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Global Risks

June 19, 2014

According to the World Economic Forum, “multiple trends are contributing to linking global systems ever more closely and in more complex ways.”

What’s the significance of that?

On the one hand, it seems like a good thing. Interconnected systems can support weak spots in times of crisis bolstering global stability. On the other, they can also be an amplifier of cascading shocks – as in the case of the 2007/2008 financial crisis.

This is also true in relation to the complex interplay between economic and environmental systems. Again from the World Economic Forum: “the increased carbon emissions and reduced ecological diversity resulting from unsustainable economic growth now fundamentally threaten to undermine not only the stability of the global ecosystem but also the economies that depend on it.”

Technology plays a role as well, e.g. “ICT is a force multiplier and has hastened the development of the various environmental issues that surround us” (see here for more).

Picture 1Two reports offer a particularly thoughtful insight into global trends and these issues from a systemic perspective.

Global Risks 2014 (PDF), outlines top risks identified by the World Economic Forum and its stakeholders, and discusses the nature of systemic risks more generally. These risks include: Fiscal crises in key economies, structurally high unemployment, water and food crises, failure of climate change mitigation, greater incidence of extreme weather (e.g. floods, storms, fires), and so on.

These trends and related risks are interconnected with one another. For example, water and food shortages as well as other resource shortages can amplify tensions and lead to conflicts. Case in point: “Drought in Russia in 2010 led to restrictions on agricultural exports, causing the price of staple grains to rise across North Africa and the Middle East. The resulting food shortages and price rises aggravated the tensions that led to the Arab Spring.”

The second report, World in Transition: A Social Contract for Sustainability (2011) comes from the German Advisory Council on Global Change, an independent scientific advisory body to the German Federal Government. This 400-page report examines environmental, economic and social trends, and examines the pathways for making a transition to a sustainable society. Ultimately, the council states: “the carbon-based economic model is … an unsustainable situation, as it endangers the climate system’s stability, and therefore the natural lifesupport system for future generations. The transformation towards a low-carbon society is therefore as much an ethical imperative as the abolition of slavery and the condemnation of child labour.”

Picture 2Interestingly, both reports provide data on shifting values and viewpoints — the World in Transition report on the view of citizens around the world, and the Global Risks report on the relative rankings of risk by different demographic groups. What seems clear from both reports is that there is an emerging surge of people who see environmental risks as a fundamental issue that must be addressed above and beyond economic issues. This opinion though is not uniform, but is more widely held in certain countries (ex: the vast majority of people in Japan, Spain, and Turkey see climate change as a serious issue, whereas that ratio is lower in the USA, China, and South Africa) and demographics (ex: people under 30 and women tend to rank environmental issues as greater risks).

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Systems