I read the risk management column by Beaumont Vance, "A Safety Truism Spiked," in the April 15, 2007, issue of Risk & Insurance®. I thank Vance for raising the issue of human behavior on safety. However, I draw different conclusions. I think the controversial theory of risk compensation is a reality.
Risk compensation suggests that people will react to environmental changes with riskier personal behaviors resulting from the perception that the environment has been made safer. However, using only aggregate data, as did John Adams in his important work, ignores the results of individual risk perceptions. For example, habituation reduces the perception of risk. Note how people are often very concerned about minute amounts of toxic chemicals while at the same time smoking tobacco, a known carcinogen.
The problem is that the level of preferred risk-taking by others may not be socially acceptable or in the best interest of the organization. I am reminded of the ironworker who insisted that he needed no protection from a 50-foot level because, he said, "If I fall, I'll catch the steel." Rather than debate the physics of the acceleration of gravity, he was told the risk management program of the host employer required fall protection. This ironworker's risk preference was unacceptable legally and potentially fatal to the financial interest of his employer.
Seat belts, child safety seats and other equipment do not, in and of themselves, prevent losses, but reduce the toll from hazards as true loss-control measures. If it is true that eliminating physical hazard controls will increase safety, then we should all remove our seatbelts, place our babies unsecured in the back of pickup trucks and prohibit police officers from using bulletproof vests. Or we should increase product safety by energizing covers with high voltage.
Insurance itself or any risk transfer could be considered a moral hazard in that the purchase of insurance causes a person to be less careful than if no insurance was purchased. Risk compensation postulates the same principle with respect to safe behaviors. The moral hazard is shown by the thought: "Why bother with preventing losses or acting carefully--I have plenty of insurance!"
Every day, every person makes risk management decisions. The goal should be to increase the quality of the decisions based on subjective risk perceptions rather than reducing engineered hazard controls. I disagree that iron spikes are a better safety device than hard hats. I will continue to wear my hard hat when exposed to overhead hazards and wear my seat belt when driving.
DAVE K. SMITH, CSP, ARM, REA
Dave Smith & Company Inc.
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August 1, 2007
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