By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
It seems each week – if not each day – brings us new headlines about the numerous and pressing disasters the world faces. What has been our collective response been to such risks?
Ha.
Not much i’m afraid.
Yesterday, the United Nations Office for Disaster Risk Reduction (UNDRR) issued a stark report on disaster risk reduction, Our World at Risk, which is embedded below. From the summary on the UNDRR website, Our World at Risk: (hereinafter OWR summary):
Despite commitments to build resilience, tackle climate change and create sustainable development pathways, current societal, political and economic choices are doing the reverse. This jeopardizes not only achievement of the Sendai Framework for Disaster Risk Reduction 2015–2030, but also hinders progress towards the Paris Agreement and the Sustainable Development Goals (SDGs) set out in the Transforming our World: the 2030 Agenda for Sustainable Development.
To change course, new approaches are needed. This will require transformations in what governance systems value and how systemic risk is understood and addressed. Doing more of the same will not be enough.
Risk creation is outstripping risk reduction. Disasters, economic loss and the underlying vulnerabilities that drive risk, such as poverty and inequality, are increasing just as ecosystems and biospheres are at risk of collapse. Global systems are becoming more connected and therefore more vulnerable in an uncertain risk landscape. Local risks, like a new virus in Wuhan, China, can become global; global risks like climate change are having major impacts in every locality. Indirect, cascading impacts can be significant.
Without increased action to build resilience to systemic risk, the SDGs cannot be achieved.
Investment in understanding risk is the foundation for sustainable development. However, this needs to link to a reworking of financial and governance systems to account for the real costs of current inaction to address risks like climate change. Without this, financial balance sheets and governance decision-making will remain fragmented and be rendered increasingly inaccurate and ineffective. [Jerri-Lynn here: original emphasis.]
Alongside the dark and depressing report, UNDRR also went out a half-hopeful tweet:
Disasters can be prevented, but only if countries invest the time and resources to understand and reduce their risks.#StopTheSpiral Read the #GAR2022 report https://t.co/WeGIKrck6X pic.twitter.com/P7H69tCTe6
— Mami Mizutori (@HeadUNDRR) April 26, 2022
This limited optimism was amplified and expanded on in the overview to the report, OWR summary:
It is not inevitable that risk continues to grow. The best defence against systemic risk is to transform systems to make them more resilient.
Policy and personal action now can reverse this trend, but only if systemic risk is better understood and risk reduction action is accelerated. The fundamental equation that risk is a function of a hazard event combined with vulnerability and exposure has not changed. However, systemic risk occurs in today’s globalized world through interconnected digital and physical infrastructures, globally integrated supply chains and factors such as urbanization and increased human mobility.
I’ve elected not to reproduce any of the reports’s charts. The one featured in the summary shows that If current trends continue, the number of disasters per year globally may increase from around 400 in 2015 to 560 per year by 2030 – a projected increase of 40%.
Why do I omit this? Because even these grim graphics understate the true magnitude of the problems the world faces in that. Per OWR summary:
These trend lines do not take into account future climate change impacts, which are accelerating the pace and severity of hazard events, nor the fact that current choices mean the world is set to exceed the Paris Agreement’s global average maximum temperature increase target of 1.5°C by the early 2030s (IPCC, 2021). [Jerri-Lynn here: my emphasis.]
So, to reproduce a report that fails to account for future climate change impacts would, or so I think, be an exercise in propagating misinformation. Even this depressing trend line Understates the actual risks faced.
What Can Be Done?
According to the OWR summary, humanity cannot eliminate systemic risk completely. but:
Systemic risk cannot be eliminated entirely, but it can be reduced and addressed more effectively. Addressing systemic risk requires building on existing risk reduction know-how, and also developing enhanced approaches to address the characteristics of systemic risk such as its cascading effects and inherent complexity and uncertainty.
Instead, a fundamental overhaul of risk governance system is necessary. Again,from the OWR summary::
In the face of global systemic risk, governance systems must quickly evolve and recognize that the challenges for the economy, environment and equality can no longer be separated. Conventional approaches to risk governance have tended to be based on linear or well- established cause-and-effect relationships. By contrast, systemic risk governance needs to recognize complex causal structures, dynamic evolutions and cascading or compound impacts. The recommendations of GAR2022 take the form of a call to action.
