From precautionary inadequacy to participatory risk management

This paper examines the case of mobile telephone infrastructure as an example of a contemporary risk defined by a lack of scientific evidence and consensus as regards potential or future harm. This uncertainty has led to recourse to the precautionary principle at the European, national, regional and local level of EMF risk management. Local risk governance of mobile telephone infrastructures in Catalonia can be seen as an example of a socio-technical complex system linked to risk perception which highlights the limitations of the precautionary principle in a scientifically uncertain context. Active participation of stakeholders and the public in risk management arenas is required if current technocratic risk management strategies are to be superseded by transparent processes of decision-making in risk management spheres.     

What counts as a reasonable extent? – a systems approach for understanding fire safety in Sweden

Swedish legislation requires that any owner or user of a building maintain a reasonable level of fire protection measures to ensure the safety of all people located in the building. If a building, in the wake of a fire, in court is determined not to have had a reasonable fire protection, the blame will likewise be assigned to the building owner or user. Using the perspective of risk governance, this study aims at analysing how regulation and stakeholders interact to maintain a specific level of fire protection in hotels. The focus is on identifying problems and frictions that have emerged from the complex relationships, and differences of interests, between the different stakeholders. Based on a stakeholder analysis, 11 respondents were selected for an interview study. The main problems identified in the analysis are that there are ambiguities for the individual hotel owner to know whether her or his fire protection measures are reasonable according to the law, that the system has emerged without clear political goals, problems related to the process of local supervision, that the ambiguous situation gives rise to opportunities of other stakeholders to claim the definition of what counts as a reasonable extent, and the ethical problems associated with convicting a single individual for failure in a complex multi-actor system.     

A comparative study of stakeholder risk perception and risk communication in Europe: a bovine spongiform encephalopathy case study

The ‘Transmissible Spongiform Encephalopathy (TSE) Roadmap’ was published by the European Commission on 15 July 2005. The TSE Roadmap proposes the relaxation of bovine spongiform encephalopathy (BSE) measures in the short, medium and long term. According to the Roadmap, any relaxation of BSE measures following the scientific assessment should be initiated by an open discussion with all stakeholders and supported by a strong communication strategy. This paper discusses the risk perception, risk communication and risk management of TSEs in Europe, exemplified by the TSE Roadmap. The main conclusion is that in general, BSE is no longer a ‘hot’ topic for stakeholders, but there are slight differences between countries with respect to specific measures. Another important conclusion is that the TSE Roadmap is a very effective tool for risk communication with stakeholders.     

Risk communication and social media during food safety crises: a study of stakeholders’ opinions in Ireland

Social media is a particular communication platform which has witnessed an exponential growth in use and influence in recent years, democratising the communication process, and offering risk communicators a way of putting into practice those principles which are advocated to be at the core of risk management and communication. However, little is known about stakeholders’ willingness to embrace this new form of communication in a food crisis. The current study presented an exploratory investigation of the opinions of Irish stakeholders on the position of risk communication in a crisis, with a particular focus on understanding what application social media may have. In-depth one-to-one interviews were carried out with key stakeholders holding frontline positions in managing and communicating about risk in the food sector in Ireland. The stakeholders identified risk communication as a central activity in a food safety crisis, driven by an obligation to protect both consumer health and the reputation of the Irish food sector. Stakeholders relied primarily on risk communication to disseminate information in a crisis so to educate and inform the public on a risk and to prevent confusion and alarmism; most did not explicitly value two-way risk communication in a crisis. The ability to effectively manage future crises may depend on stakeholders’ willingness to adapt to the changing communication landscape, namely – their willingness to adopt social media and use it effectively. The findings indicate that the stakeholders interviewed are appreciative of the need to engage with social media in times of a food safety crisis. However, most valued social media as a one-way channel to help spread a message and there was little reference to the interactive nature of this medium. Implications for integrating social media into crisis risk communication strategies are discussed.     

