This article presents highlights from five international seminars about risk in Oslo 2009-2010, sponsored by the Research Council of Norway and organized by ROFF, the BI Centre for Risk and Insurance Research. Four sections in this article briefly highlight how many of the speakers addressed key themes, and provide web links for readers seeking more detail. The themes are the changing risk environment; the challenges of risk communication: risk governance and leadership: and the undervalued importance of the insurance industry as risk experts (hopefully pointing to future interaction with the industry). In a postscript, readers are invited to join our informal network for insurance and risk research, and to attend two 2011 seminars, about micro-insurance and about legal risk management in an insurance context, respectively.
We are a society increasingly obsessed with risk, and especially with certain large-scale societal risks. Much of contemporary life is organized around risk. People think and talk about risk more than ever before, and we have new tools and techniques for dealing with risk, and new professional “risk managers”. We are preoccupied in particular with some global risks, from swine flu virus to climate change to catastrophic earthquakes to the financial crisis to volcanic ash paralyzing our air travel. Indeed, some key sociological thinkers like professors Ulrich Beck and Anthony Giddens say we have now become a “risk society”. Instead of leaving ourselves to fate, we desire more and more to control the future. Risk has become a key contemporary focus in government, business, the media and wider culture, and in our universities, especially over the last 25 years or so. And there are many experts on risk with different disciplinary backgrounds: statistics, engineering, sociology, psychology, economics, law and political science, among others. However, their knowledge is fragmented rather than complementary; rather than listening to one another, the experts are often disconnected from each other.
The Ministry of Justice and the Research Council of Norway have taken an initiative to improve our understanding of risk, especially large size societal risks like climate change and the swine flu. Aiming to connect experts and expertise across different fields, they launched the SAMRISK research program, inviting research and dialogue about how to increase societal safety and security (see http://www.forskningsradet.no/samrisk). The program aims at “… increasing the knowledge about threats, dangers and vulnerability, about how unwanted events can be prevented and crisis management be strengthened, whilst respecting basic human rights and privacy” (ibid.). Funded by SAMRISK, experts in risk in academia, government and the insurance industry from a range of countries, made their way to Oslo for five seminars on risk held between April 2009 and April 2010.[1] The seminar meetings started with keynote lectures by international or national experts (20 in total over the five seminars) on various aspects of risk.[2] One primary goal was building a sustainable interdisciplinary network of risk researchers and practitioners, in and beyond Norway. Surprisingly perhaps, the SAMRISK initiative had little input from the insurance industry, given the expertise of insurers in risk management. An important secondary goal of the seminars thus was to invite the risk expertise of insurers to the table.
To give some highlights, we will touch on four of the key themes that emerged in the discussion:[3] the changing risk environment, risk communication and the public, responsible and democratic risk governance, and last, but not least, the neglected importance of the insurance industry.
1: The changing risk environment
The prominent German thinker Ulrich Beck has argued that in the last three decades, we are seeing a whole new kind of risk, a new form of human-made large scale or global scale risk such as global warming, or nuclear or environmental catastrophe, or very large scale acts of terrorism like 9/11. Professor Beck argues that, since the 1970s, we have been living in a new kind of world, which he calls second modernity. A central thing that defines this new world is these new human-made risks, manufactured risks, global risks that cross borders. According to Beck, these new risks present a fundamental challenge for existing institutions and for science and technology, for our whole way of thinking.
Where do new emerging risks leave the insurance industry? Sociologist Aaron Doyle from ROFF and Carleton University in Ottawa, Canada spoke on the question of whether the new risks emerging in the late 20th and early 21st century, like nuclear accidents, were so large and unpredictable as to be unmanageable by the insurance industry or simply ”uninsurable”, as Beck has argued (http://www2.carleton.ca/socanth/faculty-listing/doyle-aaron/). Such uninsurability defines a new type of risk, distinct from those that have come before. Doyle used the example of earthquakes to argue on the other hand that there have always been some catastrophic risks that were very difficult to calculate and manage, but the industry still sold insurance for them. Doyle compared the insurance industry’s role in recent disasters like Hurricane Katrina with the insurance situation after the San Francisco earthquake of 1906, and argued there were many similarities in San Francisco 100 years ago, which also featured massive loss of life and property due to the limits of modern technologies such as buildings that could not withstand quakes, and also featured the failure of 12 insurance companies.
