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The Public Perception of Risk

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The Public Perception of Risk

  1. 1. The Public Perception of Risk Framing Devices for Thinking about Risk MSc Environmental Technology Imperial College 14 October 2013 www.john-adams.co.uk John.Adams@UCL.ac.uk
  2. 2. The Public Perception of Risk Framing Devices for Thinking about Risk MSc Environmental Technology Imperial College 14 October 2013 www.john-adams.co.uk John.Adams@UCL.ac.uk
  3. 3. Framing Devices for Thinking about Perceptions of Risk
  4. 4. Different kinds of Risk Perceived through science Perceived directly Virtual risk
  5. 5. The Risk Thermostat Risk compensation Propensity to take risks Rewards Balancing behaviour Perception of risks Accidents
  6. 6. A typology of bias Fatalist Hierarchist Individualist Egalitarian
  7. 7. Different kinds of Risk e.g. cholera: need a microscope to see it and a scientific Perceived through training to science understand Perceived directly e.g. climbing a tree, riding a bike, driving, car Virtual risk Scientists don’t know or cannot agree: e.g. BSE/vCJD, global warming, low-level radiation, pesticide residues, HRT, mobile phones, passive smoking ….
  8. 8. Different kinds of Risk e.g. cholera: need a microscope to see it and a scientific Perceived through training to science understand Perceived directly e.g. climbing a tree, riding a bike, driving a car Virtual risk Scientists don’t know or cannot agree: e.g. BSE/vCJD, global warming, low-level radiation, pesticide residues, HRT, mobile phones, passive smoking ….
  9. 9. Managing Health & Safety: what works? and what doesn’t? Safety on the Edge Melbourne 27-28 June 2013 Perth 3-4 July Brisbane 8-9 July www.john-adams.co.uk john.adams@ucl.ac.uk
  10. 10. Different kinds of Risk e.g. cholera: need a microscope to see it and a scientific Perceived through training to science understand Perceived directly e.g. climbing a tree, riding a bike, driving a car Virtual risk Scientists don’t know or cannot agree: e.g. BSE/vCJD, global warming, low-level radiation, pesticide residues, HRT, mobile phones, passive smoking thalidomide ….
  11. 11. Different kinds of Risk e.g. cholera: need a microscope to see it and a Perceived scientific through training to science understand Perceived directly e.g. climbing a tree, riding a bike, driving, car Virtual risk Scientists don’t know or cannot agree: e.g. BSE/vCJD, global warming, low-level radiation, pesticide residues, HRT, mobile phones, passive smoking ….
  12. 12. Risk Management: it’s not rocket science It’s more complicated Framing devices for thinking about risk Grant's London Investment Conference February 24, 2011 The Dorchester London
  13. 13. Disclaimer …. Any decisions you make based on information from this presentation are your sole responsibility. Disclaimer These slides do not constitute an offer or a solicitation of an offer to buy a security… ... Outlooks or assumptions should not be construed to be indicative of the actual events which occur. Disclaimer The views expressed in this commentary are the personal views of xxx …. Investment concepts mentioned in this commentary may be unsuitable … Certain assumptions may have been made …. No representation is made that any indicated returns will be achieved. … This commentary does not constitute an offer to sell any security or the solicitation of an offer to purchase any security.
  14. 14. 10 Stocks To Last The Decade “A few major trends will likely shape the next ten years. Here's a buy-and-forget portfolio to capitalize on them.” Fortune August 14, 2000 “For help in finding the stocks best positioned to capitalize on these four trends, we sought out some of the top stock pickers in the country-- …. We also did our own due diligence by poring through financial statements, talking to companies, and giving their products a test run. The result: ten stocks that we think will be winners over the coming decade.”
