A Proposal for Integrating Theories of Complexity for Better Understanding Global Systemic Risks

Armin Haas; Manfred Laubichler; Joffa Applegate; Gesine Steudle; Carlo C. Jaeger

doi:10.1111/risa.13608

A Proposal for Integrating Theories of Complexity for Better Understanding Global Systemic Risks

Armin Haas
, Manfred Laubichler
, Joffa Applegate
, Gesine Steudle
, Carlo C. Jaeger^*

^*Corresponding author for this work

Research output: Journal contributions › Journal articles › Research › peer-review

6 Citations (Scopus)

Abstract

The global financial crisis of 2008 has shown that the present financial system involves global systemic risks. The dimension of these risks is hard to grasp with the conceptual tools that have been developed to tackle conventional risks like fire or car accidents. While modern societies know quite well how to deal with conventional risks, we have not yet been equally successful at dealing with global systemic risks. For managing this kind of risks, one needs to understand critical features of specific global systems where many human agents interact in ever changing complex networks. Here we apply two specific dimensions of complexity theory for dealing with global systemic risk in an integrated fashion: normal accidents and extended evolution. Both of them have successfully been applied to the analysis of systemic risks. As a paradigmatic example of global systemic risks, we focus on the global financial crisis that began in 2008, and suggest that the future evolution of the financial system could either see a further increase in complexity, or a reversal to a less complex system. We explore and contrast the implications of normal accident theory and extended evolution perspectives and suggest a four-point research strategy informed by complexity theory for better understanding global systemic risks in financial systems.

Original language	English
Journal	Risk Analysis
Volume	42
Issue number	9
Pages (from-to)	1945-1951
Number of pages	7
ISSN	0272-4332
DOIs	https://doi.org/10.1111/risa.13608
Publication status	Published - 01.09.2022

Bibliographical note

The authors would like to acknowledge crucial support by the Berlin-Brandenburg Academy of Sciences and Humanities. The present publication is an outcome of the Academy's initiative “Systemic Risks as Prototypes of Dynamic Structure Generation,” launched by Klaus Lukas and Ortwin Renn, and skillfully administered by Ute Tintemann. This initiative conducted four workshops in the years 2017–2019; we thank the workshop participants for inspiring and fruitful comments and discussions. We also want to thank Ortwin Renn and Pia Schweizer for their steady support as editors of this special issue. Moreover, we want to thank Perry Mehrling, Steffen Murau, Joe Rini, Eckehard Häberle, Shade Shutters, and the members of the systemic risk research group of IASS for their intellectual inspiration, support, and enlightening discussions. We want to thank two anonymous reviewers and express our professional gratitude for their careful reviews. Together, these reviews helped us to streamline our article and sharpen its focus and its line of argument. The responsibility for errors stays, of course, with the authors.

Publisher Copyright:
© 2020 The Authors. Risk Analysis published by Wiley Periodicals LLC on behalf of Society for Risk Analysis.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 3 Good Health and Well-being
SDG 10 Reduced Inequalities

Research areas and keywords

Transdisciplinary studies
extended evolution
Global financial crisis
global systemic risks
key currency
normal accidents

ASJC Scopus Subject Areas

Physiology (medical)
Safety, Risk, Reliability and Quality

Access to Document

10.1111/risa.13608Licence: CC BY-NC-ND

CCP: Complexity or control? Paradigms for sustainable development
Vilsmaier, U. (Project manager, academic), Lang, D. J. (Project manager, academic), Hörl, E. (Project manager, academic), Laubichler, M. (Project manager, academic), Herberg, J. (Coordination), Caniglia, G. (Project staff), Leistert, O. (Project staff), Schrickel, I. (Project staff), Meyer, E. (Project staff) & Schmieg, G. (Project staff)
Ministry of Science and Culture of the state of Lower Saxony in Germany
01.01.15 → 31.03.20
Project: Research

Cite this

@article{92cd2acd565f4eb0b89c40abc55cc52a,

title = "A Proposal for Integrating Theories of Complexity for Better Understanding Global Systemic Risks",

abstract = "The global financial crisis of 2008 has shown that the present financial system involves global systemic risks. The dimension of these risks is hard to grasp with the conceptual tools that have been developed to tackle conventional risks like fire or car accidents. While modern societies know quite well how to deal with conventional risks, we have not yet been equally successful at dealing with global systemic risks. For managing this kind of risks, one needs to understand critical features of specific global systems where many human agents interact in ever changing complex networks. Here we apply two specific dimensions of complexity theory for dealing with global systemic risk in an integrated fashion: normal accidents and extended evolution. Both of them have successfully been applied to the analysis of systemic risks. As a paradigmatic example of global systemic risks, we focus on the global financial crisis that began in 2008, and suggest that the future evolution of the financial system could either see a further increase in complexity, or a reversal to a less complex system. We explore and contrast the implications of normal accident theory and extended evolution perspectives and suggest a four-point research strategy informed by complexity theory for better understanding global systemic risks in financial systems.",

keywords = "Transdisciplinary studies, extended evolution, Global financial crisis, global systemic risks, key currency, normal accidents",

author = "Armin Haas and Manfred Laubichler and Joffa Applegate and Gesine Steudle and Jaeger, \{Carlo C.\}",

