Imagine …

Ben Bernanke official portrait.jpgNo, not John Lennon’s dreary nursery rhyme for hippies.

In his memoir of the 2007-2008 banking crisis, The Courage to ActBen Benanke wrote about his surprise when the crisis materialised.

We saw, albeit often imperfectly, most of the pieces of the puzzle. But we failed to understand – “failed to imagine” might be a better phrase – how those pieces would fit together to produce a financial crisis that compared to, and arguably surpassed, the financial crisis that ushered in the Great Depression.

That captures the three essentials of any attempt to foresee a complex future.

  • The pieces
  • The fit
  • Imagination

In any well managed organisation, “the pieces” consist of the established Key Performance Indicators (KPIs) and leading measures. Diligent and rigorous criticism of historical data using process behaviour charts allows departures from stability to be identified timeously. A robust and disciplined system of management and escalation enables an agile response when special causes arise.

Of course, “the fit” demands a broader view of the data, recognising interactions between factors and the possibility of non-simple global responses remote from a locally well behaved response surface. As the old adage goes, “Fit locally. Think globally.” This is where the Cardinal Newman principle kicks in.

“The pieces” and “the fit”, taken at their highest, yield a map of historical events with some limited prediction as to how key measures will behave in the future. Yet it is common experience that novel factors persistently invade. The “bow wave” of such events will not fit a recognised pattern where there will be a ready consensus as to meaning, mechanism and action. These are the situations where managers are surprised by rapidly emerging events, only to protest, “We never imagined …”.

Nassim Taleb’s analysis of the financial crisis hinged on such surprises and took him back to the work of British economist G L S Shackle. Shackle had emphasised the importance of imagination in economics. Put at its most basic, any attempt to assign probabilities to future events depends upon the starting point of listing the alternatives that might occur. Statisticians call it the sample space. If we don’t imagine some specific future we won’t bother thinking about the probability that it might come to be. Imagination is crucial to economics but it turns out to be much more pervasive as an engine of improvement that at first is obvious.

Imagination and creativity

Frank Whittle had to imagine the jet engine before he could bring it into being. Alan Turing had to imagine the computer. They were both fortunate in that they were able to test their imagination by construction. It was all realised in a comparatively short period of time. Whittle’s and Turing’s respective imaginations were empirically verified.

What is now proved was once but imagined.

William Blake

Not everyone has had the privilege of seeing their imagination condense into reality within their lifetime. In 1946, Sir George Paget Thomson and Moses Blackman imagined a plentiful source of inexpensive civilian power from nuclear fusion. As of writing, prospects of a successful demonstration seem remote. Frustratingly, as far as I can see, the evidence still refuses to tip the balance as to whether future success is likely or that failure is inevitable.

Something as illusive as imagination can have a testable factual content. As we know, not all tests are conclusive.

Imagination and analysis

Imagination turns out to be essential to something as prosaic as Root Cause Analysis. And essential in a surprising way. Establishing an operative cause of a past event is an essential task in law and engineering. It entails the search for a counterfactual, not what happened but what might have happened to avoid the  regrettable outcome. That is inevitably an exercise in imagination.

In almost any interesting situation there will be multiple imagined pasts. If there is only one then it is time to worry. Sometimes it is straightforward to put our ideas to the test. This is where the Shewhart cycle comes into its own. In other cases we are in the realms of uncomfortable science. Sometimes empirical testing is frustrated because the trail has gone cold.

The issues of counterfactuals, Root Cause Analysis and causation have been explored by psychologists Daniel Kahneman1 and Ruth Byrne2 among others. Reading their research is a corrective to the optimistic view that Root Cause analysis is some sort of inevitably objective process. It is distorted by all sorts of heuristics and biases. Empirical testing is vital, if only through finding some data with borrowing strength.

