Risk Management Study Guide Module 11 Global Risk Report Underlying Themes in Report Trust Long Term Thinking Collaborative Multistakeholder Action Global Governance Global Risk occurrence that causes significant negative impact for several countries and industries over a time frame of up to 10 years Systemic Risk breakdowns in entire system opposed to breakdowns in individual parts or components Systemic Risks are characterized by o Modest tipping points combining indirectly to produce large failures o Risk sharing or contagion as one loss triggers a chain of others o Hysteresis or systems being unable to recover equilibrium after a shock Global Risks divided into 5 categories Economic Fiscal Liquidity Failure of major financial mechanism or institution Oil price shocks Failure of physical infrastructure Natural disasters earthquakes storms Man made risks collapsing ecosystems nuclear accidents Environmental Geopolitical Areas of politics Diplomacy Conflict Crime Global Governance Societal Severe income disparities Food Crises Dysfunctional Cities Pandemics Technological Cyber attacks Risks analyzed along 3 parameters Highest Concern qualitative Likelihood and impact quantitative Interdependencies systemic Top 10 Highest Concern 1 Fiscal Crisis in Key Economies 2 Structurally High Unemployment Underemployment 3 Water Crises 4 Severe Income Disparity 5 Failure of Climate Change Mitigation Adaption 6 Greater Incidence of Extreme Weather Events 7 Global Governance Failure 8 Food Crises 9 Failure of a Major Financial Mechanism Institution 10 Profound Political and Social Instability Causes of Fiscal Crises o Lack of confidence o High level of government debt ID Risk Strategy for Managing Global Risks 1 2 Prioritize Top Risks 3 Undertake Risk Assessment 4 ID Risk Management Options 5 Design RM Strategy 6 Design Crisis Management Strategy 7 8 Monitor Implement Strategy for Managing Global Risks Issues 1 The trade offs 2 Public Private Partnerships 3 Long Term Thinking 4 Large Scale Disasters Module 12 Natural Disasters and the Human Population What makes a disaster Fatalities Damage Economic effects Natural hazards are inevitable but natural disasters are not What is the difference between a natural disaster and a great national disaster Death toll Damage Effect on economy o Not a clear definition hard to bring precision to natural events Altruism refers to people helping others in a time of need Return Period how many years between similar magnitude events Typically an inverse relationship between frequency and magnitude really bad hurricanes don t make landfall every year Where is Tornado Alley Population Explosion varies with o Economic Development Birth Rates and Death Rates Varies with Economic Development Alternatives for managing natural hazard risk o Urbanization o Mitigation o Resilience Demographic Transition Three Phases 1 Pre transition high birth rates and high death rates population maintenance most of human history 2 Transition low death rates and high birth rates population explosion 1700 200 3 Post transition low death rates and low birth rates population maintenance developed nations Carrying Capacity o The ability of the environment to support a population o Population size is regulated by resources available in environment Module 12 Is the International Community Make Progress in Addressing Natural Disasters Great disasters megadisasters are actually very concentrated o 26 of disasters caused 78 2 of deaths o 28 of disasters caused 40 of the economic losses Natural Hazards o Poor Countries High share of risk Greater economic losses of GDP Least resilient Leads to real poverty Why are poor nations worse off o Less resilient o No insurance social coverage o Lead to income consumption shortfalls which they can t afford o Negatively affect welfare and human development where they are already behind Global Catastrophic Risks 2008 o Most global catastrophes will occur from human activities industrial civilization and advanced technologies o Infectious pandemic diseases biggest worry o Nuclear war biotechnology nuclear terrorism Hyogo Framework 1 Ensure that disaster risk reduction is a national and local priority with a strong institutional basis for implementation Identify assess and monitor disaster risks and enhance early warning 2 3 Use knowledge innovation and education to build a culture of safety and resilience at all levels 4 Reduce underlying risk factors 5 Strengthen disaster preparedness for effective response at all levels What we could be doing o Establish and promote best building practices o Safety inspections remedial construction technical know how sharing o Early warning technologies o Better international response o Provide essential infrastructure o Relocate communities o Sea walls retaining walls structural support o Survival power water systems o First response capabilities Module 13 Is Global Aging a Major Problem Aging Trends 1 Aging population people 65 and over outnumber those 5 and under 2 Life expectancy is increasing lifespan 3 The number of people 80 will double in 30 years 4 Median age of Western Europe Japan 1980 34 and 33 2030 47 and 52 5 Italy Spain Japan More than half of all adults will be older than official retirement age More people in their 70 s than 20 s Major Challenges of Aging Population 1 Economic development issues 2 Health and well being issues 3 Challenge of enabling and supportive environments Specifically 1 Slower economic growth 2 Poverty among elderly 3 Generational equity 4 5 6 Suboptimal consumption profiles 7 Not uniform across countries some are seeing an aging population Inadequate investment in physical and human capital Inefficiency in labor markets coupled with population decline 8 Noncommunicable diseases become an increasing burden 1 killer of elderly 9 Family structures are changing care options for elderly 10 Shrinking ratio of workers to pensioners pay as you go systems Social insurance systems are less sustainable Effects on social entitlement programs 11 Social Political Impacts Rate of Change is a Problem o Most developed countries have gone from a high death and birth rate to a low death and birth rate Specifics Economic Development 1 o With human input declining need improved efficiency for GDP growth o May not be enough could see declining GDP even with more effective use of capital o Worker productivity typically declines with age o Less entrepreneurial Specifics Savings Rates and Investment 4 o
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