Martin Johanntoberens, a sociologist on staff at Munich Reinsurance tasked with monitoring emerging risks, spoke about his duties and about Munich Re’s “Emerging Risk Think Tank” on new types of risk for which there is no historical data. He discussed Munich Re’s assessment of and response to new risks, using the examples of electromagnetic fields, genetic engineering and nanotechnology. He demonstrated how the insurance industry responds proactively to emerging risks, even in the absence of historical data. He stated that those within the industry disagree with Beck’s assessment that such emerging risks are “uninsurable”.
Another recurring theme at the seminars concerning new risks was how climate change may be dramatically altering the risk environment. For example, Linmei Nei from the SINTEF Department of Building and Infrastructure spoke about some of the challenges in providing flood and water insurance in Norway due to the uncertainty linked to climate change.
Another part of the changing risk environment is the availability of new types of data on existing risks. Jyri Liukko, a doctoral student from the Department of Social Policy at the University of Helsinki, spoke of his research on the possible use of predictive genetic information in insurance, exploring the difficult ethical issues that are raised concerning the possibility of discriminating on the basis of genetic testing in terms of the availability and price of insurance. As more and more information becomes available about people’s predicted mortality and morbidity, what criteria are fair and just to use in rating risks? Should we distinguish between people who are at risk as a result of their own risk-taking choices, and those at risk due to a genetic inheritance that is not their responsibility? Historically, insurance has often operated to socialize risks, especially of the latter kind, and thus produces a unique form of community or social solidarity in the face of risk.
2. Risk communication and the public
Another theme that came up repeatedly throughout the seminars was the importance of good risk communication, both with the public and between stakeholders. The public also increasingly distrusts risk experts. It is clear we need better communication between experts and the public about risks. One point that kept coming up during the seminars was that simply conveying to the public what the “objective” nature of the risk is to the public was not enough.
Matthias Holenstein and Martina Brunnthaler from the Risk Dialogue Foundation in Switzerland, see http://www.risiko-dialog.ch/Overview%20in%20English , spoke about their work with creating public dialogue over controversial risk issues. They stressed the importance of experts not just talking but of listening and taking seriously the arguments and opinions, fears and hopes of the citizens.
During the risk communication seminar in November 2009, swine flu was still a hot topic. Gunnhild Wøien, the communications head of the Norwegian Institute of Public Health (see www.fhi.no ) discussed the practical challenges when communicating with the public about the health risks related to the swine flu pandemic (and related to vaccination against it). John Berg’s paper dealt with the same topic, pointing out that six out of ten Norwegians would not take swine flu vaccine, despite official recommendations. It is perhaps unrealistic to expect the public to be swayed purely by the ”objective” calculations of experts, as research demonstrates that other factors are also important, for example, the familiarity of the risk, the extent to which the subject has voluntary control over assuming the risk, and the ”dread factor” or perceived horror of the risk, as well as social variations such as the gender and educational level of the subject[4]. Also in terms of risk communication, it is important to keep in mind the distinction between “blind trust”, and trust based on responsible information sharing. Magne Aarset, from Høgskolen i Ålesund and ROFF, began the third seminar with a talk about the interesting example of how different insurers share and pass on risks in marine insurance. His research provided indications of over-reliance on “blind trust” and resulting costly information deficits in situations when risks are passed on by one lead marine insurer to other companies.