Imagine a millennium bug

In 1984, Jerome and Marilyn Murray published Computers in Crisis in which they warned of a significant future risk to global infrastructure in telecommunications, energy, transport, finance, health and other domains. It was exactly those areas where engineers had been enthusiastic to exploit software from the earliest days, often against severe constraints of memory and storage. That had led to the frequent use of just two digits to represent a year, “71” for 1971, say. From the 1970s, software became more commonly embedded in devices of all types. As the year 2000 approached, the Murrays envisioned a scenario where the dawn of 1 January 2000 was heralded by multiple system failures where software registers reset to the year 1900, frustrating functions dependent on timing and forcing devices into a fault mode or a graceless degradation. Still worse, systems may simply malfunction abruptly and without warning, the only sensible signal being when human wellbeing was compromised. And the ruinous character of such a threat would be that failure would be inherently simultaneous and global, with safeguarding systems possibly beset with the same defects as the primary devices. It was easy to imagine a calamity.

Risk matrixYou might like to assess that risk yourself (ex ante) by locating it on the Risk Assessment Matrix to the left. It would be a brave analyst who would categorise it as “Low”, I think. Governments and corporations were impressed and embarked on a massive review of legacy software and embedded systems, estimated to have cost around $300 billion at year 2000 prices. A comprehensive upgrade programme was undertaken by nearly all substantial organisations, public and private.

Then, on 1 January 2000, there was no catastrophe. And that caused consternation. The promoters of the risk were accused of having caused massive expenditure and diversion of resources against a contingency of negligible impact. Computer professionals were accused, in terms, of self-serving scare mongering. There were a number of incidents which will not have been considered minor by the people involved. For example, in a British hospital, tests for Down’s syndrome were corrupted by the bug resulting in contra-indicated abortions and births. However, there was no global catastrophe.

This is the locus classicus of a counterfactual. Forecasters imagined a catastrophe. They persuaded others of their vision and the necessity of vast expenditure in order to avoid it. The preventive measures were implemented at great costs. The Catastrophe did not occur. Ex post, the forecasters were disbelieved. The danger had never been real. Even Cassandra would have sympathised.

Critics argued that there had been a small number of relatively minor incidents that would have been addressed most economically on a “fix on failure” basis. Much of this turns out to be a debate about the much neglected column of the risk assessment headed “Detectability”. Where a failure will inflict immediate pain, it is so much more critical as to management and mitigation than a failure that will present the opportunity for detection and protection in advance of a broader loss. Here, forecasting Detectability was just as important as Probability and Consequences in arriving at an economic strategy for management.

It is the fundamental paradox of risk assessment that, where control measures eliminate a risk, it is not obvious whether the benign outcome was caused by the control or whether the risk assessment was just plain wrong and the risk never existed. Another counterfactual. Again, finding some alternative data with borrowing strength can help though it will ever be difficult to build a narrative appealing to a wide population. There are links to some sources of data on the Wikipedia article about the bug. I will leave it to the reader.

Imagine …

Of course it is possible to find this all too difficult and to adopt the Biblical outlook.

I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.

Ecclesiastes 9:11
King James Bible

That is to adopt the outlook of the lady on the level crossing. Risk professionals look for evidence that their approach works.

The other day, I was reading the annual report of the UK Health and Safety Executive (pdf). It shows a steady improvement in the safety of people at work though oddly the report is too coy to say this in terms. The improvement occurs over the period where risk assessment has become ubiquitous in industry. In an individual work activity it will always be difficult to understand whether interventions are being effective. But using the borrowing strength of the overall statistics there is potent evidence that risk assessment works.

References

  1. Kahneman, D & Tversky, A (1979) “The simulation heuristic”, reprinted in Kahneman et al. (1982) Judgment under Uncertainty: Heuristics and Biases, Cambridge, p201
  2. Byrne, R M J (2007) The Rational Imagination: How People Create Alternatives to Reality, MIT Press
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The Iron Law at Volkswagen

So Michael Horn, VW’s US CEO has made a “sincere apology” for what went on at VW.

And like so many “sincere apologies” he blamed somebody else. “My understanding is that it was a couple of software engineers who put these in.”

As an old automotive hand I have always been very proud of the industry. I have held it up as a model of efficiency, aesthetic aspiration, ambition, enlightenment and probity. My wife will tell you how many times I have responded to tales of workplace chaos with “It couldn’t happen in a car plant”. Fortunately we don’t own a VW but I still feel betrayed by this. Here’s why.

