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When risk‐based regulation aims low: A strategic framework

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  • Julia Black
  • Robert Baldwin
Abstract
This article develops a strategic framework for regulators to employ when choosing intervention strategies for dealing with low risks and reviewing performance, building on the analysis by the same authors in the previous edition of this journal. The framework occupies the operational “middle ground” between risk analysis and formal enforcement action. At its core is a matrix, the Good Regulatory Intervention Design (GRID), which provides a framework to categorize sites or activities on the basis of two factors: the nature of the risk and the nature of the regulatee. Using GRID, regulators can select which intervention tools to use, and determine the overall level of regulatory intensity that should apply. GRID is accompanied by the Good Regulatory Assessment Framework (GRAF) for agencies to use in reviewing their performance and provides a step‐by‐step process for enabling “double loop learning.” The article also argues that the process of developing such a framework highlighted the extent to which “low risk” and “high risk” regulation are distinct. “Low risk” means “low priority.” Justifying why certain risks should not receive much regulatory attention requires a particular type of engagement, and has a bearing on the regulatory strategies that are adopted.

Suggested Citation

  • Julia Black & Robert Baldwin, 2012. "When risk‐based regulation aims low: A strategic framework," Regulation & Governance, John Wiley & Sons, vol. 6(2), pages 131-148, June.
    • Handle: RePEc:wly:reggov:v:6:y:2012:i:2:p:131-148
    DOI: 10.1111/j.1748-5991.2012.01127.x
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    References listed on IDEAS

    as
    1. Julia Black & Robert Baldwin, 2012. "When risk‐based regulation aims low: Approaches and challenges," Regulation & Governance, John Wiley & Sons, vol. 6(1), pages 2-22, March.
    2. Scholz, John T., 1991. "Cooperative Regulatory Enforcement and the Politics of Administrative Effectiveness," American Political Science Review, Cambridge University Press, vol. 85(1), pages 115-136, March.
    3. Black, Julia & Baldwin, Robert, 2010. "Really responsive risk-based regulation," LSE Research Online Documents on Economics 27632, London School of Economics and Political Science, LSE Library.
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    Cited by:

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    3. Paul Sanderson & David Seidl & John Roberts, 2013. "The Limits of Flexible Regulation: Managers' Perceptions of Corporate Governance Codes and 'Comply-or-Explain'," Working Papers wp439, Centre for Business Research, University of Cambridge.
    4. Li Wang & David Demeritt & Henry Rothstein, 2023. "“Carrying the black pot”: Food safety and risk in China's reactive regulatory state," Regulation & Governance, John Wiley & Sons, vol. 17(2), pages 469-490, April.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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