I will report the outlines of what the UNDRR recommends. These may be indeed be necessary and appropriate. But does anyone believe current political leaders are up to addressing these challenges?
Alas, I don’t.
So as to keep this post of manageable length, I’m going to confine this discussion to reproducing the bare bone categories of the UN’s discussion; in other words, more or less the headlines. Interested readers can click on the summary link above – or go to the full report itself – for a fuller discussion.
UNDRR first recommends measuring what we value, and then. per the OWR summary:
1.1 Rework financial systems to account for the real costs of risk, particularly long-term risks, and rework investment and insurance systems to incentivize risk reduction
And further, from OWR summary:
1.2 Adapt national fiscal planning and risk financing to consider risk and uncertainty
The report recognises our current predicament stems from the current faulty way in which we make decisions about risk and therefore recommends, according to OWR summary:
Design systems to factor in how human minds make decisions about risk.
I agree, this provides a promising starting point, One that’s much, much easier said than done. Recognising that at present human minds – and therefore our associated political and other decision-making systems misassess risk- would imply. Per OWR summary:
2.1 Recognize the role of people’s perceptions of risk and biases to close the gap between intention and action in reducing risk.
And, according to OWR summary:
2.2 Recognize the value of risk analytics as a tool but not a panacea.
The report makes sound recommendations, but I’m afraid, in order to head off the problems we currently confrontt, these recommendations would have needed to have been implemented years if not decades ago.
Nonetheless, in the interests of completeness, let me close with the report’s final recommendations. Per OWR summary::
Reconfigure governance and financial systems to work across silos and design in consultation with affected people.
Necessary, but not so simple, according to OWR summary:
3.1 Embrace a new “risk language” that cuts across multiple disciplines.
Followed by, which breaks down as, always talking the talk of participation, transparency, and inclusion. Per OWR summary:
3.2 Step up participation, transparency and citizen dialogue in risk decision-making to accelerate learning and necessary adjustments.
And then, according to OWR summary:
3.3 Enhance multi-scale risk management.
Let’s drill down into the discussion under that last heading, from OWR summary:
Rifts can emerge between the national and local levels during major crises, as was the case in many jurisdictions during the COVID-19 crisis. Autonomy for local-level action is essential.
More emphasis is required in scenario planning to manage extensive disasters and to handle governance issues resulting from cascading impacts. For example, adjustments made to health systems based on local knowledge and feedback were essential to building trust during the 2014 Ebola outbreak in Liberia (GAR2022, Chapter 7). In Canada, an InterSectoral Flood Network of Quebec presents modelling data and also explicitly facilitates co-training among members to promote a vision that is systemic and intersectoral, engaging universities and various socioeconomic partners and disciplines (GAR2022, Chapter 10) [Jerri-Lynn here: emphasis added].
Even this cursory discussion of this wee summary section has left me extremely depressed. As anyone whose paid even passing attention knows, the U.S. response to the covid crisis has been – and continues to be – a shambles. (To be sure, some other countries have done somewhat better, and others, much more so.)
Nonetheless, addressing other challenges requires global cooperation – and that includes the U.S.and other countries that have failed at coping with covid.
Does anyone really think the current cast of clowns – and their progeny – are up to coping with the climate change conundrum – or indeed any of the other problems the planet faces, such as the collapse in biodiversity.
Global Assessment Report on Disaster Risk Reduction 2022_0
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Hi. Not trying to be weird but the article has less than 50 words on my browser. I’m using safari in an iPhone 8. Never had this before so I’m sorry if This problem is of my own reluctance to get a new phone
The fault is mine. Please check again. The complete post should be there now.
It’s not your ‘phone!
Gah. Everything right, and yet still wrong.
The word ‘war’ appears in the piece four times. War is the imposition of systemic risk on another party. It is not just a ‘thinking fast’ phenomena that can be cured by better messaging. Neither ‘blockchain’ nor ‘bitcoin’ appears at all. Yet the rate of increase of that phenomena will bankrupt our energy reserves in a few years, left unfettered. These are ‘thinking slow’ phenomena that succeed in a time-constrained competitive environment. The ‘fast’ part is the collection of wealth, which has to happen fusteth.
