Systemic Risk

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Definition(s)

Selected definitions relating to systemic risks

"The origins of modern investigation in systems and the development of systems-based approaches can be traced back to the late nineteenth century. These lines of inquiry flourished through the twentieth century, in the study of complexity science and adaptive systems, through Ludwig von Bertalanffy’s General System Theory in 1968, to cybernetics, catastrophe theory, complexity theory and complex adaptive systems.

And yet a commonly accepted vocabulary describing the manner in which risk features in systems is yet to be developed. The imperative to adopt systems-based approaches in understanding and managing risk that is enshrined in the Sendai Framework and the 2030 Agenda, has prompted UNDRR to propose the following definitions to guide the inquiry and the address of risk in systems, in this GAR, and potentially henceforth in implementation. Definitions may overlap each other.

Systemic risk – risk that is endogenous to, or embedded in, a system that is not itself considered to be a risk and is therefore not generally tracked or managed, but which is understood through systems analysis to have a latent or cumulative risk potential to negatively impact overall system performance when some characteristics of the system change.

Femtorisk – a seemingly small-scale event that can trigger consequences at a much higher level of organization, often through complex chains of events (after Simon Levin 2011).

Systems risk – the inherent risk of a system when substantive elements of the system contribute to the entire system having a certain risk profile, which could be anywhere on the risk spectrum from very low risk, like an intact rainforest ecosystem, to very high risk, like a tar sands mining system.

Network hyper-risk (after Dirk Helbing 2013) or cascading multiple systems risk – the inherent risk across multiple systems when there are substantive elements contributing to the system of systems having a certain risk profile, which could be anywhere on the risk spectrum from very low risk to very high risk. An example of very high risk might be the network hyper-risk across the entire food system as described by the analysis in the MBBF programme of work.

Existential risk – the risk of a fundamental, irreversible change in the performance of all systems relative to a specific perspective; for example, the existential risk to the survival of humans on Earth that is posed by the collective of risks associated with climate breakdown.

Topological map of risk through time (after Molly Jahn 2015) – a dynamic temporal and geospatial representation of risks at multiple scales including representation of the functioning of multiple complex, non-linear, interlocking systems across all scales and the interlinkages, dependencies, correlations and relationships among and across all types of risk (as broadly defined in the Sendai Framework, para. 15). The purpose is to provide an understanding of the current and future conditions on Earth to manage uncertainty through the identification of precursor signals and anomalies, including sensitivities to change, system reverberations, bleed-over and feedback loops, by utilizing artificial intelligence and collective human intelligence." (https://gar.unisdr.org/sites/default/files/chapter/2019-06/chapter_2.pdf, p. 11 ; Sources: von Bertalanffy 1968; Levin 2011; Helbing 2013a; Jahn 2015)