4We start with a short video clip about Global risk
5Lecture 6 Political and social approaches to risk: the plan for today First , the Game (Monty Hall’s Three Door Problem) which I showed you last week.Those of you who chose not to switch doors are not the first to think that way. Many famous people have done so.The crucial point to note is that the host opens a door behind which he knows that there is not the car.There are obviously initially three possibilities - or cases, each of which has probability 1/3: case 1: The car is behind door 1 case 2: The car is behind door 2 case 3: The car is behind door 3
6Lecture 6 Political and social approaches to risk: the plan for today There are obviously initially three possibilities – or cases, each of which has probability 1/3: case 1. The car is behind door 1 case 2. The car is behind door 2 case 3. The car is behind door 3Suppose you have chosen door 1.In case 1 the host can open either of the other doors. If you switch you do not win. In case 2 the host has to open door 3. If you switch you win. In case 3 the host has to open door 2. If you switch you win.So in two cases if you switch you win; in one case if you switch you lose. So if you switch you increase your probability of winning from 1/3 to 2/3. You could also look at
7Lecture 6: the revision lecture Second, the revision lecture: it is scheduled for next week in order to help you to clarify the concepts and theories that we have analyzed in the first part of the course and it will help to prepare you for the mid-time exam.One important thing about that: for preparing this exam, you need use only the information contained in the slides.You do not need to memorize all the details, but understanding the common thread of this course – the interdisciplinary approach to risk, from history to economics and finance.You need to look carefully at the conclusion of each lecture.
8Lecture 6: the revision lecture I give you some examples:When I talked about risk approaches in the various social sciences, the important thing to remember here is that each social science has its own method of analysis.When we talked about probabilities, we emphasized the distinction between objective and subjective characteristics of probabilitiesWhen we discussed about rationality, we spoke about axioms and about consistency between axioms.About the economic parts, like the Independence Axiom, you will discuss that with Professor Hey when he comes back for his part of the course (lectures 8, 9, 10, 11 and 12).When I wrote this lecture, in my mind emerged one question: could the analysis of contemporary society give you new ways of understanding and interpreting the new social situations related to various types of risk?Sociologists and political analysts renew their analysis tools (concepts, theories and paradigms) with they practice their discipline.The social and political world is changing profoundly. Therefore, concepts conceived by our predecessors need to be redesigned or abandoned or replaced by other concepts, better adapted to the understanding of contemporary life. The social and political experience of risk is a part of this mutation. The outline of this evolution is the following:The critique of modernity in which the social and political experience of risk would be entering in a period of subjectivity or reflexivity (more autonomous individuals and more risky situations, relations, and so on).Time of uncertainty and cultural vacuum that we were and we are still going through and make our societies more complex.The Actor, The Individual, makes his return and we are back in the era of hyper-individualism and narcissism.This individual, in a world of communication, information and continual interactions and transactions, needs to find a role.The same individual has in an identity crisis and is in constant search of recognition inside of the world of the risk society.
