Nanotechnology risk assessment and risk management perspectives

Nanotechnology Law and Business

Volumn 8, Issue 1, 2011, Pages 25-47

  Valverde Jr , L James ^a   Linkov, Igor ^a  

^a US ARMY ENGINEER RESEARCH AND DEVELOPMENT CENTER   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COMPLEX DECISION; EMERGING TECHNOLOGIES; GLOBAL MARKET; GOVERNMENT REGULATORS; MANAGEMENT CHALLENGES; MULTI-CRITERIA DECISION ANALYSIS; NANO-MATERIALS; RISK MANAGER; SOCIETAL BENEFITS;

HEALTH RISKS; INTERNATIONAL TRADE; NANOTECHNOLOGY; RISK ANALYSIS; RISK MANAGEMENT;

RISK ASSESSMENT;

EID: 79956283620     PISSN: 15462080     EISSN: 15462080     Source Type: Journal    
DOI: None     Document Type: Article

References (66)

1. NATIONAL SCIENCE FOUNDATION, INVESTING IN AMERICAS FUTURE: STRATEGIC PLAN FY 2006-2011, at 4 (2006).
2. See, e.g., NANOSCALE SCIENCE, ENGINEERING, AND TECHNOLOGY SUBCOMMITTEE, NATIONAL SCIENCE AND TECHNOLOGY COUNCIL, COMMITTEE ON TECHNOLOGY, ENVIRONMENTAL, HEALTH, AND SAFETY RESEARCH NEEDS FOR ENGINEERED NANOSCALE MATERIALS (Sept. 2006) [hereafter EHS RESEARCH NEEDS].
3. NANOSCALE SCIENCE, ENGINEERING, AND TECHNOLOGY SUBCOMMITTEE, NATIONAL SCIENCE AND TECHNOLOGY COUNCIL, NATIONAL NANOTECHNOLOGY INITIATIVE: THE INITIATIVE AND ITS IMPLEMENTATION PLAN 13 (July 2000).
4. Of course, such outcomes also hold the potential to adversely affect the global reinsurance markets as well.
5. Woodrow Wilson International Center for Scholars, Nanotechnology Consumer Products Inventory, http://www.nanotechproject.org/inventories/consumer (last visited Feb. 23, 2011).
6. LUX RESEARCH, THE NANOTECH REPORT (4th ed. 2006).
7. LUX RESEARCH, THE NANOTECH REPORT (5th ed. 2007).
8. European Commission, DG Research Unit Nano S&T: Convergent Science and Technologies, The Economic Development of Nanotechnology: An Indicators Based Analysis, 9 (Nov. 28, 2006) (prepared by Angela Hullman). The forecasts in the figure are based on data from the German Government, Evolution Capital, NSF, Sal. Oppenheim, DG Bank, DTI, U. S. Nanobusiness Alliance, Cientifica, In Realis, Mitsubishi Research Institute, Deutsche Bank, Nomura Research Institute, BCC, GEMZ Corp., Helmut Kaiser Consultancy, and Lux Research.
9. BCC Research, Nanotechnology: A Realistic Market Assessment, http://www.bccresearch.com/report/NAN031B.html (lastvisited Feb. 23, 2011).
10. See, e.g., National Resources Defense Center, Nanotechnologies are Here, but Questions of Safety Linger, http://www.nrdc.org/health/science/nano.asp (last visited Feb. 23, 2011);
11. ETC Group, The Big Downturn?: Nanogeopolitics, http://www.etcgroup.org/ upload/publication/pdf-file/nano-big4web.pdf (last visited Feb. 23, 2011).
12. See U. S. EPA, Nanoscale Materials Stewardship Program, http://www.epa.gov/oppt/nano/stewardship.html (last visited Feb. 23, 2011).
13. LUX RESEARCH, supra note 6 (2006).
14. A portion of the $28 million in the NNI designated for "ethical, legal, and societal implications, and workforce education and training" was to be used for research directed at identifying "potential concerns and ways to address them." See NANOSCALE SCIENCE, ENGINEERING, AND TECHNOLOGY SUBCOMMITTEE, supra note 3, at 15.
15. Phillip J. Bond, Nanotechnology: Economic Opportunities, Societal & Ethical Challenges, Keynote Address at NANO Commerce 2003 (Dec. 9-11, 2003).
16. SUBCOMMITTEE ON NANOSCALE SCIENCE, ENGINEERING, AND TECHNOLOGY, NATIONAL SCIENCE AND TECHNOLOGY COUNCIL, STRATEGY FOR NANOTECHNOLOGY-RELATED ENVIRONMENTAL, HEALTH, AND SAFETY RESEARCH (Feb. 2008), available at http://www.nano. gov/NNI-EHS-Research-Strategy.pdf.