  15. 15. •Genentech •Oracle •Charles Schwab •Univision •Morgan Stanley •Viacom •Broadcom •Nokia •Nortel •Enron By year-end 2002, the 10 stocks had declined on average 80 percent. http://www.richmondhk.com/news_mutual_funds.php
  16. 16. A successful risk manager Management of directly perceptible risks is • a balancing act • instinctive • intuitive • modified by culture
  17. 17. Propensity to take risks Rewards Balancing behaviour Perception of risks Accidents
  18. 18. Risk thermostat with perceptual filters Propensity to take risks Rewards Balancing behaviour Perception of risks Accidents
  19. 19. A typology of bias Fatalist Hierarchist Individualist Egalitarian
  20. 20. Fatalist Hierarchist Individualist Egalitarian
  21. 21. Prozac Fatalist Individualist Lithium Alcohol? Hierarchist Egalitarian Chlorpromazine
  22. 22. Bottom loop bias Propensity to take risks Rewards Reducing risks, protecting people Balancing behaviour Perception of risks Accidents
  23. 23. Top loop bias Moral Hazard …decisions on compensation and other actions taken and not taken, particularly at banks that rapidly lost a lot of Propensity to Rewards shareholder value, look self-serving and greedy in take risks hindsight. Balancing behaviour Perception of risks Accidents http://www.scribd.com/doc/14049013/Lloyd-Blankfein-Speech-to-the-Council-of-Institutional-Investors-April-7-2009
  24. 24. 3 fatalities per year
  25. 25. Running with the bulls in Pamplona 1 fatality every 7 years
  26. 26. Designing for high risk environments Reinventing the Hospital: Europe’s Challenge EuHPN 2013 Workshop: Budapest 7-9 October Budapest, 7 October www.john-adams.co.uk john.adams@ucl.ac.uk
  27. 27. http://www.edwardburtynsky.com/WORKS/Ships/Shipbreaking/Shipbreaking_04.jpg
  28. 28. CAUTION These plants are covered in sharp spikes that may puncture the skin if touched DO NOT HANDLE Seen in the entrance to the Health and Safety Laboratory, Buxton “[People should] focus on real risks – those that cause real harm and suffering – and stop concentrating effort on trivial risks and petty health and safety.” Bill Callaghan, Chair of the HSC (overseer of the Health and Safety Executive) - 22 August 2006
  29. 29. Drake Gilbert Saxton Davis Hakluyt Wright Hudson Baffin Halley Dampier Bruce Cook Ramsden Roy Mackenzie Rennell Vancouver Park Clapperton Barrow Lander Parry Colby Back Ross Biscoe Franklin Stuart Eyre Galton Everest Hooker Bates Burton Speke Murchison Livingstone Baker Kirk Godwin Austen Clarke Markham Yule Stanley Doughty Thomson Murray Curzon Scott Shackleton Keltie Gertrude Bell Hogarth
  30. 30. Drake Gilbert Saxton Davis Hakluyt Wright Hudson Baffin Halley Dampier Bruce Cook Ramsden Roy Mackenzie Rennell Vancouver Park Clapperton Barrow Lander Parry Colby Back Ross Biscoe Franklin Stuart Eyre Galton Everest Hooker Bates Burton Speke Murchison Livingstone Baker Kirk Godwin Austen Clarke Markham Yule Stanley Doughty Thomson Murray Curzon Scott Shackleton Keltie Gertrude Bell Hogarth
  31. 31. The death of Captain Cook
  32. 32. The risk thermostat Propensity to take risks Rewards Money, power, love, glory, food, sex, rushes of adrenaline, control ... Balancing behaviour Perception of risks Accidents Money, health, life, status, self-esteem, embarrassment, jail, loss of control ...
  33. 33. Pure – rock climbing Self controlled Risk Imposed Cycling Plane Train Nature Economy Mount Etna Benign Impersonal Diminished control No control Voluntary Applied – driving Mobile phone masts Profit Motivated GMOs Malign Acceptability of risk Murder Al Qaida Risk Amplification
  34. 34. www.acm.ab.ca/safety/images/ fault-tree.gif
  35. 35. foresight the present bad luck
  36. 36. hindsight foresight the present bad luck
  37. 37. hindsight foresight the present bad luck
  38. 38. hindsight foresight the present Culpable negligence bad luck
  39. 39. hindsight foresight < 1 : 10,000,000 =1:1 the present Culpable negligence bad luck
  40. 40. hindsight risk assessment the present Culpable negligence
  41. 41. No children No swings Rubberized matting barriers “The swings are packed away at night because kids might climb the fence and use them unsupervised and hurt themselves.”