9Lecture 6 Political and social approaches to risk: the consideration of risk This lecture looks at the way that sociologists and political scientists consider risk perception and risk assessment as a key influence on our society.Risk today is marked by three major characteristics: risks are manufactured, risks are uncertain and risks are global.Also, we view risk in terms of regulative policies in the context of the “world society”.We focus on the social implications of these policies on environment, health, employment and finance because the social and political implications are strongly interconnected.For the sociological aspect of risk I will point out the major contribution of Ulrich Beck.After the publication of his book The Risk Society, the concept of risk entered into the fields of decision making theory and risk management.For the political aspect of risk, I will focus on risk perception and risk assessment done by the political sector . Also I will talk about the relationship between political risk and business environment.Beck's main contribution was to build risk systematically into a theory of modern society and its dilemmas.Risk is seen as a defining feature of society itself, forming the dark side of industrial successes, technical and scientific progress, and economic growth. It has stimulated changes in social relations, family structure, political and cultural organization, and even the self.Unlike the threats of early industrialization, the risks of "late modernity" (nuclear, chemical, genetic, ecological, etc.) are generated by techno-economic decisions and considerations of utility. The novel aspect of contemporary risk society is that people's decisions as a civilization lead to problems and dangers that radically contradict the established language of control and conventional techniques of calculation. Current risks are not socially, spatially, or temporally demarcatedHe later extended the concept of risk to global financial crises and transnational terrorist networks
10Politics influences how markets operate. Lecture 6 Political and social approaches to risk: the effect of politicsPolitics influences how markets operate.Often the most unpredictable economic events are political in origin, the result of flagging political willingness or the incapacity to maintain a consistent and predictable economic environment.Today, four trends dominate the global investment environment: the interconnection of financial markets, increased reliance on off shoring, deteriorating national influence and energy dependence.The definition of political riskThe exercise of political power causes political risks in international business, and this power can affect a firm’s value.I emphasise the difference between firm and country specific political and how they have impact on firm’s performance.Firm-specific political risks are risks directed at a particular company and are, by nature, discriminatory.For instance, the risk that a government will nullify its contract with a given firm or that a terrorist group will target the firm's physical operations are firm-specific.By contrast, country-specific political risks are not directed at a firm, but are countrywide, and may affect firm performance. Examples include a government's decision to forbid currency transfers or the outbreak of a civil war within the host country.
11Lecture 6 Political and social approaches to risk: Risk of politics Anticipating the risks associated with each of these trends requires asking the right questions about how institutions’ and leaders’ preferences determine policy choices and, in turn, economic outcomes.Politics can make many economic decisions look foolish in hindsight.This is especially true in countries where autocratic leaders seem to personally steer policy and where quantitative data is often adulterated.The exercise of political power is the root cause of political risks in international business.How political power is exercised determines whether government action threatens a firm's value.For example, a dramatic political event may pose little risk to a multinational enterprise, while subtle policy changes can greatly impact a firm's performance.
12Lecture 6 Political and social approaches to risk: Anticipating risks The Committee Of Sponsoring Organizations (COSO) of the Treadway Commission is a joint initiative of the five private sector organizations and is dedicated to providing thought leadership through the development of frameworks and guidance on Enterprise Risk Management (ERM), internal control and fraud deterrence.ERM framework encourages companies to measure risks and make trade-offs based on their risk appetites/attitudes.For investors exploring emerging markets, the potential for rapid political shifts makes calculating those trade-offs a moving target.Global and country-level politics can act independently or interactively to alter the economic environment.There are some tools used to anticipate the risks: Enterprise Risk management is one the most well-known.Enterprise risk management (ERM) enables management to deal with uncertainty and associated risk and opportunity, improving the capacity to build value.Value is maximized when management sets strategy and objectives to strike an optimal balance between growth and return goals and related risks.ERM encompassess• Aligning risk appetite and strategy – Management considers the entity’s risk appetite in evaluating strategic alternatives, setting related objectives, and developing mechanisms to manage related risks.Improving risk response decisions – Enterprise risk management provides the rigor to identify and select among alternative risk responses – risk avoidance, reduction, sharing and acceptance.• Reducing operational surprises and losses – Entities gain enhanced capability to identify potential events and establish responses, reducing surprises and associated costs or losses.• Identifying and managing multiple and cross-enterprise risks – Every enterprise faces a myriad of risks affecting different parts of the organization, and ERMfacilitates effective response to the interrelated impacts, and integrated responses to multiple risks• Seizing opportunities – By considering a full range of potential events, management is positioned to identify and proactively realize opportunities.• Improving deployment of capital – Obtaining robust risk information allows management to effectively assess overall capital needs and enhance capital allocation.There is an index. The World Risk Index provides definitions to some of the terms widely used today in hazard and risk researchThe World Risk Index does mention the importance of long-term environmental changes that have the potential to create hazards, such as climate change.The World Risk Index highlights the example of Chile illustrating how its preparation and resources for mitigating hazards like earthquakes have been strong, including the fact that it has less government corruption than many developed countries in addressing disasters, including France, Belgium and the US.