A known risk

Everybody knew from the infancy of emissions testing, which came along at about the same time as the adoption of engine management systems, the risks of a “cheat device”. It was obvious to all that engineers might be tempted to manoeuvre a recalcitrant engine through a challenging emissions test by writing software so as to detect test conditions and thereon modify performance.

In the better sort of motor company, engineers were left in no doubt that this was forbidden and the issue was heavily policed with code reviews and process surveillance.

This was not something that nobody saw coming, not a blind spot of risk identification.

The Iron Law

I wrote before about the Iron Law of Oligarchy. Decision taking executives in an organisation try not to pass information upwards. That will only result in interference and enquiry. Supervisory boards are well aware of this phenomenon because, during their own rise to the board, they themselves were the senior managers who constituted the oligarchy and who kept all the information to themselves. As I guessed last time I wrote, decisions like this don’t get taken at board level. They are taken out of the line of sight of the board.

Governance

So here we have a known risk. A threat that would likely not be detected in the usual run of line management. And it was of such a magnitude as would inflict hideous ruin on Volkswagen’s value, accrued over decades of hard built customer reputation. Volkswagen, an eminent manufacturer with huge resources, material, human and intellectual. What was the governance function to do?

Borrowing strength again

It would have been simple, actually simple, to secret shop the occasional vehicle and run it through an on-road emissions test. Any surprising discrepancy between the results and the regulatory tests would then have been a signal that the company was at risk and triggered further investigation. An important check on any data integrity is to compare it with cognate data collected by an independent route, data that shares borrowing strength.

Volkswagen’s governance function simply didn’t do the simple thing. Never have so many ISO 31000 manuals been printed in vain. Theirs were the pot odds of a jaywalker.

Knowledge

In the English breach of trust case of Baden, Delvaux and Lecuit v Société Générale [1983] BCLC 325, Mr Justice Peter Gibson identified five levels of knowledge that might implicate somebody in wrongdoing.

  • Actual knowledge.
  • Wilfully shutting one’s eyes to the obvious (Nelsonian knowledge).
  • Wilfully and recklessly failing to make such enquiries as an honest and reasonable man would make.
  • Knowledge of circumstances that would indicate the facts to an honest and reasonable man.
  • Knowledge of circumstances that would put an honest and reasonable man on enquiry.

I wonder where VW would place themselves in that.

How do you sound when you feel sorry?

… is the somewhat barbed rejoinder to an ungracious apology. Let me explain how to be sorry. There are three “R”s.

  • Remorse: Different from the “regret” that you got caught. A genuine internal emotional reaction. The public are good at spotting when emotions are genuine but it is best evidenced by the following two “R”s.
  • Reparation: Trying to undo the damage. VW will not have much choice about this as far as the motorists are concerned but the shareholders may be a different matter. I don’t think Horn’s director’s insurance will go very far.
  • Reform: This is the barycentre of repentance. Can VW now change the way it operates to adopt genuine governance and systematic risk management?

Mr Horn tells us that he has little control over what happens in his company. That is probably true. I trust that he will remember that at his next remuneration review. If there is one.

When they said, “Repent!”, I wonder what they meant.

Leonard Cohen
The Future

First thoughts on VW’s emmissions debacle

It is far too soon to tell exactly what went on at VW, in the wider motor industry, within the respective regulators and within governments. However, the way that the news has come out, and the financial and operational impact that it is likely to have, are enough to encourage all enterprises to revisit their risk management, governance and customer reputation management policies. Corporate scandals are not a new phenomenon, from the collapse of the Medici Bank in 1494, Warren Hastings’ alleged despotism in the British East India Company, down to the FIFA corruption allegations that broke earlier this year. Organisational scandals are as old as organisations. The bigger the organisations get, the bigger the scandals are going to be.

Normal Scandals

In 1984, Scott Perrow published his pessimistic analysis of what he saw as the inevitability of Normal Accidents in complex technologies. I am sure that there is a market for a book entitled Normal Scandals: Living with High-Risk Organisational Structures. But I don’t share Perrow’s pessimism. Life is getting safer. Let’s adopt the spirit of continual improvement to make investment safer too. That’s investment for those of us trying to accumulate a modest portfolio for retirement. Those who aspire to join the super rich will still have to take their chances.

