RMI FINAL EXAM Module 10B Societal Risk What are Needs The basics food water and shelter Our insatiable wants o Our wants and desires spur economic activity o Our wants are unlimited Include things such as entertainment communication variety ect Our limited means o Resources technology and capital are scarce so our means are scarce o Labor efforts of mind and muscle that can be used in the production process o Capital all nonhuman ingredients that go into production GDP o Prime measure of production from inside of Americas Boarders Example If you have a German company located in Florida their value of production will be included in Americas GDP not Germany o Total VALUE OF PRODUCTION from using marketing prices o DO NOT take into account ownership GDP is the economic pie but doesn t tell us about how the pie is split up Doesn t tell us what to produce o Increase in GDP can be from 1 Production increases 2 Price increases o Real GDP makes adjustments for prices rising or falling o Per Capita Real GDP production per person in our economy Production possibilities o Every economy has a stock of resources and technology to produce o Opportunity cost is not linear o Marginal cost is curved Who and what decides the optimal amount of production Won t ever be able to tell exactly o growth in the economy Generic growth more resources and technology are included Specific growth education technology What causes poverty o Quality of the labor force o Stock of capital natural resources o Technology o Efficiency o Population o Less developed countries Communism vs capitalism What can governments do to alleviate human misery Planned vs an unplanned economy Involvement in education Infrastructure Attract foreign direct investment What are we looking at in terms of a trend in less developed countries o High pop with lower life expectancy and higher rate of population increase lower per capita real GDP higher GDP growth rate o The chart looks at five things 1 Per capital GDP 2 GDP growth 3 Life expectancy 4 Population 5 Rate of population increase Q what is not a cause of poverty A Health Care Q GDP can be increased from what A Production and price increases Q What can governments provide to alleviate poverty in underdeveloped countries A Humanitarian Aid Q GDP measures A Production within the borders of an area USA using market prices Q Our limitations include A resources technology capital labor Q What are some downsides to GDP A doesn t take into account ownership doesn t say what is produced increase in GDP could be from price or production Q What is real GDP A takes away effect of price change producing more Q What is Per Capita GDP A production per person using more labor sources Module 11 GLOBAL RISK REPORTS o Ask people what are the biggest risks 31 that fall into 5 categories What are the underlying themes in the report o Trust o Long term thinking o Collaborative multi stakeholder action o Global governance What is horizon risk o Things we won t face today but are in the future Understanding systematic risk o Global risk occurrence that causes significant negative impact for several countries and industries over a time frame up to 10 years o Systematic risk breakdown in an entire system as opposed to breakdowns in individual parts or components little things go wrong lead to entire failure o Characterized by 1 little things that don t look related but eventually are 2 One loss triggers chain of others 3 Hysteresis being unable to recover equilibrium after a shock Global risk characterized into o 1 Economic biggest concern o 2 Environmental o 3 Geopolitical second biggest concern o 4 Societal o 5 Technological least concerning How do we analyze these risks o Three parameters Highest concern qualitative Likelihood and impact quantitative Interdependencies systemic Top 10 risks of concern o 1 Fiscal crisis in key economies o 2 High unemployment underemployment o 3 Water crisis o 4 Severe income disparity o 5 Failure of climate change mitigation o 6 Greater incident of extream weather events o 7 Global government failure o 8 Food crisis o 9 Failure of a major financial institution o 10 Profound political and social instability The global risk landscape o All based on likelihood and impact the map figure o Includes the breakdown of all five categories How are they related Interconnections MAP Global problem because if one govt falls their debt and effects fall on someone Fiscal Crisis biggest risk o CAUSE Lack of confidence in the US dollar High level of govt debt o RESULT else Fiscal crisis in key economies Global result of fiscal crisis Unknown Water Crisis o CAUSE o RESULT Droughts and floods Tri state water discputes FL AL GA Cali droughts Impacts food availability Question Is it us Are we the cause from burning gasses and not being Economic growth vs climate change efficient Maybe o CAUSE o RESULT Urbanization Economic impact of not driving does good for the climate but what does is do for the economy Question becomes how does one balance these things In 100 years developing countries will be able to adapt to where developed countries are today 100B per year for developing countries o Half of the population lives in cities o Not too big of a problem in USA as in poorer countries o When viruses come in underdeveloped countries they re effected more because they all Existential threat a threat that would end human life as we know it the Unknown unknowns live together Part two Focuses on o 1 Geopolitical risk o 2 Youth risk o 3 Cyber risk o Causes 1 Geopolitical low level conflicts that can expand rapidly Energy oil Financial service privacy Health care aging population costs more 2 Youth o Education and underemployment o Supporting older generations o Youth and dissatisfaction 3 Cyber risk o Digital disintegration Cyberwarfare Smart grid Cyberspace has proven resilient RM PROCESS o ID risk o Prioritize top risk o Undertake risk assessment o ID risk management option o Design risk management option o Design RM strategy o Design crisis management strategy o Implement o Monitor Strategy for managing global risk o Trade off o Public private partner o Long term thinking o Large scale disaster Q What is the biggest global risk A Fiscal crisis in KEY ECONOMIES Q something that is considered a risk for more than one country A Global risk Q What are the underlying themes in the report A trust long term thinking collaborative multi stakeholder action global governance Q Global risks are based on A
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