13Lecture 6 Political and social approaches to risk: Risk of politics Conducting a political risk-analysis can turn uncertainty into calculable risk.Why?Businesses are often affected by political decisions in the countries where they operate, at home and abroad; all companies (should) factor the political environment into planning scenarios.You can find the Political Risk 2012 map here.Firms may be able to reduce both the likelihood and impact of firm-specific risks by incorporating strong arbitration language into a contract or by enhancing on-site security to protect against terrorist attacks. By contrast, firms usually have little control over the impact of country-level political risks on their operations. The only sure way to avoid country-level political risks is to stop operating in the country in question.Several tools are created to manage political risks.These tools help minimise exposure to political risks.Political Risk 2012 is the new tool.The map measures the political risks of 167 countries and territories.Significant risks are showed for exchange transfer: sovereign non-payment, political interference, supply chain disruption, legal and regulatory risk, political violence.Emerging markets continue to be attractive for businesses seeking alternative areas for growth. However, in less mature economies assets, contracts and loans can be adversely affected by government actions. Supply chains are becoming increasingly more vulnerable. Aon’s Political Risks Map noted an almost 50% increase in supply chain disruption due to government embargoes, interference and strikes, riots, and civil commotion.
14Lecture 6 Political and social approaches to risk: Risk of politics Political stability and regime’s market orientation are the conditions necessary for responding to shocks.“Decisiveness”, Credibility” or “Predictability”: the trade-off.Decisiveness represents the capacity to change policy rapidly and shift the political environment.How can the regime optimise both decisiveness and political stability?How can the regime avoid variation in political risk?Government risks and instability risks.Government risks are those that arise from the actions of a governmental authority, whether that authority is used legally or not.A legitimately enacted tax rise or an extortion ring that is allowed to operate and is led by a local police chief may both be considered government risks. Indeed, many government risks, particularly those that are firm-specific, contain an ambiguous mixture of legal and illegal elements.Instability risks, on the other hand, arise from political power struggles.These conflicts could be between members of a government fighting over succession, or mass riots in response to deteriorating social conditions.
15Lecture 6 Political and social approaches to risk: the government of risk and globalisation Globalization can be understood as a network of processes that tend to "denationalise“ those things which had been established as "national" in the nineteenth and twentieth centuries: policies, markets, capital, culture, through new institutions, new instruments of government and new subjectivities.Also, the understanding of the process of globalization should focus on relationship between openness and risk.The new governance of risks in the actual global context requires new methods of calculating and assessing risks for avoiding country risks, crises and crashes.In international business environment avoiding political risks is the crucial condition for the firms .Political decisions and political changes can significantly influence the expected results of the firms.Although there are a number of ways to protect your firm against political risks, proper planning and due diligence are most important.Too many businesses begin operations in an unfamiliar country without having taken the time and devoted the resources necessary to ensure a better-than-average chance of success. Developing solid relations with relevant governing authorities is the preferred approach, but this may not always be possible or even desirable.Also the globalisation has an positive impact on international business. In recent years, evidence has suggested that globalisation is a key driver in helping emerging economies to apply knowledge, regulations, and standards acquired from their Western counterparts in order to become more mature, reliable, and hence stable.This generates more confidence in these markets, which is expressed in lower risk.
16Lecture 6 Political and social approaches to risk: regulation Changes in the regulatory environment, local attitudes to corporate governance, reaction to international competition, labour laws, and withholding and other taxes, to name but a few, may all be influenced by shifts in the political landscape.High quality corporate governance helps to underpin long-term company performance.An example: the UK has some of the highest standards of corporate governance in the world, which makes the UK market attractive to new investment.Another important component of regulatory environment is a creating a political-risk-friendly investment environment is to establish a good relationship with your workforce.Too often, foreign businesses are perceived as having uncaring managers who do not appreciate their workers.This can have dire consequences.One of the best ways to protect your assets is to generate a loyal workforce.Management can be replaced much more easily than can a workforce, and it is becoming more common for host governments to remove corporate managers and replace them with other experienced managers that will operate in accordance with government objectives.
