RISK

Ronald F. White, Ph.D.

Professor of Philosophy

College of Mount St. Joseph

Harm• Harm-Invasion of an Interest (Death, Pain, Disability, loss of pleasure)

– Magnitude– Probability– Parties Involved: consumers, workers, public and environment, investors.

• Problems with Assessment of Magnitude• Problems with Prediction• Liberty and Risk

– Self-regarding (Harm to Self)• Information• consent

– Other-regarding (Harm to Others)• Information• consent

• Liability (Justice)– Minimum Standards

• Disclosure Standard• Reasonably Prudent Person• Strict Product Liability

Perspectives

• Deontological Rights Based Theories– Rationality (information)– Free Will (non-coercion)

• Teleological Utilitarian Based Theories– Greatest Happiness Principle

• Egoism• Utilitarianism

Risk to Consumers• Acceptable Risk• Contractarian View

– Duties• Compliance with terms of sales contract• Disclosure of the Nature of the Product• Avoid Misrepresentation• Coercion/Duress (price gouging?)

– Variables• Reliability• Service Life• Maintainability• Product Safety

• Due Care View– Duties

• Design• Production• Information• Problems

• Social Costs View– Strict Product Liability

Risk to Workers

• Occupational Risk– Safety– Health– Security

• Right to a Safe Workplace– Stockholder View– Stakeholder View

• Utilitarian View

Risk to Public or Environment

• Pollution – Stockholder View

• Private Costs• Public Costs

– Stakeholder View• Future Generations

• Conservation of Resources– Stockholder and Stakeholder Views

• `Future Generations

Risk to Investors (Stockholders)

• Risks Due to the Nature of the Market– Complexity and prediction– High Risk=High payoff

• Risks Due to Disclosure Failure– Conflict of Interest

• Agency Problem– Brokers (fiduciary vs. salesmanship)

» Disclosure of commissions

• Monitoring Problem