* EPIMETHEUS was the Titan god of afterthought and excuses. He and his brother Prometheus were given the task of populating the earth with animals and men. However, Epimetheus quickly exhausted the supply of gifts allotted for the task in the equipment of animals, leaving Prometheus’ masterpiece, mankind, completely helpless. As a result the Titan brother was forced to steal fire from heaven to arm them. *
Prometheus peddling insurance while civilization collapses.
I went through the report and corporations/corporate gets mentioned exactly 10 times, in all but 4 cases positively.
We live in a world where consumption and waste are controlled by fewer, larger corporations every year, corporations which work through powerful financial mechanisms with the financial services sector; they are more powerful than all but a very few nations.
The global risks we are exposed to come more and more from the corporate sector (the ‘lab-leak’ theory of EcoHealth and the WIV is a classic case) and yet this report invisibilizes the systemic control of that sector.
Not much good at all, then, is it?
“Reconfigure governance and financial systems to work across silos and design in consultation with affected people.”
oh…. right…. “To serve man.” /heh
I think they are in earnest. It’s just that the “affected people” are those who presently work in “governance and financial systems.”
I’m sure they’re in earnest, as earnest and sincere as any WEF captured organization. Public/Private partnerships are always sincere(ly devoted to Private profits).
https://www.weforum.org/press/2019/06/world-economic-forum-and-un-sign-strategic-partnership-framework
an aside: a pretty good 2020 takedown of the WEF. (Yes, it’s in the NR. It’s still a good takedown.)
“…this is a small classic of the prose of soft authoritarianism. There is an “urgent need” that must be met. There is to be cooperation and management, the world is to be “improved,” and all of this is to be put in place by “global stakeholders,” — a conveniently vague phrase, with more than a suggestion of democracy bypassed about it.”
https://www.nationalreview.com/2020/10/a-useful-pandemic-davos-launches-new-reset-this-time-on-the-back-of-covid/
“Design systems to factor in how human minds make decisions about risk.” Real galaxy-brain stuff, there. Take into account how humans operate when designing systems that humans will operate…whodathunk?
UN hand-wringing over hand-wringing, waiting for someone with real authority to get the memo that it’s the end of the world. Heads up, they got the memo. Taking care of their own, imagining the jackpot. Sure wish I had a nice big boat…
I wonder what countermeasures are built into the Bezos yacht? Or maybe it will be accompanied by a screening fleet like those around soon-to-the-bottom aircraft carriers.
Maybe truly forward thinking billionaires have a nuclear sub on standby to sail through an underwater passage into their tropical island’s caldera. Or is a watery hidey hole not defensible enough?
Our world. Who is this ‘we’?
Collective Global Response. Is it me, the moron, or is that an oxymoronic concept,
off in a bubble off the page of intersecting groupings in humanity’s ven diagram?
8 Billions of us in Feb 2023, all pulling hard on the same harness toward the Bright Future upon which we all agree and share.
What Would Elon Say ? WWES
And what is number 1?
1.1 Rework financial systems to account for the real costs of risk, particularly long-term risks, and rework investment and insurance systems to incentivize risk reduction
1.2 Adapt national fiscal planning and risk financing to consider risk and uncertainty
Proper risk assessment in the frame of the financial sector is doomed.
People are told every day about their debts and the consequences if they don’t pay them. Yet, the world is letting a global financial sector, ruled by people who get bailed out and don’t face consequences, determine risk assessment.
Look at the pandemic. There has been well-deserved criticism about the Biden Administration, the CDC, the FDA, all saying it’s a matter of personal risk assessment after two years of self-serving disinformation about everything from the airborne nature of the virus (two years late with half-assed attempts to seriously discuss aerosol transmission), the diminishing returns of booster shots with antibody creation, the list goes on.