I fully understand that organisations sometimes have to take existential risks to stay in business. The development of Rolls-Royce’s RB211 aero-engine well illustrates what happens when a manufacturer finds itself with proven technologies that are inadequately aligned with the Voice of the Customer. The market will not wait while the business catches up. There is time to develop a response but only if that solution works first time. In the case of Rolls-Royce it didn’t and insolvency followed. However, there was no alternative but to try.

What happened at VW? I just wonder whether the Iron Law of Oligarchy was at work. To imagine that a supervisory board sits around discussing the details of engine management software is naïve. In fact it was the RB211 crisis that condemned such signal failures of management to delegate. Do VW’s woes flow from a decision taken by a middle manager, or a blind eye turned, that escaped an inadequate system of governance? Perhaps a short term patch in anticipation of an ultimate solution?

Cardinal Newman’s contribution to governance theory

John Henry Newman learned about risk management the hard way. Newman was an English Anglican divine who converted to the Catholic Church in 1845. In 1850 Newman became involved in the controversy surrounding Giacinto Achilli, a priest expelled from the Catholic Church for rape and sexual assault but who was making a name from himself in England as a champion of the protestant evangelical cause. Conflict between Catholic and protestant was a significant feature of the nineteenth century English political landscape. Newman was minded to ensure that Achilli’s background was widely known. He took legal advice from counsel James Hope-Scott about the risks of a libel action from Achilli. Hope-Scott was reassuring and Newman published. The publication resulted in Newman’s prosecution and conviction for criminal libel.

Speculation about what legal advice VW have received as to their emissions strategy would be inappropriate. However, I trust that, if they imagined they were externalising any risk thereby, they checked the value of their legal advisors’ professional indemnity insurance.

Newman certainly seems to have learned his lesson and subsequently had much to teach the modern world about risk management and governance. After the Achilli trial Newman started work on his philosophical apologia, The Grammar of Assent. One argument in that book has had such an impact on modern thinking about evidence and probability that it was quoted in full by Bruno de Finetti in Volume 1 of his 1974 Theory of Probability.

Supposes a thesis (e.g. the guilt of an accused man) is supported by a great deal of circumstantial evidence of different forms, but in agreement with each other; then even if each piece of evidence is in itself insufficient to produce any strong belief, the thesis is decisively strengthened by their joint effect.

De Finetti set out the detailed mathematics and called this the Cardinal Newman principle. It is fundamental to the modern concept of borrowing strength.

The standard means of defeating governance are all well known to oligarchs, regulator capture, “stake-driving” – taking actions outside the oversight of governance that will not be undone without engaging the regulator in controversy, “whipsawing” – promising A that approval will be forthcoming from B while telling B that A has relied upon her anticipated, and surely “uncontroversial”, approval. There are plenty of others. Robert Caro’s biography The Power Broker: Robert Moses and the Fall of New York sets out the locus classicus.

Governance functions need to exploit the borrowing strength of diverse data sources to identify misreporting and misconduct. And continually improve how they do that. The answer is trenchant and candid criticism of historical data. That’s the only data you have. A rigorous system of goal deployment and mature use of process behaviour charts delivers a potent stimulus to reluctant data sharers.

Things and actions are what they are and the consequences of them will be what they will be: why then should we desire to be deceived?

Bishop Joseph Butler

 

FIFA and the Iron Law of Oligarchy

Йозеф Блаттер.jpgIn 1911, Robert Michels embarked on one of the earliest investigations into organisational culture. Michels was a pioneering sociologist, a student of Max Weber. In his book Political Parties he aggregated evidence about a range of trade unions and political groups, in particular the German Social Democratic Party.

He concluded that, as organisations become larger and more complex, a bureaucracy inevitably forms to take, co-ordinate and optimise decisions. It is the most straightforward way of creating alignment in decision making and unified direction of purpose and policy. Decision taking power ends up in the hands of a few bureaucrats and they increasingly use such power to further their own interests, isolating themselves from the rest of the organisation to protect their privilege. Michels called this the Iron Law of Oligarchy.

These are very difficult matters to capture quantitavely and Michels’ limited evidential sampling frame has more of the feel of anecdote than data. “Iron Law” surely takes the matter too far. However, when we look at the allegations concerning misconduct within FIFA it is tempting to feel that Michels’ theory is validated, or at least has gathered another anecdote to take the evidence base closer to data.