17. While no known human toxicity linkages exist for the more than 2000 types of nanomaterials currently in commercial use and development, scientists have not ruled out the possibility. See, e.g., Gunter Oberdorster et al., Principles for Characterizing the Potential Human Health Effects from Exposure to Nanomaterials: Elements of a Screening Strategy, 2 (8) PARTICLE & FIBRE TOXICOLOGY (2005), available at http://www.particleandfibretoxicology.com/ content/2/1/8.
18. See, e.g., O. Renn & M. C. Roco, Nanotechnology and the Need for Risk Governance, 8 (2) J. NANOPARTICLE RES. 15 (2006);
19. K. Morgan, Development of a Preliminary Framework for Informing the Risk Analysis and Risk Management of Nanoparticles, 25 (6) RISK ANALYSIS 1621 (2005); NANOMATERIALS: RISKS AND BENEFITS (I. Linkov and J. Steevens eds., 2009).
20. EHS RESEARCH NEEDS, supra note 3, at 4.
21. See, e.g., Nanoparticle Occupational Safety and Health Consortium, Executive Summary, http://www.hse.gov. uk/nanotechnology/consortiumsummary.pdf (last visited Feb. 23, 2011).
22. ALLIANZ CENTER FOR TECHNOLOGY, SMALL SIZES THAT MATTER: OPPORTUNITIES AND RISKS OF NANOTECHNOLOGIES 7 (Christoph Lauterwasser ed., 2005).
23. Oberdorster, supra note 16.
24. See, e.g., FEDERAL INSTITUTE FOR RISK ASSESSMENT, PUBLIC PERCEPTIONS ABOUT NANOTECHNOLOGY: REPRESENTATIVE SURVEY AND BASIC MORPHOLOGICAL- PSYCHOLOGICAL STUDY (R. Zimmer et al. eds., 2008) (Berlin).
25. Press Release, Federal Institute for Risk Assessment, Cause of Intoxications with Nano Spray Not Yet Fully Elucidated (Apr. 12, 2006), available at http://www.bfr.bund.de/cd/7750;
26. Press Release, Federal Institute for Risk Assessment, Nano Particles Were Not the Cause of Health Problems Triggered by Sealing Sprays! (May. 26, 2006), available at http://www.bfr.bund.de/cd/7842. Because the glass- and ceramicsealer products had "Magic Nano" in their names, it was first assumed that the cause of the health issues was nanoparticles; subsequent analysis showed this to be a false assumption.
27. See, e.g., MUNICH RE, NANOTECHNOLOGY: WHAT IS IN STORE FOR US?, 2002.
28. Id. at 8.
29. It is worth noting, however, that a number of commentators have cautiously pointed out the potential exposure risks associated with a products end-of-life, where, e.g., decomposition and degradation can create exposure pathways with potentially deleterious outcomes. As a consequence, a number of risk management experts are advocating the use of so-called life cycle risk assessment methodologies, which examine potential EHS exposures and impacts throughout the entire product life cycle. See, e.g., JO ANNE SHATKIN, NANOTECHNOLOGY: HEALTH AND ENVIRONMENTAL RISKS (CRC Press 2008).
30. See, e.g., GUY CARPENTER & COMPANY, INC., NANOTECHNOLOGY: THE PLASTICS OF THE 21ST CENTURY (2006);
31. ALLIANZ CENTER FOR TECHNOLOGY, supra note 20;
32. LIBERTY MUTUAL, UNDER MICROSCOPE: THE POTENTIAL SAFETY, HEALTH AND LIABILITY RISKS OF NANOTECHNOLOGY (2005);
33. SWISS RE NANOTECHNOLOGY: SMALL MATTER, MANY UNKNOWNS (2004);
34. ZURICH FINANCIAL SERVICES, NANO NEWS MAY BE GOOD NEWS-IF WE CAN EVALUATE THE RISKS (2006).
35. M. S. DORFMAN, INTRODUCTION TO RISK MANAGEMENT AND INSURANCE 19 (8th ed. 2005).
36. Of course, a particular risk may still be privately insurable even if all of the criteria are not met. This will, in part, depend on the risk preferences or tolerances of the insurer. Also relevant is the insurers propensity for ambiguity aversion.
37. See, for example, SWISS Re, supra note 27. Among the key unknowns for insurers is the lack of regulation (for determining the risk of litigation) and the probable size of future damages. In general, the larger the size of the financial risk, the greater the need to meet all of the IILE criteria.
38. David Baxter, Nanotechnology: An Insurer's Perspective, SAFENANO (SafeNano Initiative Newsletter, United Kingdom), Feb. 2008.
