Reader Comment 11-06-10 Value of Life

An anonymous reader posted an unusual comment to my response to another reader comment last week on the adequacy of emergency response plans. It was unusual in that there was no actual commentary, just a link to a journal article, "Valuing the Risk of Death from Terrorist Attacks" (registration required), and quotes the abstract for that article.

Cost of Terror Attack

The article deals with the concept of ‘value per statistical life’, a mechanism for evaluating the value of small risk reductions. The general premise of the article is that this commonly used mechanism may under value the perceived risk from a terrorist attack The abstract from the article notes that may be due to the perception of a terror attack “as more dreaded and ambiguous, and less controllable and voluntary, than the workplace risks underlying many VSL estimates”.

Of course that is the whole purpose of a terror attack, to create fear and dread in the general populous. A successful attack does this by upsetting the general calculus of risk perception. It destroys the generally held perception that risk is controllable; it puts control of risk in the hands of unknown parties.

Now, what does this fairly obvious idea (one of the jobs of academia is to examine obvious ideas to verify their underlying truth) have to do with emergency response planning? The obvious answer is that the perceived increase in the expense of the risk justifies higher expenditures to prevent or reduce that risk.

Cost of Prevention

Now this type calculus is probably a good idea for governments and public agencies. For businesses, however, there is a different measure that must generally be applied to spending decisions; how does this affect profits? While many commentators castigate business for being concerned with profits; that is the whole reason that a business exists. If a business doesn’t make a profit, it goes out of business. The people that worked for the business loose jobs and the owners loose money.

Now in a regulated economy society says that profits are fine, but there are certain societal goals that must be achieved at the same time. But governments must remember that the imposition of these societal goals on top of the business goal does not change the basic reason for the existence of businesses, making a profit. If the cost of achieving societal goals is too high, the business will cease to exist.

The activist counter to that is, of course, that the cost of a successful attack will also drive the business out of business. The problem that as of today the actual risk on a statistical basis of a terrorist attack (successful or otherwise) on any business in the United States is vanishingly small. If we ignore eco-terrorist attacks, there have been no attacks on US businesses (other than airlines) since 9-11. The number of business-years (# of businesses in US x # of years since 9-11) is so large that it is hard to justify any counter-terrorism expenditure for a given business.

Finally, the security experts are sure to point out that once there is an actual indication of a pending attack on a specific business it is just too late to put realistic security measures or risk mitigation measures into place. Besides, having real and recognizable security measures in place makes it less likely that a terror planner will select the facility to attack.

Balancing Risk and Cost

So we have a two part problem. We don’t want terrorists to attack a business (say a high-risk chemical facility) because the consequences would be so high. We don’t want to impose such a high security/mitigation burden on the facility that it would drive the facility out of business. Weighing that balance is a difficult task.

It requires both a discussion in society about what level of risk is acceptable and a discussion with businesses about what cost is too high. Organizations like Greenpeace are good at driving the former, while the Chamber of Commerce and individual companies are good at expressing the latter. But both groups need to participate in both parts of the discussion. Otherwise, the expression of societal costs and business costs will be placed in different, non-comparable terms; the classic apples and oranges comparison. And there can be no reasonable resolution to that comparison.

So, as we start to think about the start of the 112th Congress in about three months, we need to think about how we are going to address these issues. Are we going to continue to have the two sides yell at Congress, or are we going to see some sort of dialogue between the two sides to work out a set of reasonable compromises to solve this contentious issue?

Remember, it will be too late to resolve the issues after an attack has occurred and thousands, perhaps hundreds of thousands, are injured or killed.

