RMI Final Exam Study Guide Module 11 Global Risk Report 1 Overview a Many risks do not respect national borders b Survey of 700 experts c Orient inform decision makers d Objectives i Explore the nature of systemic risks ii Map 31 global risks iii Three constellations youth cyberspace and geopolitics 2 Underlying themes a Trust i If you re going to work internationally with others you must be able to trust that they re going to do what needs to be done b Long term thinking i A lot of risks cannot be expressed in the short term c Collaborative multistakeholder action i Everybody has got to be involved d Global governance i Who s looking out for the big picture You can t just look out for your own countries best interest 3 Part 1 Understanding systemic risks a Global risk occurrence that causes significant negative impact for several countries industries and industries over a time frame of up to 10 years b Systemic risk breakdowns in an entire system as opposed to breakdowns in individual parts or components i What they really mean by this according to Dr Nyce The domino effect One node in a system leads to others failing ii System risks are characterized by 1 Modest tipping points combined indirectly to produce large failures others 2 Risk sharing or contagion as one loss triggers a chain of 3 Hysteresis or systems being unable to recover equilibrium after a shock 4 Understanding system risks a Categories of risk i 31 Global risks divided into 5 categories and few of the specific ones 1 Economic a Liquidity crisis b Failure of a major financial mechanism or institution c Oil price shock to a global economy 2 Environmental a Greater incidence of extreme weather events b Greater incidence of man made environmental catastrophes i Oil spills nuclear accidents etc 3 Geopolitical 4 Societal Increasing corruption a b Large scale terrorist attacks c Deployment of weapons of mass destruction a Food crisis b Severe income disparity c Pandemic outbreak d Mismanaged urbanization planning failures inadequate infrastructure and supply chains etc 5 Technological a Massive incident of data fraud theft b Escalation in large scale cyber attacks c Breakdown of critical information infrastructure and networks b Risk analysis i Risks analyzed along 3 parameters 1 Highest concern qualitative 2 Likelihood and impact quantitative a How likely is it to happen in the next 10 years and how bad will it be if it does 3 Interdependencies systemic a How interrelated is it with some of the other risks on the list c Top 10 i What Dr Nyce expects us to know from the reading 1 Fiscal crisis in key economics economy category 2 Structurally high unemployment underemployment a economy category 3 Water crisis 4 Severe income disparity a Rich getting richer and poor getting poorer 5 Failure of climate change mitigation and adaptation 6 Great 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 d Fiscal crises i Causes of fiscal crises 1 Lack of confidence a We lose confidence of our government to get things done b The US economy is really based on consumer spending and when people lose confidence in our government they spend less and save more because they think they will need it in the future 2 High level of government debt a At some point our US government is going to have to start paying it back b When interest rates goes up more and more of our future tax money is going to go towards paying interest on our debt ii Results of fiscal crises e Water crises i Connected to extreme weather ii Water security 1 How do we make sure we can protect our water supply a Can we protect if from terrorist attacks keep it from being stolen etc Impact of food availability and prices iii 1 Countries will go to war if they can t feed and give water 2 to their people If water becomes an expensive commodity it will affect food prices drink prices etc iv Not just a 3rd world concern 1 CA 2 FL f Climate change i Economic growth vs climate change 1 Should we continue at levels of economic growth that we have or should we be taking money out and trying to mitigate the affect we have on climate change 2 Should we continue burning fossil fuels at the rate we are or should we be concerned what effect it will have on the environment ii Vulnerability who can adapt best 1 Wealthier countries can adapt best to climate change iii Cost 100B year for developing counties iv Time 100 years until poorest counties can adapt as well as we can today g Trends to watch i Demographic trends aging 1 Most countries have an aging population 2 Should we be shorter focused because we re not living as long or be more long focused to worry about the kids ii Social concerns extremism youth unemployment gender inequalities 1 If you have uncertainty you will see more movements towards extremism 2 What are the job opportunities once we graduate iii Technological privacy mismanagement of data 1 What happens if everybody s information goes public iv Environmental fracking 1 What are we doing to get oil out of the ground v Science and technology 3 D printing self drive vehicles 1 Is it possible for us to make 3 D printers good enough to where we could just make stuff instead of going out and buying it vi Economic monetary policy vii Social and political cost of living longer 1 What is the cost associated with living longer 5 Part 2 Risks in focus a Three specific risk foci i Geopolitical risk ii Youth risks iii Cyber risks b Geopolitical risk i Low level conflicts 1 See more things like ISIS in Syria and Iraq ii Geopolitics and systemic sectors 1 Energy US as exporter a We import a lot of gas but the projections show that we could become the leading exporter for oil and natural gas in the near future 2 Financial services services a One of the US s main services is financial i What happens if we lose this position 3 Healthcare c Youth i Education and unemployment ii Spain and Greece have 50 youth unemployment iii Supporting older generations 1 The way the US is set up the youth has to support the older generations through SS healthcare Medicare etc d Digital disintegration involved politically a The problem with this is if the youth can t get jobs out of college how are we going to support those generations iv Professional vs formal education 1 With the unemployment of youth out of college should everybody go to college to get a degree 2 Some people need
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