39. See, e.g., DUPONT & ENVIRONMENTAL DEFENSE, NANO RISK FRAMEWORK (2007), available at http://www.nanoriskframework.com.
40. Many of these processes focus the risk managers attention on proper portfolio balancing - a topic that falls outside the purview of this paper. Along these lines, risk managers will typically need to consider a number of key factors, including the expected annual claims frequencies and the retained per-risk claims severity, each judged relative to the insurers net premium income and capital base. Ultimately, the balancing of a portfolio is achieved through surplus, quota share, and excess-of-loss reinsurance arrangements.
41. In this way, each nanomaterial is characterized by it own unique environmental properties, and each is characterized by a different set of economic costs and benefits.
42. In addition to needing to assess (however crudely) the magnitude of the risks involved, the underwriter will also need to make a determination as to how those risks correlate with the existing portfolio. An insurers understanding of the risk associated with a given portfolio is, in large measure, derived from an understanding of the risks that characterize the individual policies themselves. Unlike traditional property and casualty underwriting - like for fire or theft - where accidents or undesirable events are, to some degree, localized and statistically independent of one another - nanotechnology holds the potential to interact and affect a (possibly large) number of assets covered by a given portfolio. Also relevant is the consideration of factors such as buyer willingness to pay for insurance, regulatory constraints, and competitive dynamics.
43. The terms evaluation measure, performance metric, criterion, and attribute are often used synonymously within the realm of MCDA. See, e.g., R. KEENEY & H. RAIFFA, DECISIONS WITH MULTIPLE OBJECTIVES: PREFERENCES AND VALUE TRADEOFFS (Cambridge University Press, New York, 1993) (1976);
44. R. KEENEY, VALUE-FOCUSED THINKING: A PATH TO CREATIVE DECISION MAKING (1992);
45. D. VON WINTERFELDT & W. EDWARDS, DECISION ANALYSIS AND BEHAVIORAL RESEARCH (1986).
46. In actual practice, this step will require in-depth consultation with both risk assessors and risk managers.
47. For example, Public Health Effects (X13) can be measured through carcinogenicity, and carcinogenicity can, in turn, be measured via in vivo and in vitro investigations, or through epidemiological studies, etc.
48. KEENEY & RAIFFA, supra note 36, at 31-65 (discussing a number of criteria that can be used to guide the construction of objectives hierarchies).
49. This model is valid if the underwriters preferences are consistent with certain independence assumptions, the most important being that her preferences display mutual preferential independence. In informal terms, what this means is that the strength-of-preference for an option on one evaluation measure is independent of its judged strength-of-preference on another measure. See generally id., for a technical discussion of this issue.
50. Of course, other functional forms-requiring consistency or congruence with different sets of independence conditions-can be specified, e.g., multiplicative, multilinear, etc. See, e.g., id.;
51. von WINTERFELDT & EDWARDS, supra note 36 (examples and illustrative case studies that explore a variety of preference structures).
52. *. Between these worst/best extremes, one can use a number of different methods-including direct scoring, specification of assumed functional form, etc.-to assign scores to intermediate levels of performance for a given evaluation measure.