But beyond that, what Michels surely identifies is a danger that a bureaucracy, a management cadre, can successfully isolate itself from superior and inferior strata in an organisation, limiting the mobility of business data and fostering their own ease. The legitimate objectives of the organisation suffer.

Michels failed to identify a realistic solution, being seduced by the easy, but misguided, certainties of fascism. However, I think that a rigorous approach to the use of data can guard against some abuses without compromising human rights.

Oligarchs love traffic lights

I remember hearing the story of a CEO newly installed in a mature organisation. His direct reports had instituted a “traffic light” system to report status to the weekly management meeting. A green light meant all was well. An amber light meant that some intervention was needed. A red light signalled that threats to the company’s goals had emerged. At his first meeting, the CEO found that nearly all “lights” were green, with a few amber. The new CEO perceived an opportunity to assert his authority and show his analytical skills. He insisted that could not be so. There must be more problems and he demanded that the next meeting be an opportunity for honesty and confronting reality.

At the next meeting there was a kaleidoscope of red, amber and green “lights”. Of course, it turned out that the managers had flagged as red the things that were either actually fine or could be remedied quickly. They could then report green at the following meeting. Real career limiting problems were hidden behind green lights. The direct reports certainly didn’t want those exposed.

Openness and accountability

I’ve quoted Nobel laureate economist Kenneth Arrow before.

… a manager is an information channel of decidedly limited capacity.

Essays in the Theory of Risk-Bearing

Perhaps the fundamental problem of organisational design is how to enable communication of information so that:

  • Individual managers are not overloaded.
  • Confidence in the reliable satisfaction of process and organisational goals is shared.
  • Systemic shortfalls in process capability are transparent to the managers responsible, and their managers.
  • Leading indicators yield early warnings of threats to the system.
  • Agile responses to market opportunities are catalysed.
  • Governance functions can exploit the borrowing strength of diverse data sources to identify misreporting and misconduct.

All that requires using analytics to distinguish between signal and noise. Traffic lights offer a lousy system of intra-organisational analytics. Traffic light systems leave it up to the individual manager to decide what is “signal” and what “noise”. Nobel laureate psychologist Daniel Kahneman has studied how easily managers are confused and misled in subjective attempts to separate signal and noise. It is dangerous to think that What you see is all there is. Traffic lights offer a motley cloak to an oligarch wishing to shield his sphere of responsibility from scrutiny.

The answer is trenchant and candid criticism of historical data. That’s the only data you have. A rigorous system of goal deployment and mature use of process behaviour charts delivers a potent stimulus to reluctant data sharers. Process behaviour charts capture the development of process performance over time, for better or for worse. They challenge the current reality of performance through the Voice of the Customer. They capture a shared heuristic for characterising variation as signal or noise.

Individual managers may well prefer to interpret the chart with various competing narratives. The message of the data, the Voice of the Process, will not always be unambiguous. But collaborative sharing of data compels an organisation to address its structural and people issues. Shared data generation and investigation encourage an organisation to find practical ways of fostering team work, enabling problem solving and motivating participation. It is the data that can support the organic emergence of a shared organisational narrative that adds further value to the data and how it is used and developed. None of these organisational and people matters have generalised solutions but a proper focus on data drives an organisation to find practical strategies that work within their own context. And to test the effectiveness of those strategies.

Every week the press discloses allegations of hidden or fabricated assets, repudiated valuations, fraud, misfeasance, regulators blindsided, creative reporting, anti-competitive behaviour, abused human rights and freedoms.

Where a proper system of intra-organisational analytics is absent, you constantly have to ask yourself whether you have another FIFA on your hands. The FIFA allegations may be true or false but that they can be made surely betrays an absence of effective governance.

#oligarchslovetrafficlights

Toxic

Engine exhaust contrailsMuch in the UK press this week about alleged personal injuries from what has been described as “toxic air” in aircraft. Contamination of cabin air with, perhaps, organophosphates from the engines, either ambiently or during “fume events”, is alleged to cause ill health both in air crew and passengers. It seems that pre-action correspondence is being sent and litigation is afoot.