It all reminds me of getting a new job and they bring in the related partners to go over their 401k plan. People in the USA are familiar with the drill. They go through all the mumbo jumbo (often includes a little dig at the “problems” with SS. Then show people a bunch of jumbled together funds (that may or may not contain the stocks in the prospectus at the time you buy) and may or may not perform. Every brokerage has the disclaimer: “Performance data shown represents past performance and is no guarantee of future results.” Here in the real world where the consequences for people are real, past performance during a disaster is a guarantee of future results when nothing is ever learned.
Then there are the fees (some not as transparent as others) to wade thru. Then there are…finally people say “screw it” and throw their money in some index fund and try not to look. They cross their fingers and try not to look and just focus on reassuring mantras like “the stock market always goes up over time” (provided you can stay invested and gainfully employed for decades), “time in the market beats timing the market” (while all the banks and brokerages do is time their trades to beat you).
It also reminds me of getting a new job and they bring in the related partners to discuss their health insurance plans. This info is less transparent than the financial sector info. The 401k people have them beat by a mile because at least they LIST PRICES for their securities while medical procedures have no such listings. Then they try to talk to you about how you need to make a risk assessment of your choice of plan. And I bet you can figure out your 401k statement before you figure out your hospital billing statement. But your health care plan is a matter of your own personal risk assessment.
And Wall Street’s “risk assessment” of the pandemic was obvious to all. All time highs for stocks!
The financial sector is the worst for risk assessment because it breeds a self-involved complacency about urgent matters. Nothing is worth addressing if it interrupts the profit party. The first knee-jerk reaction to anything is that this is an “over-reaction” before enough time has even elapsed for the depth of the issue to come into focus. So, all of the problems snowball, hidden obscure projections geared to keep your money parked with them. Yet, there are companies making plenty money selling panic rooms, farms, bunkers, and islands to the super wealthy. War is the exception. That fear generates MIC profits. They’ll over-hype a war threat. They love the smell of fear.
The FIRE sector examples are important because they will be the worst people to turn to for any type of “risk assessment” regarding anything. FIRE sector risk assessment amounts to “buyer beware.”
Excellent comment, Mikel.
You’re quite right about risk assessment in the financial sector. The only risk they worry about is the risk to their profits and whether or not they will be bailed out if they get the assessment wrong.
It’s Ayn Rand neoliberalism everywhere. Put all the responsibility on the individual and if they do poorly, it’s their own fault. Governments and institutions are no longer responsible for making things better for the people, only themselves on an individual level. The people controlling these entities just want to get what they can and get out.
I think they actually believe they will be able to survive the coming catastrophe i.e., the Jackpot, in their bolt hole in New Zealand or some island in the middle of nowhere. They are delusional.
We are truly f*cked.
I’m glad that I’m approaching the end of my life (72) and most likely won’t live to see the collapse of civilization from climate change or its destruction by a nuclear war. (Although we seem to be hurtling toward that end.) But, I grieve for the future of my children and grandchild.
“Rework financial systems to account for the real costs of risk, particularly long-term risks, and rework investment and insurance systems to incentivize risk reduction.”
My question is this: Who will re-work these systems? The private sector? They botched the housing bubble pretty badly. The government? Their subsidies of flood insurance have encouraged over-development in coastal communities, and their mismanagement of student loans has created a whole new category of financial crisis. I can’t think of anybody I’d trust for such an exercise.
Maybe I’m too pessimistic, or just realistic. Nothing will change sufficiently when the main focus is short term, just take the money and run. We’ve already known about global warming since the 1970’s and what has been done to change course? The masters will see that nothing will be done to dilute their profits and that is all that really matters. My doctors, who are assumed to be intelligent all think that global warming is a non issue. As Biden promised, “nothing fundamental will change.” How true.
We’ve taught kids in ‘Merican schools about global warming since the ’50s. It was called The Greenhouse Effect when I learned about it in science class. Here’s an example filmstrip from the Bell Science Hour:
https://youtu.be/m-AXBbuDxRY
When your entire world is staring at a screen, not caring for or about “affected people” is easy. We live in Thatcher and Rand’s world: There is no “society” — only personal gratification, the glorification of the self, greed, hoarding, and taking pleasure in the suffering of others.
Such a quaint document.
