Risk Benefit Analysis

Ethical Implications

ⁿ        When is someone entitled to impose a risk on another in view of a supposed benefit to others?

ⁿ        Consider the worst case scenarios of persons exposed to maximum risks while they are reaping only minimum benefits. Are their rights violated?

ⁿ        Are they provided safer alternatives?

ⁿ        Engineers should keep in mind that risks to known persons are perceived differently from statistical risks

ⁿ        Engineers may have no control over grievance redressal.

Conceptual difficulties in Risk-Benefit Analysis

Both risks and benefits lie in future

ⁿ         Heavy discounting of future because the very low present values of cost/benefits do not give a true picture of future sufferings.

ⁿ        Both have related uncertainties but difficult to arrive at expected values

ⁿ        What if benefits accrue to one party and risks to another?

ⁿ        Can we express risks & benefits in a common set of units?

ⁿ        e.g. Risks can be expressed in one set of units (deaths on the highway) and benefits in another (speed of travel)?

Many projects, which are highly beneficial to the public, have to be safe also.

Hence these projects can be justified using RISK-BENEFIT analysis. In these studies, one should find out

i)  What are the risks involved?

ii)  What are the benefits that would accrue?

iii)  When would benefits be derived and when risks have to be faced?

iv)  Who are the ones to be benefited and who are the ones subjected to risk-are they

the same set of people or different.

The issue here is not, say, cost-effective design but it is only cost of risk taking Vs benefit analysis. Engineers should first recommend the project feasibility based on risk-benefit analysis and once it is justified, then they may get into cost-effectiveness without increasing the risk visualized.

In all this, engineers should ask themselves this ethical question: „Under what conditions, is someone in society entitled to impose a risk on someone else on behalf of a supposed benefit to others.‟

1.    Personal and Public Risks

Difficulties in assessing Personal Risks

·      Individuals are ready to assume voluntary risks than involuntary risks.

   The difficulty here is generally in assessing personal risks which are involuntary.

·      The problem of quantification of risk raises innumerable problems.

·      For example, how to assign a rupee value to one‟s life. There is no over the counter trade in lives.

·      Even for a sale, it has to be clear under what conditions the sale is to take place.

·      If one buys a kg of rice it matters whether it is just one additional purchase one makes regularly or it is the first rice purchase after quite sometime.

·      Even when compensations are made to people exposed to involuntary risk, the basis on which it is made or even the intensity of risk could be different for different people.

·      As of now, the one suggestion could be to employ an open procedure, overseen by trained arbiters, in each case, where risk to individuals is to be studied and remedied.

Public Risk and Public Acceptance

ⁿ        Risks and benefits to public are more easily determined than to individuals

ⁿ        National Highway Traffic Safety Administration (NHTSA)- proposed a value for life based on:

ⁿ        loss of future income

ⁿ        other costs associated with the accident

ⁿ        estimate of quantifiable losses in social welfare resulting from a fatality

ⁿ        NOT a proper basis for determining the optimal expenditure allocated to saving lives