53. If attempts to verify the independence conditions are unsuccessful and the additive models use is thereby unjustified, the underwriter can either attempt to simplify her multicriteria framework to effect some semblance of theoretical congruence, or she can select an alternative value model with a different, more complex, preference structure.
54. An insightful discussion of swing weights is found in, W. Edwards & F. Barron, SMARTS and SMARTER: Improved Simple Methods for Multiattribute Utility Measurement, 60 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 306, 315-318 (1994).
55. j, must sum to one, in truth we need only perform this elicitation for two of the three high-level objectives. Still, it is often useful to elicit all three values as a means of enhancing judgmental consistency.
56. The indifference probabilities can be found by employing the lottery equivalent/probability method using bracketing. See, e.g., R. DE NEUFVILLE, APPLIED SYSTEMS ANALYSIS: ENGINEERING PLANNING AND TECHNOLOGY MANAGEMENT (1990).
57. For ease of exposition and elicitation, we initially utilize an arbitrary 0 to 100 single-dimensional utility scale.
58. It is worth noting that since the weightof the more important evaluation measure is placed over the weight of a less important measure, the values that we elicit from the decision-maker will be greater than or equal to unity.
59. Within MCDA, this step is often referred to as "scoring the options" on the evaluation measures contained in our objectives hierarchy.
60. jk. In the context of MCDA, EDWARDS & BARRON, supra note 44, refer to this as the "strategy of heroic approximation. "
61. Several risk management frameworks for nanotechnology have been proposed in recent years. See, e.g., Nano Risk Framework, DUPONT & ENVIRONMENTAL DEFENSE, supra note 32;
62. Shatkin, supra note 26 (a thoughtful, ambitious program).
63. Achieving agreement or some degree of consensus among stakeholder groups is, of course, easier said than done, as the recent clash between the NNI and the NRC demonstrates. At issue in this public dispute is the national strategy for nanotechnology-related EHS research. On the one hand, the NNI claims to have, in their 2008 report, set forth a research strategy aimed at "accelerating] progress in research to protect public health and the environment, and to fill gaps in, and-with the growing level of effort worldwide- to avoid duplication of, such research, " STRATEGY FOR NANOTECHNOLOGY-RELATED ENVIRONMENTAL, HEALTH, AND SAFETY RESEARCH, supra note 15, at 1. By way of retort, the NRC argues that the NNI document "does not present a vision, contain a clear set of goals, have a plan of action for how the goals are to be achieved, or describe mechanisms to review and evaluate funded research and assess whether progress has been achieved in the context of what we know about the potential EHS risks posed by nanotechnology."
64. COMMITTEE FOR REVIEW OF THE FEDERAL STRATEGY TO ADDRESS ENVIRONMENTAL, HEALTH, AND SAFETY RESEARCH NEEDS FOR ENGINEERED NANOSCALE MATERIALS, NATIONAL RESEARCH COUNCIL, REVIEW OF FEDERAL STRATEGY FOR NANOTECHNOLOGY-RELATED ENVIRONMENTAL, HEALTH, AND SAFETY RESEARCH 6 (2009). Experts can, of course, disagree with one another on any number of things. In technically-intensive policy disputes, however, the issue of expert disagreement comes to the fore when credible experts disagree on scientific and technical issues that have potentially broad policy implications. This is likely to be an important feature of the public policy debates surrounding nanotechnology in the years to come.
65. See, e.g., T. Tervonen et al., Risk-based Classification System of Nanomaterials, 11 J. NANOPARTICLE RES. 757 (2009).
66. Of course, any such characterization must attempt to capture or represent the dynamic or evolutionary nature of the "disruptiveness."