by Dan R. Anderson, Ph.D.,CPCU - Wisconsin School of Business ...

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Biotechnology Risk Management: The Case of Genetically Modified Organisms (GMOs) unlikely to pose a serious threat to monarc h b u t t e rflies. Yet the EPA noted that data was still being collected and a more conclusive re p o rt would be issued in the future. (Yoon, 9/26/2000) Cultural, Ethical, and Religious Risks Cultural Risks The production of GMOs is heavily c o n c e n t r a t e d — a p p roximately 82 percent in N o rth America. Significant portions of all cro p p roduction in North America is exported. U.S. f a rmers export more than 25 percent of the c o rn, soybean, and cotton they produce, and m o re than 50 percent of wheat and rice. ( P a a r l b e rg, 2000) There f o re, the manner in which these crops are produced will impact other cultures. The European Union countries have largely refused to import GM crops or made import difficult. At least one reason for their refusal is cultural diff e rences. For instance, in France the ingredients and the pre p a r a t i o n and consumption of food is a way of life. The F rench refer to their culinary sovere i g n t y, so when you alter their food you impact their c u l t u re. In India, bollworm infestation in cotton plants has caused havoc. Insects have developed resistance to the heavy volume of pesticides sprayed on fields. In Indian field tests, a GM cotton variety, modified to control bollworm s , was showing promising results. Yet farm e r s , disturbed that their livelihoods may be t h reatened by these corporate biotech developments, burned the test plots in pro t e s t . ( P a a r l b e rg, 2000) Ethical Risks Genetic engineering raises the ethical issue of whether we should be altering nature. While conventional breeding techniques produced improved hybrid crops, these hybrids could have developed naturally. With GM crops, biological species boundaries are crossed. Bacteria genes would not move into corn or fish genes would not cross into tomatoes in any natural circumstances. This only can occur in the biotech laboratory with gene gun technology. Many individuals and organizations are questioning whether from a societal and ethical basis this should be done at all. Natural food sources have developed and evolved over thousands, even millions of years, and for a reason—they were best adapted to fit into the natural world. Since GM crops are developed in the laboratory, questions of whether and should they fit into the natural world are being pondered. Religious Risks Even religious issues are being raised re g a rding GMOs. Many religions hold to the sanctity of the natural world—that humans are a part of the natural world and should fit h a rmoniously into the natural world and should not artificially alter it. Recently Pope John Paul II urged those who are developing new biotechnologies to keep a “healthy balance” with nature to avoid putting people’s lives at risk. He urged rigorous scientific and ethical c o n t rols to avoid possible “disaster for the health of man and the future of the Eart h , ” f rom new agricultural technologies. He further stated: If the world of most refined techniques doesn’t reconcile itself with the simple language of nature in a healthy balance, the life of man will run even greater risks of which already we are seeing worrying signs. (D’Emilio, 2000) Genetic Pollution Environmental Risks Genetic pollution of the environment is p robably the biggest unknown with GMO. With conventional types of pollution like a chemical spill, they can be cleaned up. Or a conventional product like an automobile, which is defective, can be recalled. But if some unknown, unpredictable adverse effect re s u l t s f rom GMOs, the effect could be uncontro l l a b l e , p e rmanent, and irreversible. And of course by that time it would be too late. The defective gene or GMO would be out in the natural world and in all likelihood nonrecoverable. Some adverse consequences could be tested in the laboratory or in a controlled experiment. For instance, Australian scientists recently have accidentally created a virus that kills mice by crippling their immune system. The scientists w e re attempting to make the mice infertile by adding a gene in the mouse immune system to the mouse pox virus. The experiment, which was controlled, had the unanticipated effect of making the virus deadly for mice norm a l l y resistant to the disease. The scientists were f u rther surprised because past re s e a rch had indicated that GM viruses were less viru l e n t than their natural progenitors. (Broad, 2001) While the above was a success story, albeit accidental, if the adverse effect is delayed or unanticipated, it may occur when the GMO has been released in the natural environment where it may be uncontrollable and irreversible. As noted by Charles Benbrook, agricultural consultant and former director of the board of agriculture for the National Academy of Sciences: 220 CPCU JOURNAL “Genetic pollution of the environment is probably the biggest unknown with GMO.”
