Defining risk

Risk is the focal topic in the management of many activities and technologies. For that management to be successful, an explicit and accepted definition of the term risk is essential. Creation of that definition is a political act, expressing the definers' values regarding the relative importance of different possible adverse consequences for a particular decision. Those values, and with them the definition of risk, can change with changes in the decisionmaker, the technologies considered, or the decision problem. After a review of the sources of controversy in defining risk, a general framework is developed, showing how these value issues can be systematically addressed. As an example, the approach is applied to characterizing the risks of six competing energy technologies, the relative riskeness of which depends upon the particular definition used.     

On economic values in policy analysis

Analyses of public policy are rooted in the economic theory of the private sector. How relevant is this approach to the public sector? Specifically, where the organization is generally viewed as a controlled variable it often exhibits the characteristics of an independent variable working to constrain the feasible solution space. An illustration of this phenomenon is discussed, using a state rehabilitation agency as the case in point. Conclusions of an analysis based mainly on maximizing the economic value of return on investment conflicted with the agency professional values of individualized client service. This external/internal value conflict led to the apparent inability of the agency to implement the study conclusions in the near term. The substance of this conflict is seen as the main problem facing many public administrators. Recognition of economic values as but one element of public agency analysis is suggested as an approach superior to sole concentration on maximization of the return on public investment. By taking a broader view, the analyst may be able to encourage more rapid implementation of his recommendations.