Overline: Systemic Risk Briefing Note
Headline: Dealing with Complex Challenges

The systemic and uncertain risks facing the world today can have cascading impacts across systems and sectors. To better understand and respond to these risks, an integrated perspective that incorporates the inherently complex nature of climate-related hazards, vulnerability, exposure and impacts is needed. This insight is at the centre of a new briefing note co-authored by IASS research group leader Pia-Johanna Schweizer and published by the International Science Council, the United Nations Office for Disaster Risk Reduction and the Risk Knowledge Action Network.

Disinfection in a warehouse: the Corona pandemic is impacting many areas of life.
Disinfection in a warehouse: the Corona pandemic is impacting many areas of life. Shutterstock/Dusan Petkovic

In a globally connected world facing a climate emergency, old and new conflicts, and the long-lasting consequences of the Covid-19 pandemic, complex risks are the ‘new normal,’ according to Jana Sillmann of the University of Hamburg, Germany, and the Center for International Climate Research, Norway, who has led the writing of the Briefing Note and is co-chair of the Knowledge Action Network on Emergent Risks and Extreme Events (Risk KAN).

“The dynamic nature of risk and its determinants is one important dimension of complex systems and associated systemic risks. In the Briefing Note we argue that characteristics of systemic risk, such as the transgression of geopolitical boundaries and an emphasis on the interconnectedness of system elements, set systemic risks apart from conventional risk assessment approaches and risk governance,” said Sillmann.

The recently published report of the Intergovernmental Panel on Climate Change (IPCC) Working Group II recognises the interdependence of climate, ecosystems, biodiversity, and people, and the increasingly severe and interconnected risks to regions, sectors, and communities, outpacing our ability to adapt. In addition, “systemic risks tend to be attenuated rather than amplified in public perception due to various factors, such as risk perception not being calibrated to the seriousness of the risk due to lags in cause and effect, as we see happening with climate change,” said Pia-Johanna Schweizer.

“Understanding how risk is created and how its impacts can cascade across sectors and scales has been a major focus of research for some time. With global trends accelerating the pace of change, developing a common language and understanding of systemic risks and how we can enhance the governance of such risks is critical. This paper provides a stocktaking of current concepts and understandings of systemic risk from a range of perspectives and identifies areas for transdisciplinary collaboration,” said Anne-Sophie Stevance, Senior Science Officer at the International Science Council.

The Briefing Note argues that climate risk assessments and adaptation strategies that focus exclusively on straight-forward and clearly identified risks to individual nations and sectors are insufficient to deal with systemic risks such as climate change or a global pandemic. Only by reducing system vulnerabilities will the world be in a better position to reduce systemic risks.

For example, “Covid-19 emerged as a health concern but has disrupted nearly all aspects of society given the interdependencies of key systems including labour, supply chains, food systems and international trade. Covid-19 risks may also be compounded by simultaneous and overlapping disasters, including those driven by climate change and related extreme events. Systemic risk analysis is critical to understanding how the structure of our governments, institutions, technology and natural systems may exacerbate or alleviate these risks, providing more holistic solutions tailored to build resilience in our complex society,” said Alex Ruane, NASA Goddard Institute for Space Studies, USA, who is a co-author of the Briefing Note and a member of the UNDRR Global Risk Assessment Framework Expert Group.

The latest IPCC Report broadens its ‘risk framing’ approach to encompass both understanding the impacts of climate change and our responses to climate change (including mitigation and adaptation efforts) and considers how risks relate to the achievement of the 17 Sustainable Development Goals. “Cutting-edge approaches to risk management cannot afford to treat problems in isolation,” emphasises Ruane.
The authors of the Systemic Risk Briefing Note further highlight, given the uncertainties and complexity involved in identifying and analysing systemic risks, that no single streamlined approach will capture the complexity of interconnecting, compounding and cascading risk. Instead, the Briefing Note suggests the use of “toolbox approaches” that take an iterative approach to learning, using multiple lines of evidence and a range of methods and perspectives. Moreover, toolbox approaches that are built on an open and inclusive process that includes a broad set of stakeholders can increase trust and buy-in by decision-makers.

This article is based on a press release by the International Science Council.

Sillmann, J., Christensen, I., Hochrainer-Stigler, S., Huang-Lachmann, J., Juhola, S., Kornhuber, K., Mahecha, M., Mechler, R., Reichstein, M., Ruane, A.C., Schweizer, P.-J. and Williams, S. 2022. ISC-UNDRR-RISK KAN Briefing note on systemic risk, Paris, France, International Science Council, https://doi.org/10.24948/2022.01

Systemic Risk