Of course, the issues, engineering, physiological and legal, are complex and await a proper forensic exploration. The courts are actually very good at this sort of thing as I shall go on to discuss below. However, the press coverage reminded me of one of the recurrent themes in this blog, trust in bureaucracy.

Trust

Part of the background to the litigation is found in the work of the Committee on Toxicity (“the CoT”). The CoT consists of working scientists who provide independent advice to the UK government. The CoT looked into the “toxic air” allegations. In their report, the CoT concede that the measurement systems for measuring cabin air quality are not entirely satisfactory. However, the CoT go on to arrive at the following conclusion as to ambient exposure;

For the types of aircraft studied, and in the absence of a major fume event, airborne concentrations of the pollutants that were measured in the study are likely to be very low (well below the levels that might cause symptoms) during most flights. The data do not rule out the possibility of higher concentrations on some flights … or of higher concentrations of other pollutants that were not measured.

— and for the “fume events”:

… the Committee considers that a toxic mechanism for the illness that has been reported in temporal relation to fume incidents is unlikely. Many different chemicals have been identified in the bleed air from aircraft engines, but to cause serious acute toxicity, they would have to occur at very much higher concentrations than have been found to date (although lower concentrations of some might cause an odour or minor irritation of the eyes or airways). Furthermore, the symptoms that have been reported following fume incidents have been wide-ranging (including headache, hot flushes, nausea, vomiting, chest pain, respiratory problems, dizziness and light-headedness), whereas toxic effects of chemicals tend to be more specific. However, uncertainties remain, and a toxic mechanism for symptoms cannot confidently be ruled out.

It’s not unusual for academics to be guarded if asked for an opinion and the CoT certainly don’t regard fume related injuries as impossible. However, having taken the matter as far as they are able with their resources, their honest opinion is that the reported symptoms were not caused by toxic fumes. I have not been able to find any fully argued study that says that they are. And yet, as the BBC points out, there are anecdotes that have to be considered against a background of data that, in itself, does not conclusively exclude the alleged symptoms. The matter is not quite closed but this turns out to be another issue beset with personal attitudes to evidence and risk.

Any lawyer has to be on the side of their client. However, when the BBC interviewed aviation lawyer Frank Cannon I think he went a little further than mere advocacy in his cause. He said:

If you look at the tobacco industry, the asbestos, contaminated blood issues, if you look at all that, the government say it’s perfectly safe, perfectly safe and then “wham”, they suddenly have to admit they got it wrong for so many years.

I am pretty sure that the UK government, at least, never advised that tobacco or asbestos was safe. William Cooke, the pathologist of Wigan infirmary, made arguably the first scientific report of lung disease caused by asbestos in 1924. There had been anecdotal evidence previously but Cooke’s was the first systematic analysis. Regulation and successful litigation soon followed. I am not aware of any serious body of scientific opinion ever saying that airborne asbestos exposure was safe after that point.

AsbestosCooke

As to smoking tobacco, the first statistical evidence associating smoking with cancer seems to have come in 1929 from Fritz Lickint. After Richard Doll’s work from the 1950s onwards I don’t think there was serious scientific dispute.

Of course, in the early years of the twentieth century life was comparatively unregulated. Though an absence of regulatory framework may now appear like a governmental endorsement that is to apply a very much post-World War II perspective. In any event, governments did respond with regulation, on both smoking and asbestos, even if its rigour is condemned by hindsight. The story of asbestos is a particularly tragic one. The story of contaminated blood is, I admit, more complex. I think it will make an edifying subject for a further blog.

The narrative of a callous, self-serving government bureaucracy only exposed by the heroic endeavours of maverick scientists is an attractive one to many people. Its prototype is Ibsen’s 1882 play An Enemy of the People. The twist in that drama is [spoiler alert!] that the population join the bureaucracy in turning against the scientist, whose credibility goes notably unchallenged by the author.

Attitudes to risk are entangled with emotional responses to broader cultural matters, as I blogged about here. That ecology of personal attitudes also feeds into how individuals react to the outputs of a bureaucracy, even one holding itself out as an exemplar of scientific objectivity, as I blogged about here. It is amid those conflicting cultural responses that forensic examination has a real part to play in resolving the conflicting doubts.