17Lecture 6 Political and social approaches to risk: regulation Governments and politicians are crucial in determining the environment in which enterprises operate...... and in regulating markets.They can change the risk in any market by changing the rules and changing and enforcing the law.With international trade increasingly important, politicians also have a crucial role in working on international agreements which alter the risk in global marketsFor the firms is crucial to understanding the potential benefits of using tools instruments, to achieve better regulation of risks.Political Risk Insurance (PRI) is the new instrument to manage political risks, like expropriation, currency inconvertibility, or political violence.For the firms it’s necessary to pursue coverage before a problem occurs; after it happens, coverage will be difficult to obtain.
18How is possible to achieve the goals of sustainable globalisation? Lecture 6 Political and social approaches to risk: political uncertainty and globalisationFor social and political actors it is necessary to take into account the consequences of uncertainty: uncertainty generates new social risks in terms of inequalities, poverty, natural catastrophes.Globalisation generates not only negative aspects but also opportunities or positive aspects.We observe in the global marketplace a constant push and pull (a dynamic tension) between government, business and civil society.How is possible to achieve the goals of sustainable globalisation?The risk management process, should conduct a baseline assessment of the political risk events affecting business strategy and objectives at the international levels.The macro-political environment, from the policies and attitudes of political leaders toward business—such as privatization, foreign ownership, and corruption - to regulations, taxation structures, and other factors that can influence both the competitive environment and the ability to do business in a country.2. Economic policy, which influences foreign exchange rates, inflation, and other aspects of economic growth.3. Social risks, such as shifts in demographics or social behaviours as well as societal conflicts or tensions.4. Security issues, such as government preparedness for catastrophic events caused by either natural or human events—from hurricanes and earthquakes to cross-border conflicts, terrorist attacks, bio-security threats, or environmental disasters.
19Lecture 6 Political and social approaches to risk: politics and policy Risk is an implicit part of political decision making.Politics and policy: machinery for increasing risk.How do practicing political actors turn randomness into order and uncertainty into political risk?When you talk about the link between risks and politics you necessarily speak in terms of collective decision, regulation, or policies.When you talk about the emergency of social risks you speak in terms of political decisions and institutions.The globalization process modifies the social order in terms of social relationships.The poorest people who are the most vulnerable to risk and more likely to suffer in the face of economic shocks.Globalization has led to higher income variability, which together with marginalization and social exclusion leaves major groups like women ,ethnic minorities, make backward people highly vulnerable.Also, higher mobility of factors has reduced government ability to raise revenue, pursue independent economic policies , and to have national policies to help the poor when they need them the most.Attacking global poverty request new social policies in terms of social protection against vulnerability as a dimension of the new poverty.
20Lecture 6 Political approaches to risk: governmentality and risk Governing the future: governmentality and Risk.Sociologists like Foucault, Giddens and Beck argued on a new style of governance in modernity.This new style is characterized by the “ensemble formed by the institutions, procedures, analyses and reflections, the calculations and tactics that allow the exercises of power”.An important outcome at the political level is the transition in the role of the State throughout the developing modern period.Foucault traces the way governments have attempted to control populations throughout history; power has exerted itself in many different forms.He sees that the modern state uses many different tools beyond the threat of death to control populations.The state works through seemingly benevolent institutions in order to gain control of a population that self-disciplines itself. For example, the seemingly infallible area of psychiatry has been used to repress sexuality.The area of medicine was used as a tool to oppress a population. This is one example of the state using "objective, benevolent" institutions to discipline populations. Using these methods, the state operates not through a simple, top-down power structure, but rather through a multiplicity of institutions that attempt to use each and every individual as a part of state control. The population becomes the police.