“The United States military is the largest polluter, user of fossil fuels, and producer of greenhouse gases in the world.”
https://www.mintpressnews.com/pentagon-emitted-billion-metric-tons-greenhouse-gases-war-terror/259324/
Translation: any report which does not point the finger directly at the Pentagon as the primary cause of our ongoing climate crisis is nonsensical irresponsible propaganda. There can be no meaningful change in our effort to save ourselves without addressing the fact our constant desire to make war on each other is going to kill us in more ways than one. This is exactly why nothing meaningful is ever accomplished in this area by US politicians.
Defund the military. If as a species, we want to live past tomorrow, then there is no alternative.
Wow. Thank you JL. We can always blame our paralysis on Andromeda – the imperceptible, ever-increasing level of gravity on our teensy synapses. Slowly going ga-ga. We humans really are fatalists. That’s why we laugh and gamble, and laugh some more. I’m pretty sure that a log-on Sunday Sustainability Chat won’t end well. The bla-blah about the “dynamics of complex causal structures” is as profound as it is vacuous. “Oh, let’s just make risky behavior too expensive.” OK, that’s a great idea… if we had a few thousand years left to do it, to “rework investment and insurance systems to incentivize risk reduction.” Dear jesus. We need an entirely new vocabulary. The language of sustainability. In my mind it goes something like this: Eliminate the need for profit. Provide sustenance for essential survival. Do these things by consensus and cooperation not by coercion and debt servicing. Create a zeitgeist of generosity but not excess. And extend this thinking (sounds like Stepan Zweig’s ethereal “republic of the spirit”) to include the planet and all the creatures on it. Let our new motto be “Screw Finance.” Or something like that.
Capitalism is the only economic system allowed to operate in the world: Capitalism is based, even brags about it, on destruction, insisting said destruction is “creative”, which in fact it is, it creates risk to any entity astute enough to attempt to curtail its most destructive impulse: WAR. And War needs fuel, lots of it, and the only method of obtaining enough of that is the continued fracturing of both the North American and Siberian landscapes until there remains naught but a leaking sieve, pouring methane into the atmosphere, the result of which is well known: raging fires in every one of the hydraulic fracturing states of the American West and across the Russian taiga. Yet the only response is to fracture an ever-larger percentage of the globe’s surface. The official Denial about peak oil, even as the exact ramifications of it that were predicted are played out in front of our eyes as the world runs out of the means to increase its production, have, as you can see from this report, occasioned not a single protest against the criminal activities of the Petro States of Russia and The United States. You cannot solve a problem whose root cause is never mentioned … anywhere … although it is well-known by every climate scientist. “Climate change is causing events they had not expected to see for another 20-30 years.” That is because the egregious amount of methane hydraulic fracturing produces (and that is not even counting the flaring of enough gas to power the electrical demands of entire States … a process that creates two powerful GHG’s from that gas: CO2 and Water vapor. Flaring is virtually a GHG factory operating 24 hours/day, 7 days a week, while producing not a single joule of usable energy) has brought climate change forward by that number of decades, but you and I would not be able to communicate on this medium should fracturing not continue (there is no such word as “fracking” … it was coined by the industry so we wee folk wouldn’t be alarmed at the extent of the fracturing of oil rock that is taking place). Russia and the US together produce a full 20% of the world’s oil supply, and without fracturing, that amount would be easily halved at a time when the world can barely meet its current demand. So any UN report that pretends it is “concerned” about Climate change and says nary a word about the extensive fracturing of the earth’s rocks on a continental scale is simply pure humbug. And that’s not even counting fuel from food or crypto-mining (which has been pouring CO2 into the troposphere in such enormous amounts, it is as though an entire modern industrial country has sprung into existence practically overnight … of what good are COPout conference pledges when an entire country’s worth of CO2 generation can be produced for absolutely no reason whatsoever other than to increase billionaires’ already economically destructive hoards?). But that’s just my take … I could be wrong.
This is the same point Michael Hudson pounds on, the making money from money that Capitalism requires, the essence of Capitalism, insists that reality bend to the abstract requirement of continued compound interest/growth.