Reader Comment 08-07-10 Influence

Fred Millar, a long time reader and well known acitivist, took objection to some of my comments on the political aspects of the most recent PIRG Report on chemical security issues. As always, Fred’s comments are worth reading in their entirety. The tone of Fred’s comments reflect his commitment to the causes that he supports, but are also indicative of the reasons that once again there will almost certainly be no comprehensive update of the CFATS authorization this year. Both sides of this debate have vociferously ignored the legitimate interests of the people on the other side of the ‘discussion’. This failure to engage in a real dialogue (again on both sides of the issue) makes it impossible to reach a reasonable compromise that both sides can live with. In the current situation, since the current authorization is certainly flawed and inadequate, the failure to engage in dialogue benefits the corporate interests that do not want to see that authorization expanded. Now PLEASE don’t think that I am blaming Fred for the current impasse. There are two sides to this lack of discussion and both sides bear a full share of the blame for making it next to impossible to engage in a constructive dialogue. Name calling, vilifying the opposition and exaggerating the goals of the other side do nothing to move a political dialogue forward. Legitimate Interests Chemical companies have a legitimate interest in influencing any legislation that will have an impact on their operations; influencing not dictating. Their management has a legal obligation to their owners (that includes a large number of their employees and members of the public who own stock through 401K plans and other investment vehicles) to ensure that the companies operate at a profit within the constraints of the current legal system. Corporations cannot vote, so they must effect their legitimate influence through legal campaign contributions and legal lobbying efforts. The activists of the ‘blue-green coalition’ have legitimate concerns about the safety of hazardous chemicals in commerce. They have seen too many examples of inept and/or shortcut safety and security practices that have resulted in releases of too many of these chemicals harming the public in both the short term and long term. They have seen too long a history of too many chemical facilities ignoring safety concerns to the detriment of their customers and local communities. As a result they feel that they cannot trust current chemical facility management to do the right thing when it comes to safety and security. These organizations cannot vote either; they effect their influence on the political process through publicizing their points of view and organizing individuals in political activism campaigns to influence legislators. Finally, safety and risk are not absolute values. There is no such thing as zero risk or absolute safety. There is a continuum of values that only tangentially approaches zero. Moving any product or process lower on the risk/safety scale requires the expenditure of energy and money. Incremental changes in risk or safety require higher and higher expenditures as one gets closer to zero. What is an acceptable risk or acceptable safety or a reasonable expenditure to achieve increased safety/risk can only be determined through a full frank discussion in the political process. Political Discussion We need to stop yelling at each other and start talking with each other. Otherwise nothing substantive is going to be accomplished. We will remain at the inadequate status quo until some terrorist organization finally realizes what a juicy target these enterprises actually are and figures out a way to exploit the weaknesses in security that remain because of our political failure to address the problems. The consequences for the public and the corporations will be unbearable.

ACC – Continue CFATS

Cal Dooley, President of the American Chemistry Council (ACC), continues the public opinion campaign for the reauthorization of the current CFATS regulations in an Op-Ed piece in yesterday’s Washington Times. This piece marks a move from their publicity campaign in the industry press to start directly addressing Congress and the new Administration in the Washington press. They still appear to be ignoring the grass roots oriented campaigns of IST supporters. Dooley notes that the ACC members have been improving their security posture since soon after 9-11 and well before CFATS authorization was passed. He points to the ‘stringent, mandatory security program’ that is part of the Responsible Care Program with its security vulnerability assessment, security enhancements and independent verification of implementation of security plans. He boasts of the $6 Billion dollars that the ACC members have spent on security improvements. Fully Implement CFATS The ACC President reports that his organization was a leader in the effort to get DHS the Congressional authorization to implement the current CFATS program. While acknowledging that the current authorization runs out in October, Mr. Dooley asks that Secretary Napolitano support a continuation of the current program to “give current security regulations a chance to work before revamping them further”. ACC Acknowledges IST The ACC has acknowledged that inherently safer technology (IST) is a tool that may reduce the risks associated with hazardous chemicals. Dooley notes that the risk-based performance standards embodied in CFATS “allow and encourage operators to consider a wide array of security measures from process changes to hardening their facilities” (emphasis added). ACC just doesn’t want IST, or any other specific security measure, mandated by the Federal rules. Holes in ACC Arguments Anyone reading this Op-Ed piece would think that the ACC represented the entire chemical industry. They do not. Only a small fraction of the 7,000 high-risk facilities covered under the current CFATS program are members of the ACC. While ACC members may have worked hard to improve their security posture since 9-11, the same cannot be said for all high-risk facilities. This is especially true of the many facilities that did not consider themselves chemical facilities before CFATS. Mr. Dooley points to the draft Risk-Based Performance Standard Guidance document that was published last fall as an exemplar of the CFATS security process. Besides overlooking the fact that the document was a draft for public comment, he claims that it provided “robust standards that spells out how operators can secure their facilities and meet the requirements of the regulation”. In fact, the document was excessively clear that the ‘guidance’ did not set standards; it even acknowledged that following the ‘letter’ of the guidance would not guarantee approval of the site security plan. The draft Guidance document is a poor exemplar of CFATS. Furthermore, Mr. Dooley sets up a straw man to be his opponent by claiming that “some have argued for scrapping the rules and starting over”. While there may be the odd individual crying in the wilderness for CFATS elimination, the extended public campaign initiated this fall by a wide variety of public interest groups specifically supported last session’s HR 5577 as their model for chemical facility security legislation. That legislation specifically accepted CFATS as the starting point for the relatively limited changes outlined for the program. Finally, Mr. Dooley ignores the large number of chemical facilities (many that store large quantities of highly hazardous chemicals) that were exempted from coverage under the current CFATS legislation. By overlooking the millions of people that are at risk from potential terrorist attacks on these facilities Mr. Dooley gives lie to the claim that the ACC members “have clearly demonstrated their commitment to safeguarding America's chemical facilities”. The American Chemistry Council does itself a severe disservice in using many patently flawed and misleading arguments in this presentation. Especially in a political document targeted at regulators and members of Congress, these arguments will carry little weight. It would be much better if the ACC were to address obvious industry concerns with involving regulators in process safety decisions they are ill equipped to make. A factual discussion of the issues would be much more effective.