21Lecture 6 Political and social approaches to risk: Foucault Governmentality is a double process: social and political.On the one hand, governments try to control their citizens by a whole catalogue of measures that include the means whereby populations can be accurately counted, assessed, judged, disciplined and categorized.On the other hand, policy aims at instilling appropriate values to achieve particular outcomes. This is summed up in the compound notion of governmentality. From Wikipedia:Governmentality is a concept first developed by the French philosopher Michel Foucault in the later years of his life, roughly between 1977 and his death in 1984, particularly in his lectures at the Collège de France during this time.The concept has been elaborated further from an "Anglo-Neo Foucauldian" perspective in the social sciences, especially by authors such as Peter Miller, Nikolas Rose, and Mitchell Dean. Governmentality can be understood as:the way governments try to produce the citizen best suited to fulfill those governments' policies; the organized practices (mentalities, rationalities, and techniques) through which subjects are governedGovernmentality may also be understood as:the "art of government"[;the "how" of governing (that is, the calculated means of directing how we behave and act); "governmental rationality“; "a 'guideline' for the analysis that Michel Foucault offers by way of historical reconstructions embracing a period starting from Ancient Greece right through to modern neo-liberalism“; "The Techniques and strategies by which a society is rendered governable"Also according to Foucault risk is the way to control people.In conclusion, governmental mentality is now the governing of mentalities -- the shaping of the minds of a population through seemingly transparent institutions such as schools, hospitals, prisons, etc.The ways people govern others have changed throughout history from the very first nation-state and simple rule through brute force to the complex governments we have today. Governance has become governmentality.
22Lecture 6 Political and social approaches to risk: Governability via insurance The logic of public or national insurance is one means through which both aspects can be linked.It includes the basis for a more precise estimate of the needs and ability to pay of particular groups, and the justification for different treatment of different risk categories.During the late nineteenth and early twentieth centuries, governments were able to accommodate to political pressures by extending and nationalizing.The existing friendly society (private insurance companies) effectively turn risk-sharing schemes into social insurance.The logic of insurance is based on different treatment of different risk categories.
23Lecture 6 Political and social approaches to risk: Welfare states This became the foundation of European Welfare States.The current pressures on welfare spending have led to retrenchment of these systems.In some contexts, this has meant a retreat from welfare inclusiveness to precise actuarial calculation (calculations based on probabilities) with the denial of benefit to those who have imperfect contribution records.Things have changed. In an ideal typical post- industrial society, economic growth rates are lower and more uncertain. Stable employment in the manufacturing sector is no longer available on a mass scale, with implications for semi- and un-skilled workers and for the class structure and the political interests associated with it.Histories of the welfare state usually begin around The period does mark a particular point in the history of welfare in Britain.Lloyd George did not therefore invent the welfare state. As we have seen it was already very much in existence. But he did, along with a young Winston Churchill, refine the concept and drive it forward into the arms of the state - surprising for a Liberal politician.The 1906 landslide victory of the Liberal Government was not based on a programme of welfare reform. Indeed, it did its best not to discuss it. But reform came. In order to protect the friendly societies a non-contributory, means-tested old age pension was introduced for those of 70 or more. At the time average life expectancy for men was 48 years!National health and a more limited coverage, unemployment insurance, were introduced by the 1911 Act. Contribution and benefit levels were laid down by Parliament, but friendly societies and mutually-owned bodies operated the health scheme.The insurance principle was advanced to finance this new welfare because the Liberal Government was anxious not to raise income tax and alienate the bedrock of its support.A number of countries have enacted radical measures of social policy retrenchment that have restricted the generosity and tightened the eligibility criteria of social policy benefits.In other countries welfare state reforms have been more limited in scope.Social policy has attempted to strengthen the actuarial soundness of social insurance and put existing social insurance programs on firmer financial basis.
24Lecture 6 Political and social approaches to risk: insurance In others, it has led to the privatisation of areas of social insurance and the targeting of state help more accurately on clearly defined groups.Social insurance issues and institutions for managing them have played an important role in modern politics.Why?Because politics should take into account the social preferences of different groups about social policies.
