The risks of risk-based regulation

All inspection activity is supposed to be ‘risk-based’. However, how such risk-based approaches are developed and applied - and how the application of risk-based approaches might lead to risks to regulated entities is less understood. This study is interested in inspections and is concerned with how risks are being understood across different stages of an inspection and how such decisions are informed by an organisational risk appetite. Risks might vary across different stages of an inspection, and their evaluation is constantly evolving. Risk appetite therefore also reflects on the updating of organisational risk perceptions. Such issues are at the heart of any inspection regime, and they are also critical in any consideration of change in inspection regime. Particular interest therefore is also in the questions of ‘risk of risk-based regulation’ to different entities, such as the inspectorate itself , the regulatee and the wider regulated system. The challenges of being a risk-based inspectorate are particularly interesting in a wider system of regulation where the risks to the inspecting entity might be different to those in the wider political system. Analytically, the interest is in how risk-based systems may or may not mitigate against becoming ‘engines of anxieties’ in the wider regulated system (leading to unintended consequences).