  42. 42. The lorry driver and the cyclist Propensity to take risks Rewards Propensity to take risks Balancing behaviour Balancing behaviour Perception of risks Perception of risks Rewards Accidents Accidents
  43. 43. Propensity to take risks Rewards Propensity to take risks Balancing behaviour Rewards Balancing behaviour Perception of risks Perception of risks Lawyer on contingency fee Insurer Accidents Propensity to take risks Rewards Balancing behaviour Perception of risks Accidents Accidents
  44. 44. 69% of Americans believe in angels. 46% have their own guardian angel.
  45. 45. Walking/Cycling Initiatives Source: www.rbkc.gov.uk
  46. 46. Annual Rate Kensington High Street: Pedestrian Accidents Average decrease after removing pedestrian barriers = 60.5% 4 3 2 1 0 Edwardes Edwardes Earl's Court Phillimore Argyll Road Tube Derry Street Kensington Old Court Ken Palace Palace Square Square Road Gdns Station Church Place Gdns Avenue (west) (east) Street Before After
  47. 47. "This house believes that helmets should be mandatory for all cycling children" Debate College of Emergency Medicine Imperial College London 17 September 2009 Opposing: John.Adams@UCL.ac.uk www.john-adams.co.uk
  48. 48. Are the Dutch as mad as the English? The SENSE Research School for SocioEconomic and Natural Sciences of the Environment Amsterdam 12 May 2006 John.Adams@UCL.ac.uk www.geog.ucl.ac.uk/~jadams/publish.htm
  49. 49. http://hembrow.eu/cycling/photos.html
  50. 50. http://hembrow.blogspot.com/2008/08/everyone-cycles.html http://steco.nl/pages/consumer/index.php?taal=nl&page=Producten&cid=12&pid =20
  51. 51. there were 23% more vehicles coming within 1m of the bicycle when a helmet was being worn passing traffic gave significantly more leeway Walker, I. (2007). Drivers overtaking bicyclists: Objective data on the effects of riding position, helmet use, vehicle type and apparent gender. http://drianwalker.com/o Accident Analysis and Prevention, 39, 417-425.
  52. 52. 8000 2000 0 Togo Ethiopia Liberia Bangladesh Sierra Leone Pakistan Nepal Kenya Benin Afghanistan Zambia Senegal Madagascar Sudan Republic of the Congo Papua New Guinea Guinea-Bissau Nigeria Angola Peru India Ghana Indonesia South Africa Egypt United Arab Emirates Chile Brazil Russia Argentina Malaysia China United States of… Australia United Kingdom Japan Iceland Malta fatalities per 100,000 motor vehicles 16000 14000 2700 X 12000 10000 1200 X 6000 4000 1042 = 204 X 5.1 http://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate
  53. 53. How much can be attributed to: the work of engineers? the work of legislators? change in road user behaviour? Hungary 2010 (4 X) UK 2010
  54. 54. Safer vehicles? 40 People Burnt To Death Along Lagos-ibadan Expressway On Sunday 16th August August 16, 2010
  55. 55. Better roads? (a) Indices of fatalities and injuries in Ontario by month, 1970-79. The average of all Januaries (month1) is set equal to 100. (b) An index of road accident severity for Ontario by month, 1970-79.
  56. 56. Better laws? Legislation for road safety can be defined as “comprehensive” if the existing national and sub-national road safety laws include the following key laws: 1) a national speed limit law 2) a national drink-driving law 3) a national motorcycle helmet law 4) a national seat-belt law (front and rear seats) http://blogs.bmj.com/injury-prevention/2013/04/16/global-progress-towards-comprehensive-legislation-for-road-safety/
  57. 57. Seat belts UK 2010
  58. 58. 60000 lives saved over 25 years = 2400 per year
  59. 59. • “By January 2008, 25 years after the introduction of the law, front seat belts had saved over 60,000 lives in Great Britain.” • “By January 2008, 25 years after the introduction of the law requiring car drivers and front seat passengers to wear seat belts (if fitted), it was estimated that front seat belts had saved over 60,000 lives in Great Britain.” • “Seat belt laws increase seat belt use, and so reduce death and injury. 25 years after the first law requiring seat be to be used, it was estimated that front seat belts had saved over 60,000 lives in Great Britain.”