25Lecture 6 Political and social approaches to risk: the passage from Welfare society to the reflexive societyBeck and Giddens anticipated the transformation of the nature of Welfare State from insurance to risk.Beck and Giddens maintain that the process of modernisation has spawned a unique collection of humanly produced risks “...generated by the individualisation of society...”The concept that individuals can no longer depend on continuity and security, creating a need to embrace change and uncertainty by constantly recreating their lives based on past experiences (reflexivity), is the basis of Giddens’ work.The concept that individuals can no longer depend on continuity and security, creating a need to embrace change and uncertainty by constantly recreating their lives based on past experiences (reflexivity), is the basis of Giddens’ work.
26Lecture 6 Political and social approaches to risk: reflexive modernity “...newly formed social relationships and social networks now have to be individually chosen; social ties, too, are becoming reflexive, so that they have to be established, maintained, and constantly renewed by individuals” (Beck, p.97).Reflexive choices according to Beck analysis are related with institutional dynamism on the one hand and self –referentiality and critical reflection on the other.According to Beck modernisation has become "reflexive.“Constant reflexive choices having to be made are inevitable: “...whether they know it or not, that they start thinking more and more in terms of risk”.Characteristics of this change are postulated as increased reflexivity and ‘individualisation’ in the processes of identity formation, resulting in individuals experiencing greater choice and determination in the construction of the ‘project of self’. Contemporary individuals are construed as being more able to build and fashion identities through self-monitoring and choice.”
27Lecture 6 Political and social approaches to risk: Beck’s “the Risk society” The term Risk Society is a new term by German sociologist Ulrich Beck introduced in his book Risk Society: Toward a New Modernity, first published in German in 1986 and translated into English in 1992.In this book, Beck point out the distinction between two societies: the industrial society and the risk society through the idea of modernity.Modernity is very much coextensive with industrial society and the new reflexive modernity with the risk society.Beck emphasised the difference between modernity and reflexive modernity.Modernity is very much coextensive with industrial society and the new reflexive modernity with the risk society.Risk and ambivalence are key concepts in the sociology of reflexive modernity.It is argued that tensions inherent in global market capitalism, particularly risks associated with industrial development have resulted in the breakdown of administrative, professional and expert categories and authority, an increasing lay scepticism and a new grassroots political activism.Ironically, it is technological development, not its failure, which is said to have spawned the radical processes of self-confrontation at the heart of reflexive modernity (Beck 1997).
29Lecture 6 Political and social approaches to risk: Beck fundamental concepts Reflexive society is the risk society based on the distribution of risks and uncertainty about the future.Inside this society the old social classes are replaced by the communities around dangers .Reflexivity is the process of the late modernity in which the motor of social change is the agency , the individualization or creation of autonomous identities ( self monitoring of life).Reflexive Modernity is dominate by the agent primacySelf is agent reflects on itselfStructural reflexivity: agent reflects on social structures (rules and resources)Networks of flexibility, communications and technologies, Knowledge basedClient–centered–co-production
30Reflexive modernization Lecture 6 Political and social approaches to risk: Beck fundamental conceptsReflexive modernizationA term which refers to the way in which advanced modernity ‘becomes its own theme’, in the sense that ‘questions of the development and employment of technologies (in the realms of nature, society and the personality) are being eclipsed by questions of the political and economic “management” of the risks of actually or potentially utilized technologies-discovering, administering, acknowledging, avoiding or concealing such hazards with respect to specially defined horizons of relevance’ (see his Risk Society: Towards a New Modernity, 1992.
31The Church as shaping center of meaning and purpose in life. Lecture 6 Political and social approaches to risk: Beck fundamental conceptsIn contrast with reflexive modernity, traditional societies were dominated by the influence of traditional institutions and structures.The Church as shaping center of meaning and purpose in life.Extended family and village community had a place in terms of role and identity.Early modernity (17th century): the structures and institutions of these traditional societies were challenged in the name of individual freedom and autonomy.Churches became less critical, extended family replaced by the nuclear family. Nation state – in the place of village came the corporate, bureaucratic state, which impersonally, took responsibility for the ordering of people’s lives.
