Survival in the Age of Complexity | World Economic Forum
Wednesday, 14 September, 2011 Leave a comment
Image via Wikipedia
My only excuse for missing out on this update from Klaus Schwab (World Economic Forum), following the Global Risks Report 2011, is that I was only holiday (and am still paying the price)!
Bearing in mind that we all share the same planet, their findings are relevant to each and every one of us (and our children) BUT, if you are involved in the “risk business” what will be your excuse for failing to heed the warnings???
I would also like to point out to any readers (particularly, in the unlikely event that someone involved in WEF or with preparing the report) that, whilst inter-connectedness and complexity are identified within and between “domains”:
Unless I am missing something, there appears to be an assumption that risk impacts are, somehow, contained within the originating domain…like the interconnectedness doesn’t serve as a conduit for risk (of the systemic variety)! I would be surprised and “disappointed” if such a naive assumption were made BUT, if it is understood that other domains are affected at micro and macro levels why not spell that out? It is relevant, is it not?
These words are pretty clear although there is still scope to read between the lines, so I have endeavoured to help in this respect because we can’t afford to ignore the issues. They will not go away
…All of these accelerated trends–velocity, multiplicity, interconnectivity–are creating a completely new world in which the mastering of complexities will be the key challenge. Of course, the more complex the system is, the greater the risk of systemic breakdowns. In modernity (digital age) the pace of and scale of the growth in complexity (a source of risk) outstrips the capabilities of the tools and techniques we have used to analyse, measure and manage risk in industrial and post-industrial eras.
When we look at our governance systems, above all global governance, we see the stress symptoms of leaders who are having difficulty in coping with the complexities of today’s world. Leaders who abandoned Governance in pursuit of profit generate risk (in the form of complexity) and communicate that into global networks where, what was unmanaged risk creates uncertainty and instability. Now the don’t know how to undo what has been done without admitting what has been done and their motivations The sub-prime and Euro economic crises are primary examples of the unintended consequences resulting from actions taken in unchartered territories. the result of multiple self-similar financial strategies and a failure to understand the impact of cumulative interdependent risks Today, the whole world, inclusive of the Group of Twenty (G-20) countries, is consumed by fire-fighting rather than fire prevention and mitigation. failed attempts to micro manage (at national level) macro (global) issues relating to global finance and sovereign debt [“good” money after bad – dealing with debt by creating more!] But there’s a tipping point where velocity, interconnectivity and complexity become so pervasive that the whole system collapses, regardless of whether certain elements at the surface of the system are fixed. inability to penetrate institutional opacity to form an accurate holistic view and to identify/track causality at micro level lead to “treating symptoms”. If we heap complexity upon complexity until the point of “critical complexity” is reached failure and collapse are assured. We may not have the foresight and collaborative spirit to shape our global future, but at least we should have the survival instinct to move from pure urgency-driven risk management to much more collaborative efforts aimed at strengthening our risk resilience. an understanding of the need for interdependence is VITAL and more productive than “fire-fighting”. We need to build systemic resilience (rather than to create systemic risk) – but resilience requires the means to identify areas of fragility so that redundancy can bring strength [needs measurement to cost effective deployment]
This implies a multi-stakeholder effort by governments, business, science and civil society to create a much more appropriate global rules-based system. unless the collective will is “right” and stakeholders take precedence over results [if ethical business and transparency aren’t forthcoming], the rules-based approach will need to increase This should at best guarantee that the complexity of the system is not exploited for the individual gain to the detriment of global society. individual and collective greed [with the opacity that it demands] have brought us to where we are and now that we accept that complexity is an unavoidable consequence of our growth and development we cannot afford to overlook the threat that it carries for all of us.