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Crises cost money, dent confidence and create opportunities

28/2005, 07.09.2005

Warnings or all-clear signals: BfR wishes to counter the many different opinions with the orientation knowledge of a neutral institute

Crises lead to enormous costs: material and immaterial, administrative and economic. But, by no means all crises are based on real, scientifically quantifiable risks. Who decides when a situation turns into a crisis? Can crises be avoided and what role do the sciences play here? These and other questions were the focus of the first status conference which the Federal Institute for Risk Assessment is hosting in Berlin. The conference entitled "What does a crisis cost? – Facts, Experiences, Management Options" provided a forum for around 150 representatives from political and economic circles, public agencies, the sciences, consumer protection bodies and the media. Whether a situation is perceived as a crisis depends very much on how the beholder, who is confronted with many different opinions, sees it. "In the decisive phase BfR can offer neutral orientation knowledge", commented the President of the Institute, Professor Dr. Dr. Andreas Hensel. The precondition for this was objectively founded, unbiased risk assessment as well as open and responsible risk communication.

Nowadays, existence-threatening crises are rare in our affluent society. At the same time, crises involving foods or consumer products have an enormous impact even today. They may be linked to considerable health risks. They may discredit products or entire groups of products. They may lead to the collapse of markets and to the incurring of considerable costs in all areas affected. This was demonstrated by the BSE crisis. But crises don’t just cost money, they also dent confidence – in products, markets and institutions. Attempts to restore lost confidence are lengthy endeavours and not always crowned with success. In a BfR survey, 1,000 representatively selected consumers were asked “about the biggest health risk”: 27.9 % of the interviewees stated that they were apprehensive about “risks linked to foods”. However, it is a fact that foods are safer than ever before from the scientific angle. Reason enough for BfR to take the subject “crisis” as the main theme at its first status conference. The goal of this series of conferences is to take a look at consumer health protection problems and BfR’s own risk assessment from different social positions and interests and to publicly present and discuss the respective standpoints. We have summed up some of the conference results below.

Crises do not follow a plan, they can only be controlled to a limited degree. They follow their own rules and their own dynamics. Nevertheless, experience shows that it makes sense to prepare for a crisis. The more crisis management measures are delayed, the longer the crisis will last. In other words: the sooner well-planned and consistent steps are taken to deal with it, the greater the likelihood that the crisis can be successfully managed.

Often, it is the subjective risk perception, the “felt” risk amongst those concerned that turns an event into a crisis. This perception is influenced by the most diverse interests; they include personal interests as well as those of the media, manufacturers or research scientists. Subjective risk perception is, therefore, an important factor which must not, however, be allowed to replace objective criteria. This is where the scientifically-backed expertise of a neutral institute comes in. It can contribute to an objective discussion and assume a “corrective” function.

Anyone who has ever been affected by a crisis should learn from it and make the effort to analyse the crisis retrospectively. This analysis can provide insight into what triggered the crisis and the mistakes made. This makes it an essential crisis prevention tool.  For science this means that clear and easily comprehensible knowledge is passed on in a timely manner to the general public – without jumping to conclusions. After all, nothing is more difficult than having to retract a statement once it has gone public. Responsible risk communication takes on special importance in this context. It must take up the challenge of honestly communicating knowledge and ignorance and clearly separating the facts from estimations and opinions.

No matter how important crisis management and crisis analysis may be, many crises can be avoided. The precondition is that developments are carefully monitored and effective action is taken early on. This applies to risk assessors, risk managers and to the business community. However, this all costs money. Experience has, nevertheless, shown that cost-risk-benefit analyses of timely measures tend to be positive for both material (in profits or non-incurred losses for manufacturers) and immaterial costs (for warded off health risks and, by extension, savings for individuals, society and the national economy).

For both areas – crisis management and crisis prevention – the conference participants are of the opinion that the following should apply “Away from action for action’s sake to efficient and effective prioritising of necessary activities” – this is where the real opportunities lie.

Further information on this subject can be accessed in german language on our homepage (www.bfr.bund.de) under “Veranstaltungen/Programme, Abstracts und Manuskripte von früheren Veranstaltungen“.

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