The Role of Risk Management and Governance in Determining Audit Demand

Abstract:  Most prior research into audit fees has been based on a theoretical model which treats audit fees as the by-product of a production function ignoring potential demand forces that may drive the level of the audit fee. Inspired by prior 'anomalous' results, we take a different perspective by focusing on demand factors that may affect the level of the audit fee. Using data collected from a sample of listed companies in Belgium, we consider both disclosures about risk and risk management and actual decisions about corporate governance to examine whether audit fees are higher when these demand forces exist. In general, we expect that external auditing will increase in situations where there are multiple stakeholders with individual risk profiles who can shift some of the cost of monitoring to other stakeholders. Consistent with our theory and expectations, our results indicate that audit fees are higher when a company has an audit committee, discloses a relatively high level of financial risk management, and has a larger proportion of independent Board Members. Audit fees are lower when a company discloses a relatively high level of compliance risk management. The latter result indicates that controls are only complementary as long as they are voluntary, as mandated controls act as substitutes for non-mandated controls.     

Management accounting and corporate governance: An institutional interpretation of the agency problem

Challenging the dominant economic agency theory of corporate governance with a new discourse drawn from institutional theory, the paper analyses how management accounting is implicated in corporate governance. The proposed institutional theory of agency links the micro-institutions of the organization that are informed by the practices of management accounting with external institutional players and stakeholders. The paper identifies emerging narratives in which the management accounting profession has recognised a distinctive, post-Enron set of sensibilities. Although techniques drawn from strategic management accounting can be adapted to embed better corporate governance practices, the institutional theory of agency identifies tensions between the heroic CEO narrative and the routinization of strategy implicit in strategic management accounting.     

法律保护是行政监管的有效补充吗？——基于上市公司虚假陈述行政处罚的实证检验

本文考察了当上市公司因虚假陈述受到证监会行政处罚时,地区法律保护水平差异是否以及如何影响资本市场的短期反应。研究表明,地区法律保护水平与受罚公司累积异常收益率之间呈显著正相关,这表明法律保护水平发挥了补充治理作用,进一步分析发现其存在“事前威慑”和“事后监督”两种治理渠道。研究结果为法律保护的补充治理功能提供了证据支持,为加强投资者民事法律保护提供了理论参考。     

Ecological risk assessment of pesticides in the EU: what factors and groups influence policy changes?

For the last couple of years, European environmental risk assessment (ERA) regulations have undergone significant changes. The new 1107/2009 directive which came into effect in 2011 has triggered an on-going debate on defining specific protection goals for ERA. During this period, we conducted a study on policy change among the most influential ERA stakeholders from Europe. We interviewed 43, purposively sampled, participants from the European safety authorities, plant protection product industry and academia. Transcribed interviews underwent thematic analysis conducted separately by two coders. As we followed the advocacy coalition framework, our findings focus on stakeholders’ processes, interrelations and values behind the ERA policy change. The main challenges emerging from our analysis turned out to be the slow uptake of scientific developments into ERA and very broadly defined protection goals. The use of safety factors and cut-off criteria left risk assessors with many uncertainties. With ERA in its current form it turned out to be impossible to determine whether the current scheme is over- or under-protective. Still, the study shows that the problem of over- or under-protectiveness lies deep in the perception of stakeholders and depends greatly on their priorities. Academics strive for better ecological relevance as a priority. They have concerns that ERA is oversimplified. Regulators worry that ERA relies too much on risk mitigation and is possibly not protective enough, but at the same time, the majority believes that the assessment is well established and straightforward to follow. Industry representatives would like to see ERA based more on probabilistic risk assessment. Recent changes, according to risk assessment and management practitioners have led to an inevitable increase in complexity, which is not perceived as a positive thing, and does not necessarily translate into better risk assessment.     

