Last week the Italian law courts delivered a guilty verdict of manslaughter in the case instituted against the seven seismologists who formed part of the national commission of experts on earthquakes. They were each jailed for six years and ordered to pay a total of €7.8 million in damages.

The case was instituted after the earthquake in L’Aquila in 2009. Essentially these persons had expressed an opinion that it was unlikely that the city would be hit by a major earthquake following a number of minor tremors. Six days after this advice was given, L’Aquila was struck by a 6.3-magnitude earthquake that killed 309 persons.

In delivering the verdict, the judge said these expert seismologists’ assessment of risks had been “completely inept, unsuitable and criminally mistaken”, and through their opinion they had materially contributed to the death of 29 persons who had chosen not to move from their homes.

This verdict may have provided some comfort to the relatives of the victims (I wonder what comfort, really), but it has raised a number of questions related to the assessment of risks generally. As a result it also raises questions related to the management of a business, financial regulation, macro-economic policymaking and the management of public sector organisations – hence the reason for me bringing upthe issue.

Persons occupying senior positions in an organisation continually need to assess risk when taking decisions. This needs to happen whenever they are considering an investment, or are seeking finance, or have to decide on product and market development. But no matter how much one seeks to make a thorough assessment of risk, one can never predict the unpredictable and it would be only after the event that one would find out if the decision was correct or not. Decision-making, by its very nature, is future-oriented and decision-makers do not have the benefit of hindsight – they only have the benefit of their experience and their knowledge.

The same principle may be applied when designing macro-economic policies. Public officers and Government ministers cannot anticipate all the effects of the decisions they take, and there will be times when the consequences are far more positive than expected and times when the consequences are negative, contrary to expectations.

Similarly, financial regulators need to allow the market to operate while ensuring that everyone abides by the law. There will be times when their assessment of risk is too conservative and hinder a business from exploiting an opportunity, and there will be times when they are unable to act in time to stop a business from abusing its customers.

There are other examples to cite, but they revolve around the same thing – one cannot predict the future with certainty. On the occasion when the wrong decision is taken, the result may be either a missed business opportunity or a breach of the law.

This does not imply that persons taking such decisions (or any decision, for that matter) should not be held accountable.

But being held accountable does not mean being held criminally responsible, unless the law has been broken. It needs to be stated that independent experts have reviewed the minutes of the meetings held to assess the risk of a major earthquake in L’Aquila and they found nothing where they could fault the advice given by the Italian seismologists.

The judgment delivered last week in Italy certainly provides a new dimension to the issue of risk management. Legal advice on the subject has always been that persons responsible need to have taken due diligence while using their knowledge in the taking of decisions.

If due diligence has been taken and the knowledge at one’s disposal has been fully considered (hence the person has not acted in a negligent manner), then one cannot be held criminally responsible. In Italy the seismologists, contrary to this widely-held view, were held criminally responsible.

It may be that eventually the decision is overturned on appeal or it is completely ignored in other countries.

If it is not, this judgment becomes case law for other countries as well, and will be applied to economic and financial aspects. The risk is that everyone will become so risk-averse that the global economy would seize.