32Lecture 6 Political and social approaches to risk: Beck For Beck, the concept of risk society is a theoretical frame.The frame comprises three inter-related components: risk, individualisation, and reflexive modernisation.Also, in Beck’s theory of risk society the keystone element is the role of science.Beck sees a dynamic that is driven by an increase in risks and in the ability of science to detect increasingly minute risks, leading to a fundamental re-ordering of social positions in society, and to a transformation in the cultural meanings of risk.Separating the present era from its past are new species of risk that, unlike in the past, are no longer circumscribed spatially or temporarily.The role of science is crucial to detect and prevent various risks because the effects and impacts of technologies and innovation are global.The plethora of lifestyle choices offered by modern science and technology is said to open up new ethical spaces by fermenting doubts about the natural order and scientific progress.
33Lecture 6 Political and social approaches to risk: Beck’s Risk society Beck’s “Risk Society” is not a society in which we live more dangerously, but a society where the issue of industrial and technological risks have become firmly established in the political field.In Industrial Society, the central political issue was the distribution of goods and services, the distribution of wealth.In Beck’s Risk Society, it is the existence of risks and their distribution that dominate the society.Before the Risk Society institutions dominated the social order.In Reflexive Modernity (which corresponds to the Risk Society), individuals themselves become the motor of social change.Agent primacy signified: self as agent reflects on itself, structural reflexivity (agent reflects on social structures, rules and resources., networks of flexibility, communication/ technologies the new structure, knowledge based, client-centred-coproduction.In the risk society, collective identities, once crystallized around the nation, progress or class affiliation are now dislocated and renegotiated around "communities of danger”.It is the breaking between past social order, in which the traditional institutions assured the social contract, and the reflexive social order, in which the dominant elements are risk and uncertainty about the future.
34Lecture 6 Political and social approaches to risk: The transformation of Risk Society Beck argued that the risks of nuclear radiation, many modern technologies, the greater mobility of diseases, global warming, invasive species and many other challenges expose virtually all people around the globe to common risks.The risk society, then, is now World Risk Society, to cite the title of one of Beck’s many follow-on books on the topic.The concept of the "world risk society" (Beck 1999) draws attention precisely to the limited controllability of globalized and artificially produced risks.World Risk Society, published in 1999.The concept represents the building of a global perspective on to hisoriginal theory of "risk society" as described in his 1986 book, Risk Society: Towards a New Modernity.The notion of a "world risk society" can be applied inrelation to a number of different circumstances in the world today, notably the war on terrorism, oil spills, BSE (mad cow disease), and the Chernobyl disaster.Beck argues that "threats create society, and global threats create global society.”According to Beck's concept of world risk society, chemical, radioactive, and biological risks are commonly distributed andorganized by political means .These risks know no political or geographical boundaries. Global risks are part of the world risk society. Global risks open up a complex moral and political space of responsibility in which the others are present and absent, near and far, and in which actions are neither good nor evil, only more or less risky..The meanings of proximity, reciprocity, dignity, justice and trust are transformed within this horizon of expectation of global risks.
35Natural Risks: the dangers came from such as floods and epidemics. Lecture 6 Political and social approaches to risk: Beck’s typology of riskRisks, as opposed to older dangers, are consequences which relate to the threatening force of modernisation and to its globalisation of doubt.Is necessary to distinguish between what Beck consider to be natural risks and what they have come to define as manufactured risks.Natural Risks: the dangers came from such as floods and epidemics.Manufactured risks: are created by industrialisation, pollution and other urban poverty-related conditions.In this slide you have the key distinctions between risk categories as defined by Beck.