Biosecurity risk and peri‐urban landholders – using a stakeholder consultative approach to build a risk communication strategy

This article presents a straightforward and highly participatory methodology for addressing government agencies’ concerns with effective communication strategies for biosecurity when stakeholders are diverse and there is uncertainty about their levels of knowledge. The case study was among peri‐urban landholders in an area where serious animal disease infestation has occurred within the last 10 years. Initially we engaged stakeholders in a consultative process that included establishing a stakeholder influence and interest map for both weeds and animal diseases. This was followed with a mental model approach involving surveys and in‐depth interviews. We elicited information about landholders’ knowledge, practices, values and beliefs regarding biosecurity risk. Our consultative process generated examples that indicate that effective risk communication relies on establishing and affirming mutual levels of trust and credibility between landholders and agencies. While this finding is not surprising, we argue that attention to stakeholder consultative processes is central to overcoming barriers to changing practices and building awareness. Secondly, our data confirmed that while smaller landholders were the initial target for the communication, all landholders represented a similar level of biosecurity risk. Therefore, our approach was critical in overcoming external assumptions about particular actors. Finally, our data pointed to the need to develop a whole of landscape approach to biosecurity risk communication strategy in consultation with local stakeholders.     

PERFORMANCE REPORTING BY MALAYSIAN LOCAL AUTHORITIES: IDENTIFYING STAKEHOLDER NEEDS

The concept of public accountability promotes the need for a comprehensive set of performance‐related information to satisfy the information needs of a diverse stakeholder interest group. However, literature concerned with the scope of information to be disclosed, and in particular within the context of a developing country, is limited. This paper identifies the information set which stakeholders of Malaysian local authorities consider relevant in the monitoring and assessment of local authority performance. Stakeholders indicated strong interest in performance information that is not traditionally disclosed in the financial statements: non‐financial information particularly performance measurement of outputs, outcomes, efficiency and effectiveness. Disclosures in the Statement of Revenue and Expenditure and forward‐looking information are generally regarded as the most important disclosures. The results of the study also indicate differences amongst stakeholders as to the level of importance that they place on certain items especially items related to internal policies and governance and financial position of the local authorities. The findings will be of significance to policy makers interested in improving the performance reporting of Malaysian public sector entities, particularly local authorities.     

Voluntary adoption of board risk committees and financial constraints risk

To improve risk management processes, policymakers around the world have encouraged firms to invest in improving risk oversight and governance practices, such as adoption of a board risk committee (BRC). This paper examines whether adoption of a BRC improves a firm's access to capital by reducing financial constraints risk. Using a sample of 28,265 observations from listed firms in the U.S. from 2005 to 2017, we find voluntary adoption of a BRC significantly reduces financial constraints risk. This finding is robust to alternative proxies of financial constraints risk, accounting for sample selection bias and controlling for unobserved firm-level heterogeneity. We also find that BRC characteristics including size, financial experts and female directors are negatively related to financial constraints risk. In addition, we document significant indirect effects of BRCs on financial constraints risk through reducing information asymmetry and agency costs. In summary, the findings of this paper indicate that voluntary adoption of a BRC is important for listed firms without an effective risk governance structure at the board level.     

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.     

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.     

How do policymakers and think tank stakeholders prioritize the risks of the nuclear fuel cycle? A semantic network analysis

In recent years, the importance of stakeholder involvement and of integrating diverse perspectives into risk management has gained increasing recognition. However, it remains a challenging task to identify all potentially relevant stakeholders and to reliably describe their deeply held beliefs regarding the risks associated with complex industrial systems. For example, the development of advanced nuclear fuel cycles presents such a case. Based on a review of policy-making literatures and a content analysis of congressional records, we identify federal agencies and nonprofit policy institutes (also known as ‘think tanks’) as key stakeholders that are representative of those actively involved in making high-level decisions on the US nuclear energy policy. Using a semantic network analysis approach, we visually delineate the thematic areas of each party’s perceptions concerning fuel cycle risks. The results show that although governmental and think tank stakeholders share common concerns in areas such as nuclear waste management, the economics of nuclear facilities, and proliferation, they tend to focus on distinct aspects of each area. Moreover, while governmental stakeholders are primarily concerned with the environmental and local impacts of nuclear fuel cycles, think tank stakeholders focus more on the relative advantages and disadvantages of nuclear energy compared to other alternative energy options. Implications for risk management and risk communication are discussed.     

