Risk and Regulatory Policy

Improving the Governance of Risk

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We expect governments to protect citizens from the adverse consequences of hazardous events. At the same time it is not possible or necessarily in the best interest of citizens for all risks to be removed. A risk-based approach to the design and implementation of regulation can help to ensure that regulatory approaches are efficient, effective and account for risk/risk tradeoffs across policy objectives. Risk-based approaches to the design of regulation and compliance strategies can improve the welfare of citizens by providing better protection, more efficient government services and reduced costs for business. Across the OECD there is great potential to improve the operation of risk policy as few governments have taken steps to develop a coherent risk governance policy for managing regulation.  

This publication presents recent OECD research and analysis on risk and regulatory policy.  The chapters discuss core challenges today. They offer measures for developing, or improving, coherent risk governance policies. Topics include: challenges in designing regulatory policy frameworks to manage risks; different cultural and legal dimensions of risk regulatory concepts across OECD; analytical models and principles for decision making in uncertain situations; key elements of risk regulation and governance institutions; the use of management-based regulation to help firms make risk-related behavioural changes; an analysis of the risk-based frameworks of regulators in five OECD countries (Australia, Ireland, Netherlands, Portugal, United Kingdom) and across four sectors: environment, food safety, financial markets and health and safety; and the elements for designing formal guidelines for risk prioritisation, assessment, management and communication.



Why Governments Need Guidelines for Risk Assessment and Management

Regulation can be a key tool to help governments manage risks. The financial crisis has reinforced concern that governments have not done enough to integrate risk management into the design and management of regulations and the functions of regulatory bodies. Formal guidelines for risk prioritisation, assessment, management, and communication may help governments cope with this regulatory governance gap. Themes that should be addressed in such guidelines include optimal risk taking, processes for preparing formal risk assessment reports, the analytic treatment of scientific uncertainty about risk, ranking risks and risk-reduction opportunities, precaution and the value of information, ancillary risks and benefits, transparency of governmental procedures, cross-department co-ordination, public/stakeholder participation and capacity building. The governments of Canada, the USA and the UK as well as the European Commission have already moved in this direction with formal policy statements on risk.


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