  60. 60. http://john-adams.co.uk/2009/09/08/yet-more-myth-inflation/
  61. 61. 2400
  62. 62. http://www.john-adams.co.uk/2009/09/16/seat-belts-again-2/
  63. 63. http://john-adams.co.uk/2009/11/05/seat-belts-another-look-at-the-data/
  64. 64. www.snowdoniamontaineering.com
  65. 65. Managing transport risks: what works? PACTS House of Commons 5 June 2-13 www.john-adams.co.uk John.Adams@UCL.ac.uk http://john-adams.co.uk/wp-content/uploads/2010/12/Management-of-the-risks-of-transport2.pdf
  66. 66. “Change has to take root in people’s minds before it can be legislated.” Michael Sandel
  67. 67. The main headline in the Daily Mail on 9 May reads “£90 fine if you’re texting at the wheel: Minister warns of safety crackdown” Highway Loss Data Institute News Release - September 28, 2010 “Texting bans don't reduce crashes; effects are slight crash increases” http://www.iihs.org/news/rss/pr092810.html
  68. 68. Risk management: where are the keys?

Editor's Notes

  • I have been fascinated by problems of risk and risk management for more than three decades.Over the years, being an academic, I have discussed risk with psychologists and sociologists and anthropologists and engineers and philosophers. I have also discussed their risk management problems with the Health and Safety Executive, and doctors and National Health Service Administrators, with foresters, highway engineers and project managers and forensic psychiatrists. And also with the Navy, the police and MI6 – MI6 was the closest I got to problems of financial risk management - they paid me in used bank notes, and said if I decided to declare it to the Inland Revenue I should say it came from the Foreign Office.Until fairly recently I have shied away from financial risk. Not having a PhD in mathematics, I found your quants, the people you sometimes call “rocket scientists”, intimidating. Also I wasn’t very good at speaking acronym – the language of your trade. But it has become apparent since the breaking of the financial crisis through which we are now living that many fluent speakers of acronym also didn’t understand what the rocket scientists were up to.So, emboldened by this discovery, I accepted Jim Grant’s invitation to explore with you territory that you might have in common with MI6 and the psychiatrists – and to see whether you might have risk framing devices in common.I started my preparation by looking at some presentations to previous Grant’s conferences. I was intrigued by the number that ended with a disclaimer.
  • UBS Trading FloorWith 1,400 seats, 2,000 computers and 5,000 monitors, the UBS trading floor is noted by the Guinness Book of World Records as the largest single trading floor in the world. The floor is home to traders, sales traders, quants, technology support, executives and others among its various groups, which include fixed income, commodities, currencies, money markets, derivatives, equities, international trading, algorithmic trading, direct market access, program trading and more. UBS manages more than 1,689,000 transactions a day. The firm deals in almost every asset class and trades across almost every region. The photo gallery below will take you through the mammoth trading floor, offering both big-picture photos to illustrate the size of the floor as well as close-ups of some of the trading desks to offer more detail on the technology UBS uses. A special thank you to UBS for allowing us to feature their floor. trading places:The Worlds Largest Trading Floor at UBS in Stamford Connecticut &quot;The largest securities trading floor in the world. The 103,000 square-foot operation has 40 foot arched ceiling freeing it of columns or walls. The size of three football fields, it is home to 1,400 traders and staff who handle about $1 trillion worth of transactions a day. It is roughly 227 feet wide by 410 feet long. UBS officials have boasted that a 747 jet could turn around in it&quot;With 1,400 seats, 2,000 computers and 5,000 monitors, the 103,000 square-foot facility is noted by the Guinness Book of World Records as the largest single trading floor in the world. The floor is home to traders, sales traders, quants, technology support, executives and others among its various groups, which include fixed income, commodities, currencies, money markets, derivatives, equities, international trading, algorithmic trading, direct market access, program trading and more. UBS manages more than 1,689,000 transactions a day. The firm deals in almost every asset class and trades across almost every region.UBS Investment Bank&apos;s offices in Stamford, Connecticut. At roughly the size of two American football fields it is the largest trading floor in the world. Following an expansion in 2002, the trading floor covers 103,000-square-foot (9,600 m2) with 40-foot (12 m) arched ceilings. Over US$1 trillion in assets are traded here every trading day. In June 2011, it was announced that UBS was considering moving its North American headquarters back to New York City, and that the bank was looking at office space in Midtown and in the rebuilt World Trade Center[12]
  • Broadcom, enron and Nortel all bankrupt. The head of broadcom – bernieebbers –I in jail, and the head or Enron, Ken lay would be if he hadn’t died.
