Systemic Risk Archives - Page 4 of 4

What is a Global Polycrisis? And how is it Different from a Systemic Risk?

This discussion paper proposes that “A global polycrisis occurs when crises in multiple systems become causally entangled in ways that significantly reduce humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply intertwined” (p. 2). The authors then elaborate […]

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Polycrisis and Long-Term Thinking: Reimagining Development in Asia and the Pacific Foresight Brief

This Foresight Brief argues that conventional risk management frameworks cannot grapple with the growing number of systemic and existential risks generated by decades of globalization. Instead, these risks require more long-term thinking – “intentional consideration of what might happen in the future, the choices for influencing it and the consequences of those choices” (p. 10).

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Briefing note on systemic risk

This briefing note presents an integrated perspective on climate, environmental, and disaster risk science and practice concerning systemic risk. It provides an overview of the evolving concepts of systemic risk over time and identifies commonalities across terminologies and perspectives used in different contexts.

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Anatomy and Resilience of the Global Production Ecosystem

The authors argue that the worldwide production and distribution of food, fuel, and fibre has created a “global production ecosystem” subject to immense simplification, intensification, and control by humans attempting to maximize efficiency. The resulting system is homogenous, highly connected, and has weak feedbacks – “features [that] converge to yield high and predictable supplies of

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Things are Different Today: The Challenge of Global Systemic Risks

The authors clarify the systemic risk concept using the Global Financial Crisis as an example. They explain how global systems involve micro and macro-dynamics interacting with each other and their environment, leading to stable periods and multiple possible future scenarios. Some of these scenarios may pose catastrophic risks, so that agents must confront systemic risk.

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Systemic Risks: The New Kid on the Block

Ortwin Renn proposes that societies are good at conventional risk management, which focusses on discrete events like a fire or car accident, but increasingly challenged by systemic risks where a failure in one part of a system quickly spreads to disable the whole system and has ripple effects on others. “It is the totality of

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The Emergence of Global Systemic Risk

The authors argue that the world constitutes a tightly coupled, global complex system that endogenously generates systemic risks and vulnerabilities as it grows more complex. After discussing complexity, risk, and networks as key elements of their framework, they provide case studies of global systemic risk in trade, finance, infrastructure, climate change, and public health. The

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Globally Networked Risks and How to Respond

Dirk Helbing demonstrates that “Systemic failures and extreme events are consequences of the highly interconnected systems and networked risks humans have created. When networks are interdependent this makes them even more vulnerable to abrupt failures.” He surveys key concepts in complexity and network science, draws upon examples of financial meltdowns and crowd disasters, and ultimately

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The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about it

Ian Goldin and Mike Mariathasan argue that systemic risk is endemic to globalization that cannot be removed. “It is a process to be managed rather than a problem to be solved” (p. xiii). But rather than retreat from globalization and forfeit its considerable benefits, the authors argue that systemic risk requires global governance reforms to

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What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It?

George G. Kaufman and Kenneth E. Scott provide one of the most often cited definitions of systemic risk as “the risk or probability of breakdowns in an entire system, as opposed to breakdowns in individual parts or components, and is evidenced by co-movements (correlations) among most or all parts” (p. 371). They explain how systemic

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