Risk assessment for public–private partnership projects: using a fuzzy analytic hierarchical process method and expert opinion in China

Public–private partnerships (PPP) have been widely used in China to procure public facilities and services. Complicated problems in PPP projects in China arise because of a variety of risk factors. A proper risk assessment model is needed to identify risks and provide risk response strategies for future Chinese PPP projects. The fuzzy analytic hierarchy process (F-AHP) method provides the ability to solve complex risk assessment of PPP projects. Current risk assessment models are limited to PPP projects in specific countries and do not consider unique risks in China, especially political, economic, social, and legal risks. This paper designed a risk evaluation index system for PPP projects based on the Delphi expert investigation method, and then established an optimized risk evaluation model for PPP projects in China using the F-AHP method. The risks identified are confirmed by interviewing experts from Chinese local government departments, private enterprise, third-party intermediary consulting and regulatory agencies, and academic organizations. The results show that the risks that ranked among the top ten are closely related to China’s political and economic policies and relationships among stakeholders. It can be concluded that government authorities play a critical role in providing a favorable political, social, and economic environment and an effective institutional framework for PPP projects. Furthermore, it is also important to deal with relationships among stakeholders based on the public–private ‘win–win’ principle. This study provides risk response strategies, addressing key issues from eight aspects: an impeccable legal and regulatory framework; a central coordinating and regulating PPP authority; supportive governmental authorities; institutional capacity-building; favorable economic conditions and viability; community, partner, and moral accountability; clear division of responsibilities through contracts; and effective advisory management. These effective measures may be useful in reducing the adverse effects of risk for PPP projects in China.     

A multi-level and multi-actor approach to risk governance: a conceptual framework to support policy development for Ambrosia weed control

Invasive species such as Ambrosia (an annual weed) pose a biosecurity risk whose management depends on the knowledge, attitudes and practices of many stakeholders. It can therefore be considered a complex policy and risk governance problem. Complex policy problems are characterised by high uncertainty, multiple dimensions, interactions across different spatial and policy levels, and the involvement of a multitude of actors and organisations. This paper provides a conceptual framework for analysing the multi-level and multi-actor dimensions of Ambrosia management. Potential and existing public, private and public–private management strategies are identified to address the interests and needs of different actor groups across different levels. We conclude that policies that promote a mix of public and private Ambrosia management strategies may respond better to the needs and interests of different actor groups across different levels than a one-size-fits-all approach. However, multiple policy strategies need to be aligned in order to lead to synergies and spreading coherent messages to the public. Collaboration may enhance the likelihood of biosecurity management and risk governance of Ambrosia being adequately implemented and enforced.     

A theory of optimal expropriation, mergers and industry competition

We model a competitive industry where managers choose quantities and costs to maximize a combination of firm profits and benefits from expropriation. Expropriation is possible because of corporate governance ‘slack’ permitted by the government. We show that corporate governance slack induces managers to choose levels of output and costs that are higher than would otherwise be optimal. This, in turn, benefits consumers - the equilibrium price is lower - and other stakeholders such as suppliers and employees. Depending on the government’s social welfare objective, less-than-perfect investor protection can be optimal. We show why some mechanisms suggested by the literature as improving investor protection - legal change, cross-listing, domestic mergers - may not be effective. We provide a theoretical argument showing the efficacy of cross-border mergers. The stronger corporate governance of a foreign acquirer, imposed on the domestic target firm, benefits merging shareholders and those of competing unmerged domestic firms.