  • Running since 1911
  • Running since 1910
  • These pictures of ship breaking in Bangladesh provide dramatic reminders that different health and safety standards operate at different times and in different parts of the world.http://images.google.co.uk/imgres?imgurl=http://arkiblog.net/blog/wp-content/uploads/2006/08/12.jpg&amp;imgrefurl=http://arkiblog.net/blog/2006/08/12/largest-structures-destroyed/&amp;h=290&amp;w=436&amp;sz=87&amp;hl=en&amp;start=16&amp;um=1&amp;tbnid=F567Sf9JSr0YIM:&amp;tbnh=84&amp;tbnw=126&amp;prev=/images%3Fq%3Dship%2Bbreaking%2Bbangladesh%26um%3D1%26hl%3Den%26client%3Dfirefox-a%26rls%3Dorg.mozilla:en-US:official%26sa%3DN
  • A floating iron mine lands on the beach and the third world miners set to without helmets, safety shoes, gloves or goggles apparently working under a non-existent safety regime.It would be interesting to know how the accident rates for this industry in the 21st century compare with those of high steel workers in New York in 1932 or those of roughnecks in the oil industry at the beginning of he 20th century. Sadly such comparators don’t exist.
  • But one might speculate that this man coming off work is a pedestrian who does not own a car, and that the owner of the ship in the background owns a car and drives it with the same concern for the welfare of pedestrians as is manifest in his concern for his workers.
  • UBS Trading FloorWith 1,400 seats, 2,000 computers and 5,000 monitors, the UBS trading floor is noted by the Guinness Book of World Records as the largest single trading floor in the world. The floor is home to traders, sales traders, quants, technology support, executives and others among its various groups, which include fixed income, commodities, currencies, money markets, derivatives, equities, international trading, algorithmic trading, direct market access, program trading and more. UBS manages more than 1,689,000 transactions a day. The firm deals in almost every asset class and trades across almost every region. The photo gallery below will take you through the mammoth trading floor, offering both big-picture photos to illustrate the size of the floor as well as close-ups of some of the trading desks to offer more detail on the technology UBS uses. A special thank you to UBS for allowing us to feature their floor. trading places:The Worlds Largest Trading Floor at UBS in Stamford Connecticut &quot;The largest securities trading floor in the world. The 103,000 square-foot operation has 40 foot arched ceiling freeing it of columns or walls. The size of three football fields, it is home to 1,400 traders and staff who handle about $1 trillion worth of transactions a day. It is roughly 227 feet wide by 410 feet long. UBS officials have boasted that a 747 jet could turn around in it&quot;With 1,400 seats, 2,000 computers and 5,000 monitors, the 103,000 square-foot facility is noted by the Guinness Book of World Records as the largest single trading floor in the world. The floor is home to traders, sales traders, quants, technology support, executives and others among its various groups, which include fixed income, commodities, currencies, money markets, derivatives, equities, international trading, algorithmic trading, direct market access, program trading and more. UBS manages more than 1,689,000 transactions a day. The firm deals in almost every asset class and trades across almost every region.UBS Investment Bank&apos;s offices in Stamford, Connecticut. At roughly the size of two American football fields it is the largest trading floor in the world. Following an expansion in 2002, the trading floor covers 103,000-square-foot (9,600 m2) with 40-foot (12 m) arched ceilings. Over US$1 trillion in assets are traded here every trading day. In June 2011, it was announced that UBS was considering moving its North American headquarters back to New York City, and that the bank was looking at office space in Midtown and in the rebuilt World Trade Center[12]
  • Moldova 108
  • Hungary 2010 345 veh/1000UK 2010 519veh/1000UK 1987 388 veh/1000
  • Nigeria has them all
  • How
  • 1932 6.5:1
  • California, washington, Minnesota, Louisiana

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