note = "The authors would like to acknowledge crucial support by the Berlin-Brandenburg Academy of Sciences and Humanities. The present publication is an outcome of the Academy's initiative “Systemic Risks as Prototypes of Dynamic Structure Generation,” launched by Klaus Lukas and Ortwin Renn, and skillfully administered by Ute Tintemann. This initiative conducted four workshops in the years 2017–2019; we thank the workshop participants for inspiring and fruitful comments and discussions. We also want to thank Ortwin Renn and Pia Schweizer for their steady support as editors of this special issue. Moreover, we want to thank Perry Mehrling, Steffen Murau, Joe Rini, Eckehard H{\"a}berle, Shade Shutters, and the members of the systemic risk research group of IASS for their intellectual inspiration, support, and enlightening discussions. We want to thank two anonymous reviewers and express our professional gratitude for their careful reviews. Together, these reviews helped us to streamline our article and sharpen its focus and its line of argument. The responsibility for errors stays, of course, with the authors. Publisher Copyright: {\textcopyright} 2020 The Authors. Risk Analysis published by Wiley Periodicals LLC on behalf of Society for Risk Analysis.",

year = "2022",

month = sep,

day = "1",

doi = "10.1111/risa.13608",

language = "English",

volume = "42",

pages = "1945--1951",

journal = "Risk Analysis",

issn = "0272-4332",

publisher = "Wiley-Blackwell Publishing, Inc.",

number = "9",

}

TY - JOUR

T1 - A Proposal for Integrating Theories of Complexity for Better Understanding Global Systemic Risks

AU - Haas, Armin

AU - Laubichler, Manfred

AU - Applegate, Joffa

AU - Steudle, Gesine

AU - Jaeger, Carlo C.

N1 - The authors would like to acknowledge crucial support by the Berlin-Brandenburg Academy of Sciences and Humanities. The present publication is an outcome of the Academy's initiative “Systemic Risks as Prototypes of Dynamic Structure Generation,” launched by Klaus Lukas and Ortwin Renn, and skillfully administered by Ute Tintemann. This initiative conducted four workshops in the years 2017–2019; we thank the workshop participants for inspiring and fruitful comments and discussions. We also want to thank Ortwin Renn and Pia Schweizer for their steady support as editors of this special issue. Moreover, we want to thank Perry Mehrling, Steffen Murau, Joe Rini, Eckehard Häberle, Shade Shutters, and the members of the systemic risk research group of IASS for their intellectual inspiration, support, and enlightening discussions. We want to thank two anonymous reviewers and express our professional gratitude for their careful reviews. Together, these reviews helped us to streamline our article and sharpen its focus and its line of argument. The responsibility for errors stays, of course, with the authors. Publisher Copyright: © 2020 The Authors. Risk Analysis published by Wiley Periodicals LLC on behalf of Society for Risk Analysis.

PY - 2022/9/1

Y1 - 2022/9/1

N2 - The global financial crisis of 2008 has shown that the present financial system involves global systemic risks. The dimension of these risks is hard to grasp with the conceptual tools that have been developed to tackle conventional risks like fire or car accidents. While modern societies know quite well how to deal with conventional risks, we have not yet been equally successful at dealing with global systemic risks. For managing this kind of risks, one needs to understand critical features of specific global systems where many human agents interact in ever changing complex networks. Here we apply two specific dimensions of complexity theory for dealing with global systemic risk in an integrated fashion: normal accidents and extended evolution. Both of them have successfully been applied to the analysis of systemic risks. As a paradigmatic example of global systemic risks, we focus on the global financial crisis that began in 2008, and suggest that the future evolution of the financial system could either see a further increase in complexity, or a reversal to a less complex system. We explore and contrast the implications of normal accident theory and extended evolution perspectives and suggest a four-point research strategy informed by complexity theory for better understanding global systemic risks in financial systems.

AB - The global financial crisis of 2008 has shown that the present financial system involves global systemic risks. The dimension of these risks is hard to grasp with the conceptual tools that have been developed to tackle conventional risks like fire or car accidents. While modern societies know quite well how to deal with conventional risks, we have not yet been equally successful at dealing with global systemic risks. For managing this kind of risks, one needs to understand critical features of specific global systems where many human agents interact in ever changing complex networks. Here we apply two specific dimensions of complexity theory for dealing with global systemic risk in an integrated fashion: normal accidents and extended evolution. Both of them have successfully been applied to the analysis of systemic risks. As a paradigmatic example of global systemic risks, we focus on the global financial crisis that began in 2008, and suggest that the future evolution of the financial system could either see a further increase in complexity, or a reversal to a less complex system. We explore and contrast the implications of normal accident theory and extended evolution perspectives and suggest a four-point research strategy informed by complexity theory for better understanding global systemic risks in financial systems.

KW - Transdisciplinary studies

KW - extended evolution

KW - Global financial crisis

KW - global systemic risks

KW - key currency

KW - normal accidents

UR - https://www.scopus.com/pages/publications/85096661708

UR - https://www.mendeley.com/catalogue/b3b8a7db-678d-36cd-8180-e01fdc90e702/

U2 - 10.1111/risa.13608

DO - 10.1111/risa.13608

M3 - Journal articles

C2 - 33141485

SN - 0272-4332

VL - 42

SP - 1945

EP - 1951

JO - Risk Analysis

JF - Risk Analysis

IS - 9

ER -

A Proposal for Integrating Theories of Complexity for Better Understanding Global Systemic Risks

Abstract

Bibliographical note

UN SDGs

Research areas and keywords

ASJC Scopus Subject Areas

Access to Document

Fingerprint

Projects

CCP: Complexity or control? Paradigms for sustainable development

Cite this