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Risk And The Dark Ages

June 16, 2010

Balancing safety and innovation can be a tough challenge. Are we at risk of stifling scientific and commercial progress by becoming too risk averse?

Of course it is important to protect our world from the damaging consequences that can come from scientific or commercial innovation. But when is ‘enough’? To what extent do we risk impeding new developments by making them either too slow or too costly or simply too risky for anyone to develop them? And do we apply anywhere close to equal standards in deciding when to make rigorous assessments of risk and benefit? For example, it is now quite evident that we applied far too little analysis and questioning to the new financial instruments devised by the global banking industry. If we had undertaken the scrutiny to which GM crops have been subjected, we would most likely have avoided the financial collapse.

And now, in the wake of disaster, we appear ready to apply much greater rigor to other areas of technological development, in this case deep-sea drilling. Increased regulation continues to drive up the cost of developing new drugs and pharmaceuticals. In fact, in many areas of major human interest, we are creating costs and delays – and potentially making the world of scientific discovery unaffordable. Risk management is not an absolute – it must be adaptive to conditions. So as we think about risk, we must not seek to eliminate unpleasant things happening, but rather build systems and approaches that enable us to gain early visibility, respond rapidly and contain the consequences.

That is where good contracting and good relationship management come into the equation. As we deal with ever-greater complexity, our contracts must spell out the mechanisms and contain the incentives through which risk will be managed on an on-going basis – ensuring early awareness and collaborative management.

One Comment
  1. An excellent and well-balanced view as always Tim.

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