Five overlooked global risks

September 15, 2009

Rafael Ramirez is James Martin Senior Research Fellow in Futures at Oxford University's Institute for Science, Innovation and Society. His latest book is "Business Planning for Turbulent Times: New Methods for Applying Scenarios" edited with John W. Selsky and Kees van der Heijden. — Rafael Ramírez is the James Martin Senior Research Fellow in Futures at Oxford University and author of “Business Planning for Turbulent Times: New Methods for Applying Scenarios” edited with John W. Selsky and Kees van der Heijden. Ramírez attended a session at the World Economic Forum’s gathering in Dalian, China, on managing global risks.

Reuters asked Ramírez to elaborate on five overlooked risks the world is confronting as it works its way through the current recession. His response is below. The views expressed are his own.

Risk one: Confusing risk with uncertainty

The first — and perhaps most important risk — is confusing categories of ignorance. This most centrally is about confusing risk with uncertainty. It entails pretending that probability (with data sets of past events with distributions of occurrence which are relevant for the future) is relevant for both “known unknowns” one cannot model with probability as well as unknown unknowns in one’s plausible futures where no data set is available, such as those of unique events.

Unfortunately, while the uncertainty that we became aware of as the financial crisis unfolded did not obey to the characteristics of “risk”, a lot of the policy interventions and “solutions” that were put in place pretended that the risks were known — and thus are well positioned to create new trouble. What we need to do instead is accepting that uncertain ignorance – for which forecasting, probability and risk are irrelevant – is now a common characteristic of our environment, and that we need technologies based on plausibility, like scenario planning. Plausibility is not going to be easy to implant in large organizations with established teams whose livelihood depends upon calculation of probability – but is necessary.

Risk two: Failure to link different types of knowledge

A second under-explored risk is keeping different forms of knowledge disconnected. This is typically manifested as keeping knowledge in the organizations that develop and use knowledge (like universities, corporations, or patent offices) in silos, while also ignoring that different scales create difficulty to translate applicability from small to large contexts and vice-versa. Failure to link different types of knowledge together, and to organize the architectures that enable this, prevents effective action. So the risk is that insufficient conversations linking different forms of knowledge will be made available, and that “solutions” in one context create (bigger) problems in others that have not been consulted.

Risk Three: Finding false comfort in “solutions”

A third important risk is the ongoing and often unquestioned over-dependence on the comfort of “solution”. The promised comfort in any one solution leads people addressing complex messes to construe these as a single problem that, once solved, will be OK.  The emotional appeal of “solution-security” is highly misleading, and way too often the “solution provider” over-promises and under-delivers. For example, the “solution” confidence to develop and do well after “winning a war” has led to terrible approaches to deal with messes such as poverty, drugs, and terrorism. The “wars” that have been declared on poverty, drugs, and terrorism have not only not delivered the promised solutions but have also mis-fired and created even messier messes.

Risk Four: Pushing irreversible solutions

A fourth under-attended to risk is promoting irreversible designs. Uncertain complexity in our contexts means that what we do may be the wrong thing to do if the context changes. So designing irreversible options is the only responsible thing to do. Certain forms of bioengineering such as some GMO crops and toxic cocktails of insecticides and herbicides have created conditions in the countryside (such as the collapse of honeybee colonies) that may well be irreversible, and which would be terrible if scenarios for which they were not designed unfold.

Risk Five: Giving too much priority to the short-term

Finally, the form of discounting that is used to value things is highly risky. The short-term is  given far higher priority in relation to long-term effects than sustainable solutions call for. Contextualising the short-term in long-term implications is one of the key challenges to design better governance than we have today.

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