Forensics

Thereza Imanishi-Kari was a postdoctoral researcher in molecular biology at the Massachusetts Institute of Technology. In 1986 a co-worker raised inconsistencies in Imanishi-Kari’s earlier published work that led to allegations that she had fabricated results to validate publicly funded research. In his excellent 1998 book The Baltimore Case, Daniel Kevles details the growing intensity of the allegations against Imanishi-Kari over the following decade, involving the US Congress, the Office of Scientific Integrity and the FBI. Imanishi-Kari was ultimately exonerated by a departmental appeal board constituted of an eminent molecular biologist and two lawyers. The board allowed cross-examination of the relevant experts including those in statistics and document examination. It was that cross-examination that exposed the allegations as without foundation.

As eminent an engineer as George Stephenson found that he could not ask Parliament to approve the building of the Liverpool and Manchester Railway on the basis of faulty surveying that he had not properly supervised. After his cross-examination by Edward Hall Alderson he complained:

I was not long in the witness box before I began to wish for a hole to creep out at.

Certainly in England and Wales, expert evidence only provides guidelines within which the court makes its findings of fact. In the Canadian case of Reynolds v C.S.N. the learned judge, analysing whether a strike induced shut down at an aluminium facility had caused plant damage, disregarded the evidence of two statisticians, who could not agree how to calculate a Kaplan-Meier estimator, and preferred that of an engineer who had adopted a superficially less exact approach.

Process improvement

Though every branch of science has been advancing with sure and rapid strides, it is perhaps not too much to say that from the time of Lord Mansfield, and Folkes v Chadd, to the present; there has been a steady decrease in the credit awarded to the testimony of scientific witnesses.

Anonymous
“Expert testimony”
American Law Review (1870)

Throughout the nineteenth century the forensic evidence of scientific experts garnered a poor reputation. Robert Angus Smith, the discoverer of acid rain, refused to take expert work as he regarded it as corrupt beyond remedy and wished not to taint his reputation.

However, English law gradually drew the matter under supervision. The whole process by which English law adapted to embrace the conflicting evidence of specialists, woven through their respective esoteric expertise, is set out by Tal Golan in Chapter Three of his 2004 history of expert evidence, Laws of Men and Laws of Nature. Within the common law world, evaluation of expert evidence continues to evolve. The Australian courts have made important contributions with innovations such as hot tubbing. The common law courts have developed into a sophisticated forum for adjudicating on competing claims as to knowledge, not from an absolute standpoint, but from the pragmatic worldview of allocating resources. For practical people there has to be an end to every dispute.

The life of the law has not been logic; it has been experience… The law embodies the story of a nation’s development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics.

Oliver Wendell Holmes
The Common Law (1881)

Proposition 65

WarningPoster1I had break from posting following my recent family vacation to California. While I was out there I noticed this rather alarming notice at a beach hotel and restaurant in Santa Monica. After a bit of research it turned out that the notice was motivated by California Proposition 65 (1986). Everywhere we went in California we saw similar notices.

I stand in this issue not solely as somebody professionally involved in risk but also as an individual concerned for his own health and that of his family. If there is an audience for warnings of harm then it is me.

I am aware of having embarked on a huge topic here but, as I say, it is as a concerned consumer of risk advice. The notice, and I hesitate to call it a warning, was unambiguous. Apparently, this hotel, teeming with diners and residents enjoying the pacific coast, did contain chemicals emphatically “known” to cause cancer, birth defects or reproductive harm. Yet for such dreadful risks to be present the notice gave alarmingly vague information. I saw that a brochure was available within the hotel but my wife was unwilling to indulge my professional interest. I suspect that most visitors showed even less curiosity.

As far as discharging any legal duty goes, vague notices offer no protection to anybody. In the English case of Vacwell Engineering Co. Ltd v B.D.H. Chemicals Ltd [1969] 3 All ER 1681, Vacwell purchased ampules of boron tribromide from B.D.H.. The ampules bore the label “Harmful Vapour”. While the ampules were being washed, one was dropped into a sink where it fractured allowing the contents to come into contact with water. Mixing water with boron tribromide caused an explosion that killed one employee and extensively damaged a laboratory building. The label had given B.D.H. no information as to the character or possible severity of the hazard, nor any specific details that would assist in avoiding the consequences.