Britt-Marie Drottz-Sjöberg, NTNU Trondheim, http://www.svt.ntnu.no/psy/Brittds/ overviewed large scale on-going EU projects researching risk communication and risk governance, such as one where five countries are working together to develop better public participation and decision making processes regarding nuclear waste management.
3. Risk, governance and leadership
Risk communication is closely tied with accountability and responsibility in the governance of risk. If the risk environment is shifting, so is the regulatory environment. Bridget Hutter from the London School of Economics spoke about changes in the regulation of risk[5]. She highlighted a tendency towards regulation of risks ”beyond the state” by bodies such as industry and trade organizations, consultancy businesses and by the companies in question themselves, as well as non-governmental organizations, charities, trusts and advocacy groups. In this vein, Chris Groves from Cardiff University discussed the limited participation, especially of smaller companies, in voluntary self-regulation in Britain in the rapidly developing sector of nanotechnology, featuring the controlling of matter on an atomic or molecular scale, despite a large amount of uncertainty and public concern about the emerging technology.
All of the workshops discussed the management of risk, but the fifth and final one in April 2010, focused on leadership in dealing with risk in crisis situations (such as the Ålesund landslide event and a number of comparable crises which tested preparedness) . Crises were defined as major unpredictable events that threaten harm to an organization or the general public, characterized by the element of surprise and short decision and response times. Another reference was, in two papers, how the US Federal Emergency Management Agency (FEMA) responded to Hurricane Katrina, hampered by massive bureaucracy. Aaron Doyle spoke about how sociological research shows how disasters bring forth large amounts of spontaneous helping behaviour by people in affected communities. Doyle stressed that it is important that authorities use such volunteers as a resource and work closely with them, taking advantage of the fact local community volunteers are already in place, are spontaneous and flexible and have local knowledge and social networks.
4. The importance of the insurance industry
A final theme that emerged through the seminars was the neglected or undervalued importance of the insurance industry in terms of their risk expertise. The third network meeting, held on Aug. 23-24, 2009, focused on the key role of insurance and reinsurance in managing societal risks in the shifting contemporary risk environment. Evan Mills wrote in the journal Science that if insurance was a country, it would have the third biggest economy in the world (http://www.sciencemag.org/cgi/content/full/309/5737/1040). Unlike other key institutions, the insurance industry and reinsurance in particular have rarely been studied by social scientists, apart from several new key works. The researchers present agreed that insurance and reinsurance also remain largely invisible to the general public.
To understand how risk and risk management evolves through the years and centuries, it is very helpful to study the insurance industry. Luis Lobo-Guerrero, from the University of Keele in England, traced the rise and history of insurance through various crisis periods, looking at how new forms of insurance emerged in relation to societal changes in the Renaissance, in the 18th century and now in the 21st century, in each case adapting to and reinforcing new values as well as new ways of thinking about risk. For example, he discussed the recent development of so-called “catastrophe bonds” where an insurer sells a bond that has a high rate of interest but if a particular catastrophe happens the investor loses everything and the insurance company does not have to pay the bond back. The investor gambles, for example, that there will not be a hurricane over a certain magnitude in Florida during a specified time period - an innovative way of providing insurance coverage for large-scale catastrophes.
The seminar on insurance was particularly successful: the participants were very enthusiastic about connecting with each other, and about bridging not only across countries but across the academic-industry divide. Those present were very excited to build and strengthen a network of insurance researchers in academia and in the insurance industry in Europe and North America.
CONCLUSION: MORE AT RISK OR JUST MORE RISK CONSCIOUS?
In opening the first seminar, Jens Zinn of the University of Melbourne stated that although research and communication about risk had increased over the last 100 years, it is very much contested whether life is any riskier than 100 years ago, as we are certainly safer by some measures. Even so, Zinn said, an analysis of the New York Times over the last 150 years shows a very dramatic increase in how much risk has been discussed. As the five seminars showed, research on risk has also increased massively. One conclusion was clear: we may not be more at risk, but we are definitely more risk conscious.
