Future Global Shocks

Improving Risk Governance

image of Future Global Shocks

Recent global shocks, such as the 2008 financial crisis, have driven policy makers and industry strategists to re-examine how to prepare for and respond to events that can begin locally and propagate around the world with devastating effects on society and the economy. This report considers how the growing interconnectedness in the global economy could create the conditions and vectors for rapid and widespread disruptions. It looks at examples of hazards and threats that emerge from the financial world, cyberspace, biological systems and even the solar system, to reflect on what strategic capacities are called for to improve assessment, mapping, modelling, response  and resilience to such large scale risks.  




Risk assessments for future global shocks

To assess the probability and consequence of future global shocks a better understanding is needed about where contagion effects and amplification are likely to occur. First, risk managers must identify the hubs of critical systems and resources, which if disrupted could trigger a series of adverse knock-on effects. They also need to investigate how dependency on a single or few critical resources or systems may create unexpected vulnerabilities to endogenous or exogenous shocks. In addition, risk managers should adopt a broader view of risk, beyond visible direct threats, and expand their situation awareness to include trends and events that take place in far away locations and identify components in critical systems that may amplify risks. This chapter focuses on the potential for global shocks resulting from the threats covered in the project’s case studies on pandemics, financial crises, cyber risks and geomagnetic storms. It draws general conclusions regarding the need to increase access to data and information resources in order to establish or reinforce systemic risk assessments.


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