Notes on Engineering Health, August 2022

Risky Business

Since the onset of the Covid-19 pandemic in March 2020, the march of crises across the front pages of the world’s newspapers has been relentless. Myanmar. Afghanistan. Ukraine. Omicron. Monkeypox. Drought. Recession. We have reached the point where crisis seems to be an endemic state of affairs. Is this the result of an increase in communication via digital tools, or are the risks we are facing today of a different nature than before? 

The feeling that we are living in a different world may not be unfounded as the latest report from the United Nations Office for Disaster Risk Reduction lays out. The report recounts the recent increase in the rate of catastrophic events in order to highlight how risks are becoming more structural and systemic. Regional conflicts like the war in Ukraine and tensions over Taiwan have broad repercussions on global food and energy prices, endanger entire ecologies, and jeopardize global supply chains. Other threats are ever more present, putting increasing pressures on health systems: valley fever is a fungus endangering wildland firefighters in California when they don't wear appropriate respiratory protection; polio has made a grim return to the US, threatening a planned global eradication; substance addiction continues to be a problem after hundreds of thousands of lives were lost to opioids in recent years, just to name a few. Global warming looms large above all these conflicts and diseases, aggravating them, and creating new inequities. Increased risk of flooding (all but certain flooding in this case), historic droughts and their wildfire counterparts will make access to water more difficult, increasing further existing rivalries

While the scale and breadth of risks facing the world may be at new levels, the importance of understanding and managing risk is not a new thing. Statisticians have been working on formalizing a measure of risk for a long time, going back as least as far as Laplace. By definition, the risk function (also called the loss or cost function) is the difference in outcomes between the best decision that could have been made (if all circumstances had been perfectly known) and the decision that was in fact taken. In its simplest form, it combines the probability of occurrence of a hazardous event (external factor) and the vulnerability and exposure of the system (internal factor). This formalism helps explain the assertion of the UN report that risk creation is outstripping risk reduction. Indeed both external and internal factors are growing in tandem in ways sometimes hidden until they are dramatically revealed. External factors of the equation are, for example, all the catastrophic events rendered more likely by global warming. Internal factors can refer to the elements that make our system more fragile and less resilient such as interdependences of our supply chains or our globalized financial system.

The report offers guidance on how societies might rethink organizational principles to reduce systemic risk and increase resilience. The strategy revolves around three main actions:

  1. Measure accurately the risk by reworking financial systems to account for the real cost of risk and adapt fiscal planning accordingly. 
  2. To better factor in human biases when it comes to assessing and preventing risk. This can be achieved by using new processes and tools  (fascinating research on this topic is covered in a recent Science publication. 
  3. Rethink governance systems to account for and tackle more effectively new multi-scale and interdisciplinary risk profiles. 

These broad ideas, crafted to tackle risks linked to catastrophic events caused by global warming, could be a template for organizations large and small engaged in vastly different activities but all facing new sets of risks. As people come away from this summer more acutely aware of the changing world we inhabit, the time for adjusting course might be now. 

Jonathan Friedlander, PhD & Geoffrey W. Smith