POSTSCRIPT: LOOKING AHEAD
Since our network-building project has been extended, under the title Risk, Insurance, Security and Responsibility, there will be further activities in the future. There will be a special issue of the Journal of Business Ethics, forthcoming in 2011/2012, with the title Insurance, Ethics and Corporate Social Responsibility, a pilot study about Risk Perception among Insurance Customers, and two more seminars in a similar format to the ones reported above: one in April 2011 about Microinsurance and another one in the spring or summer 2011 about Legal Risk Management In An Insurance Context. If you are interested in participating in these seminars or in joining our insurance and risk research network or would like more information, please send an email to jb_prosjekt@bi.no.
[1] The seminars were organised by the Centre for Risk and Insurance Research (ROFF, see www.bi.no/roff ) at the Norwegian School of Management BI (see www.bi.edu, www.bi.no), with Professor Johannes Brinkmann functioning as the project manage, see http://home.bi.no/fgl92025/. ROFF was established in 2008 with seed money from the Norwegian Insurance Academy Foundation, in order to advance the academic grounding of insurance education, see for a link in Norwegian http://www.bi.no/forsikring. ROFF aims to become a meeting place between theory and practice concerning insurance and risk, focusing not only on research but also on research-based teaching and on leadership development. Professors Brinkmann, Magne Aarset and Tore Bråthen founded the centre, while Ottawa-based Assoc. Prof. Aaron Doyle holds an adjunct position at ROFF 2008-2011 (see for further links www.bi.no/roff). Another key partner for the seminar series was Rune Glomseth, who is a Police Superintendent and Assistant Professor at the Norwegian Police University College in Oslo, see http://www.phs.no/no/Forskning/Forskere/Rune-Glomseth/.,
[2] The five seminar topics were: Interdisciplinary perspectives on societal risk and risk management (1), Societal risk in a legal perspective (2),Societal risk in an insurance and re‐insurance perspective (3), Societal risk, risk and crisis dialogue (4) and finally Societal risk: Responsible and competent leadership in crisis situations (5). For a more or less complete collection of presentation slides see www.bi.no/roff, under the heading of presentations at past SAMRISK seminars.
[3] Seminar 2 about legal perspectives was arranged jointly with another SAMRISK project, Justice in the risk society. An additional seminar 2 topic was legal risk management. Seminar responsibility was shared with Ragnhild Hennum, Heidi M Lomell and Tobias Mahler (all of the University of Oslo Law school, see http://www.jus.uio.no/ior/personer/vit/rhennum/index.html, http://www.jus.uio.no/smr/personer/vit/heidilo/index.html, http://folk.uio.no/tobiasm/. Mainly for space reasons, this article doesn’t summarise seminar 2. For further information see keynote manuscripts and powerpoint slides on the ROFF-website: http://www.bi.no/InstitutterFiles/JB_Three_keynotes_ms.pdf and http://www.bi.no/InstitutterFiles/JB_All_powerpoint_slides.pdf In addition, see perhaps the following state of the art overview about societal risk in legal research: “Rettsvitenskapelig forskning om samfunnssikkerhet og risiko. En kunnskapsoversikt”, available online here VedleggKunnskapsoversikt rettsvitenskap.
[4] Cf also Jens Zinn, now University of Melbourne, http://www.ssps.unimelb.edu.au/about/staff/profiles/zinn, who in his opening presentation at the first seminar in april 2009 reviewed the history of risk psychology, discussing how ”objective” assessments of risk often differ from public assessments. For example, although nuclear power was understood by experts to be a safer way to provide more energy, it was very difficult to convince the public of this.
[5] She has the Chair in Risk Regulation at the LSE and is Director of the CARR Centre for Analysis of Risk and Regulation (http://www.lse.ac.uk/collections/CARR/aboutUs/staff/hutter.htm).