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dc.contributor.authorViscusi, Kip W.
dc.contributor.authorZeckhauser, Richard Jay
dc.date.accessioned2011-12-21T21:43:43Z
dc.date.issued2011
dc.identifier.citationViscusi, W. Kip, and Richard Zeckhauser. 2011. Addressing Catastrophic Risks: Disparate Anatomies Require Tailored Therapies. HKS Faculty Research Working Paper Series RWP11-045, John F. Kennedy School of Government, Harvard Universityen_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:5688700
dc.description.abstractCatastrophic risks differ in terms of their natural or human origins, their possible amplification by human behaviors, and the relationships between those who create the risks and those who suffer the losses. Given their disparate anatomies, catastrophic risks generally require tailored therapies, with each prescribed therapy employing a specific portfolio of policy strategies. Given that catastrophic risks occur rarely, and impose extreme losses, traditional mechanisms for controlling risks – bargaining, regulation, liability – often function poorly. Commons catastrophes arise when a group of actors collectively impose such risks on themselves. When the commons is balanced, that is, when the parties are roughly symmetrically situated, a range of regulatory mechanisms can perform well. However, unbalanced commons – such as exist with climate change – will challenge any control mechanism with the disparate parties putting forth proposals to limit their own burdens. When humans impose catastrophic risks predominantly on others – as with deepwater oil spills – the risks are external. For those risks, the analysis shows, a single responsible party should be identified. Primary emphasis should then be placed on a two-tier liability system. Parties engaged in activities posing such catastrophic risks would be subject to substantial minimum financial requirements, strict liability for all damages, and a risk-based tax for expected losses that would exceed the responsible party’s ability to pay. Utilizing the financial incentives of this two-tier liability system would decrease the current reliance on regulatory policy, and would alter the role of regulators with a tilt toward financial oversight efforts and away from direct control. Catastrophic risks will always be with us. But as rare, extreme events, society has little experience with them, and current mechanisms are poorly designed to control them. Only a tailored therapy approach offers promise of significant improvement.en_US
dc.language.isoen_USen_US
dc.publisherJohn F. Kennedy School of Government, Harvard Universityen_US
dc.relation.isversionofhttp://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8069en_US
dash.licenseLAA
dc.subjectMBG - Markets, Business, and Governmenten_US
dc.subjectMLD - Management, Leadership, and Decision Sciencesen_US
dc.subjectEnvironment and Natural Resourcesen_US
dc.subjectRegulatory Policyen_US
dc.subjectManagementen_US
dc.subjectDisaster Preparedness and Responseen_US
dc.titleAddressing Catastrophic Risks: Disparate Anatomies Require Tailored Therapiesen_US
dc.typeResearch Paper or Reporten_US
dc.description.versionAuthor's Originalen_US
dc.relation.journalHKS Faculty Research Working Paper Seriesen_US
dash.depositing.authorZeckhauser, Richard Jay
dc.date.available2011-12-21T21:43:43Z
dash.contributor.affiliatedZeckhauser, Richard


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