Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Risk analysis for a complex world

18.11.2014

Developing adaptable systems for finance and international relations could help reduce the risk of major systemic collapses such as the 2008 financial crisis, according to a new analysis.

The increasing complexity and interconnection of socioeconomic and environmental systems leaves them more vulnerable to seemingly small risks that can spiral out of control, according to the new study, published in the journal Proceedings of the National Academy of Sciences.

The study examines risks are perceived as extremely unlikely or small, but because of interconnections or changes in systems, can lead to major collapses or crises. These risks, which the researchers term “femtorisks,” can include individuals such as terrorists, dissidents, or rogue traders, or factors like climate change, technologies, or globalization.

“A femtorisk is a seemingly small-scale event that can trigger, often through complex chains of events, consequences at much higher levels of organization,” says Princeton University professor and IIASA Distinguished Visiting Fellow Simon Levin, who adopted the term (originally suggested by co-organizer Joshua Ramo) together with an international group of experts during a 2011 IIASA conference on risk modeling in complex adaptive systems.

Levin explains, “A complex adaptive system is a system made up of individual agents that interact locally, with consequences at much higher levels of organization, which feed back in turn to affect individual behaviors. The individual agents can be anything from cells and molecules, to birds in a flock, to traders in a market, to each and every one of us in the global environment.”

The complexity of such systems makes it difficult or even impossible to model the outcomes of specific changes or risks, particularly very small or seemingly insignificant ones. The study examines several examples of such femtorisks that set off major crises, including the credit default swaps that led to the 2008 financial crisis, the recent protests in the Middle East and Ukraine that led to the broad upheavals in both regions’ political systems, and the warming temperatures in the Arctic that have led to massive international interest in the region for mining and economic development.

Risk management for an unpredictable world
In light of such unpredictable risks, the researchers say, the most resilient management systems are those that can adapt to sudden threats that have not been explicitly foreseen. In particular, the researchers suggest a model drawing on biological systems such as the vertebrate immune system, which have evolved to respond to unpredictable threats and adapt to new situations.

“In practice it is generally impossible to identify which of these risks will end up being the important ones,” says Levin. “That is why flexible and adaptive governance is essential.”

The general principles of such management include: effective surveillance, generalized and immediate initial responses, learning and adaptive responses, and memory, say the researchers. Levin says, “We need to design systems to automatically limit the potential for catastrophic contagious spread of damage, and to complement that with effective and flexible adaptive responses.”

Reference
Frank AJ, Collins MG, Levin SA, Lo AW, Ramo J, Dieckmann U, Kremenyuk V, Kryazhimskiy A, Linnerooth-Bayer J, Ramalingam B, Stapleton Roy J, Saari DG, Thurner S, von Winterfeldt D. 2014. Dealing with femtorisks in international relations. Proceedings of the National Academy of Sciences. Doi:10.1073/pnas.1400229111

For more information contact:

Simon Levin
Princeton University
IIASA Distinguished Visiting Fellow
Tel: +1 609 258 6880
slevin@princeton.edu

Margaret Goud Collins
IIASA Secretary - Science and NMO'sDirectorate
Council and External Relations
+43(0) 2236 807 354
collins@iiasa.ac.at

Holly Welles
Princeton University Environmental Institute
Communications and Outreach
+1 609-258-6456
hwelles@princeton.edu

Katherine Leitzell
IIASA Press Office
Tel: +43 2236 807 316
Mob: +43 676 83 807 316
leitzell@iiasa.ac.at

About IIASA:
IIASA is an international scientific institute that conducts research into the critical issues of global environmental, economic, technological, and social change that we face in the twenty-first century. Our findings provide valuable options to policy makers to shape the future of our changing world. IIASA is independent and funded by scientific institutions in Africa, the Americas, Asia, Oceania, and Europe. www.iiasa.ac.at 

Katherine Leitzell | idw - Informationsdienst Wissenschaft

Further reports about: Analysis IIASA Sciences economic development warming temperatures

More articles from Studies and Analyses:

nachricht Drone vs. truck deliveries: Which create less carbon pollution?
31.05.2017 | University of Washington

nachricht New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Climate satellite: Tracking methane with robust laser technology

Heatwaves in the Arctic, longer periods of vegetation in Europe, severe floods in West Africa – starting in 2021, scientists want to explore the emissions of the greenhouse gas methane with the German-French satellite MERLIN. This is made possible by a new robust laser system of the Fraunhofer Institute for Laser Technology ILT in Aachen, which achieves unprecedented measurement accuracy.

Methane is primarily the result of the decomposition of organic matter. The gas has a 25 times greater warming potential than carbon dioxide, but is not as...

Im Focus: How protons move through a fuel cell

Hydrogen is regarded as the energy source of the future: It is produced with solar power and can be used to generate heat and electricity in fuel cells. Empa researchers have now succeeded in decoding the movement of hydrogen ions in crystals – a key step towards more efficient energy conversion in the hydrogen industry of tomorrow.

As charge carriers, electrons and ions play the leading role in electrochemical energy storage devices and converters such as batteries and fuel cells. Proton...

Im Focus: A unique data centre for cosmological simulations

Scientists from the Excellence Cluster Universe at the Ludwig-Maximilians-Universität Munich have establised "Cosmowebportal", a unique data centre for cosmological simulations located at the Leibniz Supercomputing Centre (LRZ) of the Bavarian Academy of Sciences. The complete results of a series of large hydrodynamical cosmological simulations are available, with data volumes typically exceeding several hundred terabytes. Scientists worldwide can interactively explore these complex simulations via a web interface and directly access the results.

With current telescopes, scientists can observe our Universe’s galaxies and galaxy clusters and their distribution along an invisible cosmic web. From the...

Im Focus: Scientists develop molecular thermometer for contactless measurement using infrared light

Temperature measurements possible even on the smallest scale / Molecular ruby for use in material sciences, biology, and medicine

Chemists at Johannes Gutenberg University Mainz (JGU) in cooperation with researchers of the German Federal Institute for Materials Research and Testing (BAM)...

Im Focus: Optoelectronic Inline Measurement – Accurate to the Nanometer

Germany counts high-precision manufacturing processes among its advantages as a location. It’s not just the aerospace and automotive industries that require almost waste-free, high-precision manufacturing to provide an efficient way of testing the shape and orientation tolerances of products. Since current inline measurement technology not yet provides the required accuracy, the Fraunhofer Institute for Laser Technology ILT is collaborating with four renowned industry partners in the INSPIRE project to develop inline sensors with a new accuracy class. Funded by the German Federal Ministry of Education and Research (BMBF), the project is scheduled to run until the end of 2019.

New Manufacturing Technologies for New Products

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Plants are networkers

19.06.2017 | Event News

Digital Survival Training for Executives

13.06.2017 | Event News

Global Learning Council Summit 2017

13.06.2017 | Event News

 
Latest News

A new technique isolates neuronal activity during memory consolidation

22.06.2017 | Life Sciences

Plant inspiration could lead to flexible electronics

22.06.2017 | Materials Sciences

A rhodium-based catalyst for making organosilicon using less precious metal

22.06.2017 | Materials Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>