Ignoring for the moment the human costs, growth in resource exploitation beyond sustainable thresholds crossed decades ago is literally converting death to money, causing plants, animals and entire ecosystems to die in mass for profit. Now, to keep the interest compounding/growth going, the insistence on war despite the numerous alternatives still available, not to mention Covid policy, is absorbing human populations into the “converting death to money” phase of Capitalism: population is just another capitalist resource to convert into money through killing.
Burning the world and killing people are massive profit opportunities you can see our Disaster Capitalist leaning into and planning for. It’s a vision of species suicide from the ground up, I can only assume entertained by people who think they’ll die naturally before it gets too bad, or are have such a wonderful rush with their own power they just don’t care.
Given that this was a UN report I suppose it’s not surprising that they omitted mention of one of the worst risk mispricing of all times, namely AIG FP’s decision to offer its CDS clients the option of demanding NPV collateralization of an AIG CDS in return for paying an extra .25% in premiums. Yves covered this territory admirably in her book Econned. Without that extra clause Goldman Sachs et al could have been told to pound sand when they started arguing in late 2007 that AIG accept GS’s low marks on illiquid, infrequently traded tranches of CDOs GS had insured with AIG FP. WHen AIG ran out of liquidity itself and its credit rating plummeted that triggered a whole new set of margin calls, again something AIG FP had agreed to in return for a little extra (25 basis points extra profit!) in premiums. AIG FP and Joe Cassano had gotten so overconfident after a few years of record profits from the CDSs they’d sold in early the 2000s they decided to offer these “premium’ options for the well-heeled purchaser of bespoke CDSs. Without the CDSs that AIG and their ilk offered during the building of the real estate bubble on the 2000s,, many banks and pension funds would have been unable to buy the dodgy CDO tranches that GS, MS, JPM, ML, et al made billions packaging and selling to their investment clients world wide. AIG was the 800 lb gorilla in CDSs and when they went risk oblivious their competitors probably did likewise. Either way, AIG was enough. They sold fire insurance to arsonists and ended up burning down ther own company, not to mention much of the world. Think of the carnage that the Arab SPring ultimately resulted in and think of the arrogance of the AIG FP math wizards who were conifident they understood the risks of an instrument that had not existed before the mid 1990s – less than a decade worth of data. Simply incredible.
“Spiral of self destruction” is the least of it. It’s a spiral of destruction of everything, a total war on the life of the entire planet.
I can’t even avoid it by avoiding news. It’s literally in my own back yard. I never use pesticides or herbicides, but I live next to people who cut down their ancient trees and worship the gods of chemistry and lawns. I have numerous elderberry trees which are in riotous bloom. There’s not a bee in sight. Insect life has gradually disappeared over the years, and, quelle surprise, so have the birds.
I was as idealistic as they come, but I don’t understand Baerbock’s position on Nordstream. Did they ever send us a message saying, “We’re sorry we’re opposing it, and that that’ll mean you have to frack more” ? No, bring in Tverberg’s points. How bout a little transitioning talk?
If I were to start a party, maybe I’d call it the Thorny Problems Party. Or the Behind the Curtain Party. One by one I’ve watched a scary number of heavies squeak their way on over to the MICIMATT’s Ukraine narrative. Covid and that one AFAICS are the big stumbling blocks for Greens. I agree with Grumbine’s nationalizing ideas, but MMT nevertheless sort of simplifies the “thorny problems” IMO. I can see the good attributes Jacques Ellul saw in the libertarians, but OTOH something is OWED all the workers who busted their tails in quarantined facilities. And will be owed if they have to do it again (to previous extent).
The fault on Greens’ part is too much vagueness re their position on the present Ukraine intervention (or “war”). Same goes for the Covid hype(s). The fault is in not going to a deep enough extent critiquing the propaganda. I realize the risk, but their chances aren’t super anyway, so what is there to lose?
As for MY fault…
“Won’t we be too busy saying goodbye to our loved ones? Won’t we actually blame these people who knew what was coming but were so incompetent at screaming for 75 years that we never even heard them? I mean you’d really have to suck at screaming, right?” David Swanson
I feel now as though I was very bad at it. That’s all I can say.