Likewise the Proposition 65 notice gives me no information on the severity of the hazard. There is a big difference between “causing” cancer and posing a risk of cancer. The notice doesn’t tell me whether cancer is an inevitable consequence of exposure or whether I should just shorten my odds against mortality. There is no quantification of risk on which I can base my own decisions.

Nor does the notice give me any guidance on what to do to avoid or mitigate the risk. Will stepping foot inside the premises imperil my health? Or are there only certain areas that are hazardous? Are these delineated with further and more specific warnings? Or even ultimately segregated in secure areas? Am I even safe immediately outside the premises? Ten yards away? A mile? I have to step inside to acquire the brochure so I think I should be told.

The notice ultimately fulfils no socially useful purpose whatever. I looked at the State of California’s own website on the matter but found it too opaque to extract any useful information within the time I was willing to spend on it, which I suspect is more time than most of the visitors who find their way there.

It is most difficult for members of the public, even those engaged and interested, to satisfy themselves as to the science on these matters. The risks fall within what John Adams at University College London characterises as risks that are known to science but on which normal day to day intuition is of little use. The difficulty we all have is that our reflection on the risks is conditioned on the anecdotal hearsay that we pick up along the way. I have looked before at the question of whether anecdote is data.

In 1962, Rachel Carson published the book Silent Spring. The book aggregated anecdotes and suggestive studies leading Carson to infer that industrial pesticides were harming agriculture, wildlife and human health. Again, proper evaluation of the case she advanced demands more attention to scientific detail than any lay person is willing to spare. However, the fear she articulated lingers and conditions our evaluation of other claims. It seems so plausible that synthetic chemicals developed for lethal effect, rather than evolved in symbiosis with the natural world, would pose a threat to human life and be an explanation for increasing societal morbidity.

However, where data is sparse and uncertain, it is important to look for other sources of information that we can “borrow” to add “strength” to our preliminary assessment (Persi Diaconis’ classic paper Theories of Data Analysis: From Magical Thinking through Classical Statistics has some lucid insights on this). I found the Cancer Research UK website provided me with some helpful borrowing strength. Cancer is becoming more prevalent largely because we are living longer. Cancer Research helpfully referred me to this academic research published in the British Journal of Cancer.

Despite the difficulty in disentangling and interpreting data on specific risks of alleged pathogens we have the strength of borrowing from life expectancy data. Life expectancy has manifestly improved in the half century since Carson’s book, belying her fear of a toxic catastrophe flowing from our industrialised society. I think that is why there was so much indifference to the Santa Monica notice.

I should add that, inside the hotel, I spotted five significant trip hazards. I suspect these posed a much more substantial threat to visitors’ wellbeing than the virtual risks of contamination with hotel carcinogens.

Risk of dishonesty – the supermarket checkout

File:Self checkout using NCR Fastlane machines.jpgThis recent news item got me thinking again about the risks of dishonesty faced by organisations. It appears that modern self-service supermarket checkouts provide the opportunity for, and perhaps a “nudge” towards, theft. You may remember my earlier blog about this interesting presentation by Dan Ariely. One of the things Ariely suggests is that the cumulative losses from many small acts of dishonestly are far from negligible in economic terms.

In any organisation, it is a sad and disconcerting fact of human nature that there is a genuine and widespread propensity for dishonesty. Defensive policing is costly and probably ineffective. It is an attempt to “inspect quality into a product”. That means that systems have to be set up to “nudge” employees towards honesty at the design stage.

As the supermarket checkout example shows, individuals’ moral reactions are often sensitive to system design in subtle ways. Dishonesty does not often show up on risks assessments or FMEAs. Uncomfortable as it may feel, experience tends to suggest that it is something that should be ever present in analysing risk. Perhaps that visibility might in itself be a positive “nudge” towards honesty.

Yet in suggesting that, I fear that the emotional costs of raising the issue in most organisations might outweigh the benefits. I wonder if including honesty in the list of assumptions of a risk assessment would influence the people involved in the assessing. But then how to provide the “nudge” to those who weren’t there?