Risk Landscape of Autonomous Cars

Abstract

This article presents a study of how automobile risks are changing over time as the level of automation shifts from the traditional to semi-autonomous to fully autonomous car. The study involves the concept of comparative advantage between the human driver and the driverless car to determine how the roles between the two have been changing and, in turn, how the change affects attendant risks. To develop a risk landscape across changes in levels of automation, the roles of human driver and driverless car are matched with the five levels of automation used to describe the phases of development of the driverless car. We conclude that the costs associated with fatal accidents will decrease sharply over time as the driverless cars are deployed on the road. And we offer implications for policy, regulation, and insurance based on our analysis of the changing risk landscape.

Notes

^1. Broadly interpreted, the term technology within these constraints suggests that available and applicable technology for a desired system could simply be mechanistic in nature and may or may not involve any computerization (e.g., early printing machines). Simon (1977) saw no significant difference between mechanization and automation. He argued that the historical effects of mechanization and ongoing effects of computerization are similar in nature.

^2. The original description of the basic idea was contributed by Robert Torrence in an Essay on the External Corn Trade (1815). David Recardo formalized, convincingly articulated, and illustrated the concept in his book, On the Principles of Political Economy and Taxation (1817).

^3. IHS Automotive estimates that by 2025, there will be 230,000 self-driving cars out of the 115 million sold worldwide.

^4. Tesla’s Autopilot Vexes Some Drivers,” The Wall Street Journal, July 7, 2016, A1, A8.

^5. Rob Molloy, Chief Highway Crash Investigator, the National Transportation Safety Board, in “Automation: Some Makers may Rethink,” Omaha World-Herald, July 25, 2016, 1D–2D.

^6. It is uncertain if car buyers will have the option of owning a driven or driverless car.

^7. As reported by Kaplan (2016).

^8. S. Schechner, “Ireland’s Privacy Cop Sets the Beat for EU,” Wall Street Journal, December 28, 2016, B1, B2.

^9. “U.S. Won’t Impede Self-Drive Cars,” The Wall Street Journal, July 23–24, 2016, B1.

Additional information

Notes on contributors

Vasant Raval

Vasant Raval, DBA, CISA, ACMA, is Professor of Accounting in the Heider College of Business, Creighton University. His teaching and research interests include information systems control and security, information ethics, financial fraud, and corporate governance. He can be reached at [email protected].

Michael J. Dentlinger

Michael J. Dentlinger holds an undergraduate degree in Accounting and is currently taking graduate courses at Heider College of Business, Creighton University. He can be reached at [email protected].