-year periods, and controlling for factors previously linked to having an effect on earnings management and analysts forecast effort, we find statistical evidence supporting the proposition that, in the aggregate, the Sarbanes–Oxley Act (SOX) has served as a constraint on curbing opportunistic earnings management behavior, and thus should be considered as an effective means to improve the quality of financial reporting information.     

Devolving Skills: The Case of the Apprenticeship Grant for Employers*

One rationale for devolution is that local decision makers may be well placed to adapt national policies to the local context. We test whether such adaptation helps meet programme objectives in the case of the Apprenticeship Grant for Employers. Originally a national programme, aimed at incentivising employers to take on apprentices, reforms a few years into operation gave some Local Authorities negotiated flexibilities in how the scheme operated. We consider the impact of the national scheme and then use a difference-in-differences approach to test whether flexibility led to an increase in the number of apprenticeship starts in devolved areas relative to control groups. We find that flexibility had zero effect. There is suggestive evidence that this is because flexibilities were negotiated on the wrong margins.