36Lecture 6 Political and social approaches to risk: Beck’s typology of risk He analyses contemporary society at the structural and action levels, blaming the increase in manufactured risk on science.“Science has become the protector of a global contamination of people and nature. In that respect, it is no exaggeration to say that in the way they deal with risks in many areas, the sciences have squandered until further notice their historic reputation for rationality” (Beck, 1992, p.70).He talks about the place of science in society.The changing nature of society's relation to production and distribution is related to the environmental impact as a totalizing, globalizing economy based on scientific and technical knowledge becomes more central to social organization and social conflict.He argues that science has changed from an activity in the service of truth to an activity without truth.Among the attributes of Risk Society is the one he just mentioned: science has become so powerful that it can neither predict nor control its effects. It generates risks too vast to calculate. In the era of nuclear fission, genetic engineering and a changing climate, society itself has become a scientific laboratory.
37Lecture 6 Political and social approaches to risk: Beck’s typology of risk Social risks, which defined the problems and solutions of industrial society are still here.A number of changes in population, family structure, labor markets generated new social risks (social exclusion, income inequalities, the increase in the absolute and relative numbers of elderly people has implication for social care).New social risks are defined as the risks that people now face in the course of their lives as a result of the economic and social changes associated with the transition to a post-industrial society.They are combined with new risks arising from science and technology, which can be summarized in one phrase: the risk of the disaster resulting from the global contamination of man and nature.The concept of the World Risk Society is often associated with major disasters and accidents. And indeed, safety from the forces of nature can no longer be taken for granted even by the population of industrialised countries, as an increasing number of floods, hurricanes and winter storms over the last two decades demonstrates.Similarly, industrial accidents, such as Chernobyl, Sandoz and Bhopal, cause severe and lasting damages to human health and the environmentIn view of accelerating technological change and increased competitive pressures, as well as climate change, it is reasonable to expect that such disasters will continue to undermine the safety of the population and commentators will keep on referring to the idea of a ‘world risk society’.His "risk society" cannot properly be understood according to the probability model.In introducing the notions of "unintended consequences and unawareness" into his theory of reflexive modernity instead of emphasizing the "knowledge," as Giddens and Lash do, Beck recognizes that there are areas of unknowability, contingency, and ignorance. For this reason his theoretical approach lends itself to multiple interpretations that lie between the concepts of risk and uncertainty.
38Contemporary risks are invisible and often hard to measure. Lecture 6 Political and social approaches to risk: Beck and Contemporary risksContemporary risks are invisible and often hard to measure.Contemporary risks involve social inequalities. As Beck (1992, p 35) put it “wealth accumulates at the top, risks at the bottom.”Contemporary risks are not just limited to national boundaries.Is globalisation risky?Or opportunity?Global battles over the adverse consequences of every-day technologies such as mobile phones, controversies over the safety of food, tensions in the relations between medical doctors and patients, and public outrage after failures in social care underline the fundamental character of the transformation of risk society in world risk society.While ‘risk society’ arguments often emphasise the trans-boundary and ubiquitous nature of risk, risk is in fact often distributed across the population in a way that it affects different parts of the world or only particular industries, at one time.The decision based on risk or uncertainty is not neutral in its political consequences.Risk is associated with prevention, whereas uncertainty is associated with precaution (Godard et al. 2002). Risk may lead to a process of risk-mitigating negotiation and agreement, whereas uncertainty may lead to risk-avoiding prudence. The possibility of rejecting certain techno-economic decisions and actions has provoked a lively ongoing debate about the advisability of the "precautionary principle" at a time of rapid technological change.
39Lecture 6 Political and social approaches to risk: Conclusions Politics has a dramatic effect on the way that risk impacts on society and the world.Politicians can reduce risk by various schemes of social insurance and by manipulating the population. They can also increase it.Politicians can make a huge difference on the risks faced by companies.Changes in society (either induced by political actions or by technological change) are changing the way that risk impacts on members of society.In present modern society it is less true that institutions affect the impact of risk on its members.In a paradoxical way it is individual members of society who can change the way that risk impacts on them and their fellow members.Risks are different now than they were before, partly as a result of political, but also social, changes. Risk is becoming globalised.