'Risk' is a four letter word
The European Court of Justice ruled last week that that gender as a pricing for insurance contracts should be prohibited. With one fell swoop, the ECJ has devastated established assumptions in the insurance industry about how risk is defined and measured. Although of not much conciliation to both insurers and the insured who are bracing themselves for “seismic change” in the industry, the decision is illustrative of the dynamism of risk concepts.
The ECJ case is an example of how law is capable of changing ideas about risk, however there are also ways the media, pressure groups and important events play roles in reshaping social attitudes towards risk.
The media often helps to amplify risks about which very little is known and powerful news stories can help foment changes in individual behaviours as well in institutions. Reporting on the H1N1 outbreak in Singapore for example, led to a number of contextually legitimate, but otherwise apparently irrational behaviours. Families horded dry goods and water in preparation for the apocalypse, and entry to many public and private buildings required a temperature reading in addition to the usual protocol. Business people known to have travelled to destinations where infection was detected were frequently quarantined to the confines of their home until they were deemed ‘safe’ to return to work by their bosses. The media in this case facilitated the view that individual cases of H1N1 should be treated as imminent and intolerable threats.
Pressure groups can strategically introduce ideas and tools to change company behaviours. Sustainability reporting, which was introduced by groups who were actively concerned about the social and environmental impact of economic activity in the early 2000s is an example of how civil society organizations have been instrumental in shifting normative debates on social and environmental politics to one that is articulated in terms extra-financial risks to investors and corporations. There is now a range of reporting frameworks and analytical tools that are available at the disposal of activist groups so that they are in a better position to make the ‘business case’ for improved corporate social and environmental practices. The Global Reporting Initiative, the UN Global Compact, and the Carbon Disclosure Project are among the vast number of reporting frameworks that have materialized in the past decade which have helped to reshape highly politicized issues in terms of risk.
High impact events on the other hand, may force people to rethink their previous approaches towards risk. There have been a number of events in the recent past which have led to organizational changes in risk calculations. The financial crisis for instance has dramatically changed how retail banks determine mortgages; buyers with low deposits in the United Kingdom which were hitherto ‘unrisky’ are now serious liabilities in the eyes of lenders. The unforgettable eruption of volcano Eyjafjallajokull in Iceland which led to a standstill of air traffic in Europe for a week last April, in contrast has led for a call to relax zero tolerance approaches towards regulating ash afflicted airspace. Organizations may also shift their attention between different types of risks. Since the Deepwater Horizon spill in the Gulf of Mexico, BP may be reorienting its successful personal health and safety strategy to one that emphasizes protection against more large scale disasters.
It is in short not the ECJ ruling but the nature of risk itself which has produced and will continue to produce “seismic change”.