“Consumers in the United States have been rather indifferent to GM foods, particularly compared to Europeans.” You don’t mess around with the genetic base of a food production system as fundamentally as some of these biotech applications are, without causing some things to change. It is really scientific hubris to think that we understand all that, because we don’t. This stuff is just horrendously complicated. (Denison, 1999) Business Risk—Customers Wo n ’t Buy It From a commercial development standpoint all the risks discussed above may collectively augment the business risk that customers and markets will refuse to buy GM food products. Regulatory constraints to be discussed in a subsequent section will further constrain companies getting GM products to potential customers. E u ro p e E u ropean consumers have been skeptical of GM foods since they first started being developed. Just as GM foods were first being c l e a red for import into European markets, the first mad cow disease scare hit in 1996. While GM foods are not related to mad cow disease, it generated new consumer anxieties about food s a f e t y. The scare also undermined consumer t rust in re g u l a t o ry and scientific opinion as U.K. public health officials had given consumers assurances that there was no danger in eating beef from diseased animals. (Paarlberg, 2000) While mad cow disease, or Bovine Spongiform Encephalopathy (BSE), which only exists in cattle, had been discovered in Britain in the 1980s, it was not until 1996 that it was publicly announced that a possible connection may exist between BSE in cattle and Cre u z f e l d - J a c o b Disease, a rare but fatal disease found among humans. (Pollack and Shaeff e r, 2000) The mad cow disease problem has spread to other E u ropean countries and currently is causing considerable consumer consternation and market disru p t i o n s . In May 1999, it was discovered that Belgium farm animals had been given dioxincontaminated feed. This discovery resulted in the removal of Belgium chicken, eggs, pork, and beef from the entire EU market. (Pollack and Shaffer, 2000) And in June 1999, hundreds of French and Belgium residents were sickened by drinking contaminated Coca-Cola. The contamination apparently came from a batch of defective carbon dioxide, as well as from a fungicide that may have rubbed off some wooden pallets onto its cans of soda. (Mitchner and McKay, 1999) Given this history and experience of these f o od scares, it is not surprising that Euro p e a n s may be skeptical of any type of tampering with f o od, including genetic modifications. These WINTER 2001 Biotechnology Risk Management: The Case of Genetically Modified Organisms (GMOs) s c a res have also seriously eroded the confidence of Europeans in their food safety authorities. (Pollack and Shaff e r, 2000) European activist groups, most notably Greenpeace, joined the protest and inflamed consumer fears of GM foods. Substantial publicity was generated when Paul McCartney and Prince Charles joined the questioning of GMOs. The collective protests dubbed GM foods as “Frankenfoods,” hardly positive publicity if you are trying to sell your GM product. United States Consumers in the United States have been rather indiff e rent to GM foods, part i c u l a r l y c o m p a red to Europeans. Americans also have m o re confidence in governmental food regulations like the FDA. (“Science and Technology . . .,” 1999) But with the anti-GM f o od activities and regulations in other countries gaining more and more attention, it seems likely that U.S. consumer attitude could change. The recent case of StarLink corn could exacerbate the situation. The case of StarLink corn is the most dramatic example of adverse financial and risk-related effects that can arise from the commercialization of GM products. Costs are estimated to be in the $100 millions. Several liability suits have been initiated. Executives have been fired and the reputation of Aventis, who developed StarLink, has been adversely impacted. StarLink corn is a GM crop with a genetically inserted pesticidal bacterial pro t e i n known as Cry9C. It is similar to Bt corn in that it has been genetically modified to produce its own insecticide. The EPA approved StarLink c o rn only for animal consumption. The EPA decided in 1997 that Aventis’ technology should be kept out of human food because l a b o r a t o ry tests indicated that the protein might cause food allergies. (Feder, 2000) StarLink is the only GM corn that is not approved for use in U.S. food consumed by humans. In the fall of 2000, StarLink corn was discovered in Taco Bell brand taco shells and other products of at least two food manufacturers, Kraft Foods and Mission Foods. The discovery was actually made in laboratory tests at Genetic ID, which were paid for by the Friends of the Earth. It was announced at a September 18, 2000, press conference covered by Genetically Engineered Food Alert, a coalition of environmental and consumer groups. (Crenson, 2000) After these 221
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by Dan R. Anderson, Ph.D.,CPCU - Wisconsin School of Business ...

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