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Systemic Thinking for Policy Making

The Potential of Systems Analysis for Addressing Global Policy Challenges in the 21st Century

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We live in a period of profound systemic change, and as in similar periods in the past, there is bound to be considerable instability and uncertainty before the new society and economy take shape. We have to identify actions that will shape change for the better, and help to build resilience to the inevitable shocks inherent in, and generated by, the complex system of systems constituted by the economy, society and the environment. These challenges require updating the way policies are devised and implemented, and developing more realistic tools and techniques to design those policies on the basis of appropriate data. In Systemic Thinking for Policy Making world experts from the OECD and International Institute for Applied Systems Analysis (IIASA) pool their expertise and experience to propose new approaches to analysing the interconnected trends and issues shaping today’s and tomorrow’s world. The authors argue that to tackle planetary emergencies linked to the environment, the economy and socio-political systems, we have to understand their systemic properties, such as tipping points, interconnectedness and resilience. They give the reader a precise introduction to the tools and techniques needed to do so, and offer hope that we can overcome the challenges the world is facing.

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Systemic Risk Emerging from Interconnections: The Case of Financial Systems

Approaches to analysing and managing the potential for a threat or hazard to propagate disruptions or losses to multiple connected parts of a complex system are reviewed, and ways IIASA and OECD could enhance their analytical capabilities and rigour of policy advice on systemic financial risk are outlined. IIASA has quantitative methods to measure, model, and manage systemic risk of financial systems using network theory and agent‑based modelling. OECD looks into how to operationalise the concept of resilience to systemic risk to give policymakers an effective and efficient resilience management framework. IIASA’s methods can inform and enhance OECD’s framework by making available simple and transparent systemic risk indicators that can be monitored in real-time, as well as tools to test alternative policy interventions to reduce systemic risk. Approaches and models developed to deal with financial systemic risk may also be useful in other networked systems, for example, supply chains.

English

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