c) As often as makes the yearly cost of extra training and maintenance equal to the money that would be lost in destroyed airframes, higher salaries needed to attract pilots, and revenue lost to passengers developing a fear of the airline if that training and maintenance were not done.
(...)
. In the space launch industry, customers are going to frequently be companies or organizations as large or larger than the launch provider with teams of experts that can be put to analyzing the risks of using one launch provider or another.
We've already seen during the financial crisis that business fails miserably at factoring in small but significant risks - the models don't work.
So I'm afraid I believe it's wishful thinking that space industry would be the exemption and be able to factor that kind of risk correctly. Small but crippling risks are the very thing business is consistently bad at dealing with - pretty much always the finding is that such risks are downplayed, ignored, not acknowledged,...
Edit: There's also no real evidence that airlines get the calculation correctly - they seem to be bankrupted by serious accidents (as well as other factors) with some regularity - despite having access to insurance.
---------- Post added at 05:50 AM ---------- Previous post was at 05:10 AM ----------
For the sake of it, the problems as outlined in investigation reports:
https://en.wikipedia.org/wiki/Space_Shuttle_Challenger_disaster
conflict between engineering data and management judgments, and a NASA management structure that permitted internal flight safety problems to bypass key Shuttle managers. (...) In the appendix, he argued that the estimates of reliability offered by NASA management were wildly unrealistic, differing as much as a thousandfold from the estimates of working engineers.
The engineers knew, management didn't want to listen.
https://en.wikipedia.org/wiki/Space_Shuttle_Columbia_disaster
An example was the position of Shuttle Program Manager, where one individual was responsible for achieving safe, timely launches and acceptable costs, which are often conflicting goals. The CAIB report found that NASA had accepted deviations from design criteria as normal when they happened on several flights and did not lead to mission-compromising consequences.
Conflict between engineering and administrative goals, the engineers knew, management didn't want to listen.
That's about the theme when NASA screws up. Now let's have industry - Deepwater Horizon oil spill:
https://en.wikipedia.org/wiki/Deepwater_Horizon_investigation
A large number of decisions were made that were highly questionable and potentially contributed to the blowout of the Macondo well... Virtually all were made in favor of approaches which were shorter in time and lower in cost. That gives us concern that there was not proper consideration of the tradeoffs between cost and schedule and risk and safety.
Conflict between engineering and administrative goals.
One of the decisions met with tough questions was that BP refuted the findings of advanced modelling software that had ascertained over three times as many centralizers were needed on the rig. It also decided not to rerun the software when it stuck with only six centralizers, and ignored or misread warnings from other key tests, the panel said.
The engineers knew, management didn't want to listen.
The record shows that without effective government oversight, the offshore oil and gas industry will not adequately reduce the risk of accidents, nor prepare effectively to respond in emergencies
Industry doesn't achieve adequate risk management without being regulated.
So, not listening to the engineers, downplaying the risks they estimate to have good PR and sell stuff, conflicts between management goals and engineering goals - that's the stuff disasters are made of. Either give the decisionmaking to the engineers (i.e. do not operate as business) or regulate externally.
I rest my case.
