'Insurer of last resort' and 'Lender of last resort': exploring continuity and discontinuity in UK governmental risk regulation
Management University of Sheffield Sheffield, England
This paper explores the role of the UK Government as a key actor in facilitating complex risk management processes in a risk society paradigm. Comparing and contrasting the UK Government's response to terrorism and banking crises, as insurer of last resort and lender of last resort respectively, this paper seeks to provide insights into UK regulatory responses to economic threat in the late twentieth and early twenty-first centuries.
It is argued that terrorism and banking are particularly apposite vehicles for deriving insights into shifting paradigms of risk as they encapsulate elements of continuity and discontinuity, most notably in aspects of form, impact and actors. They represent a modern variant of traditional or "old" risk. This modern variant reflects the transforming social and political context within which these risks present - a changing context driven by key themes of advanced modernity (Beck, 1992; 1998; Castells, 1996), such as increased complexity, embedded inter-connectivity and the globalisation of both markets and risk.
Whilst seeking to provide institutional stability and allay the fears of key stakeholders, the paper recognises that Government intervention may have the potential for unintended consequences. Arguably, this reflects the dynamic and complex nature of these risks in late modernity. The comparisons explored illustrate key challenges facing institutional actors such as uncertainty and the limits of knowledge (Ericson & Doyle, 2004; O'Malley, 2004) as well as more traditional concerns of moral hazard and contagion (Schwartz, 2002). These factors have significant repercussions upon accepted norms of "calculability" as well as "insurability", the traditional cornerstones of rational risk regulation response.