Chapter 2 - Risk & Society Flashcards
As a society are we more or less anxious about risk?
We are more anxious about it than every before. Risks we face now are global risks exposure virtually everyone to the same thing
What are 2 main factors which have changed the way society perceives risk?
- Many modern risks are global rather than local e.g. nuclear radiation & global warming
- Speed of modern communication means risks are transmitted so much faster, so we are all aware of more risks and potential consequences
How have we moved from a culture of risk acceptance to risk prevention?
In the past society has accepted major uncertainties e,g, disease, death but now seen as failure of risk prevention. We believe if we have created the problem, we should be able to solve it e.g. pollution, road accidents. We also prepare for disaster more, in the attempt to reduce the impact e.g. earthquakes and flooding, more thought = more risk averse
Why is ESG important?
Important for investors, regulators, businesses employees and consumers e.g. investors prefer companies with strong ESG as they have fewer liabilities, so it is easier to acquire capital as well as a strong correlation with ESG score and reputation
How do ESG scorecards typically work?
- Data Collection: evaluate environmental, social and governmental metrics
- Data analysis – comparing data between industry peers, regulatory requirements
- Risk assessment – for investors, stakeholders & rating agencies
What are the general loss from large scale natural disasters?
While there can be loss of life and damage to infrastructure & property, main bulk of high losses are resulting from economic growth, urbanisation, rising populations and inflation driving up the cost of claims
What man-made disasters? Provide some examples
Man made disasters are when humans have influenced factors which lie behind apparently natural catastophes e.g. environment degradation, climate change, harmful technological developments
What do most reports on major losses focus on?
Lost lives and insurance claims losses
During natural disasters, why can insurance claims totals not be accurate on the damage occurred?
Often, especially with property, there may be inadequate cover – or no insurance at all – so will not be included in the overall loss calculations
What is the influence of globalisation on risks?
= Interconnectivity – the erosion of national barriers results in growing interconnectivity of business, people and places. Therefore, if a disaster strikes one part of a supply chain, it can have large and unexpected impacts elsewhere
What is a corporate crises?
When large businesses rapidly decline due to poor management (arrogance/complacency), often declaring for bankruptcy there are significant impact on local economies and workers, suppliers & customers
What is corporate governance & how does it arise?
Comes from learning about past corporate crises and providing new laws and regulations to monitor how large businesses are managed. Governments have increased levels of corporate governance and standards, especially after the 2008 financial crises
What have the trends been relating to health and safety?
Mocked by society but reduced workplace injury, long-term illness and death e.g. hearing protection, asbestos handling, safety helmets etc.
What is the government’s stance on health and safety now?
= sensible risk management: not about totally risk-free society, is about balancing benefits and risks, with a focus on reducing real risks which can result in serious consequences
Explain what is meant by a ‘compensation culture’
Is a name used to suggest that, when accidents and loss occur, we tend to look for somewhere to blame and then using legal proceeds against for compensation. Can often be prompted by lawyers on a no win no feee basis
