Perverse compensation

A discussion of risk perception would not be complete without examining one of the most controversial concepts in the field of safety. In recent years, it has been given different labels, including risk homeostasis, risk or danger compensation, risk-offsetting behavior, and perverse compensation. Whatever the name, the basic idea is quite simple and straightforward. 

Free allocation can distort incentives. If installations cease to receive free allowances when they close, the withdrawal of over-compensation creates a perverse incentive to keep inefficient facilities operational. 

Tying employee performance evaluation, including linking compensation or bonuses, with process safety performance should be implemented only after careftil consideration and safeguards are in place to prevent perverse outcomes. 

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