Beware the chain reactions

The terrible events in northeastern Japan have been a chilling reminder not only of the susceptibility of this part of the world to violent seismic activity but also of the chain reaction that can be triggered by a single natural catastrophe. A recent report published by the International Risk Governance Council (IRGC), analyses fundamental risks which, if not properly addressed, can have complex knock-on effects.

The report, entitled “The Emergence of Risks: Contributing Factors” is authored by leading international authorities on the subject, with support provided by Swiss Re’s Emerging Risk team.

One of the risk factors cited by the authors – there are also others – takes on macabre significance in the aftermath of the catastrophe in Japan. Described as a “Loss of Safety Margins,” this risk entails “cascading failures, where a failure of one component in a system can cause failures of other components. The more tightly the components are connected, the faster and further a shock or failure can propagate throughout the system.” One only need recall the consequences of the breakdown of the cooling system in the Kukushima nuclear plant in the wake of the tsunami.

With regard to addressing emerging risks in complex systems and organizations, just one of the strategies the IRGC report proposes is “enhancing the capabilities for surveillance, data collection, knowledge development, scenario planning and formal uncertainty analysis.”

Published 4 April 2011

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