Systemic risk
– Briefing Note on Systemic Risk (2022)
Systemic risks involve: multiple communities, cities, regions, or countries; risks that are interconnected; effects that move from one system or network to another and are uncertain or unpredictable; and they have potentially devastating outcomes – like the collapse of entire systems and threats to society as a whole.
Recent disasters that span countries, regions and societal systems have underscored the need for new understanding of the nature of more complex risks, and new approaches to their management.
The COVID-19 pandemic, heatwaves and droughts, volcanic eruptions and tsunamis, wildfires, and conflict and food security crises have all shown clear signs of the rippling effects of hazards and in a globalized world, and the need for systemic approaches to reduce the risks of disasters whose effects resonate across systems and sectors, countries and regions.
Addressing systemic risks requires a new approach, moving from a focus on single hazards, to considering multiple, interdependent hazards and compound hazards, across systems and sectors. This involves working across silos – like climate science, finance, health, and supply chain management – and accepting a greater degree of uncertainty in risk management, and developing multi-hazard early systems.


The global dimension of risk
An interconnected world with a globalized economy has created complex, interconnected risks. Disruptions to food supplies and shipping can have knock-on effects on food security around the world. Climate change creates cascading risks that intersect with non-climatic risks, amplifying the potential for disasters.
Disruptions to global trade and supply chains pose systemic risks that can threaten economic and food security. A single ship getting stuck in the Suez Canal in 2021 caused losses of up to $9 billion per day. Critical transport infrastructure – like roads, ports, canals, railways and airports – are vulnerable to climate-related hazards, especially sea-level rise but also floods, hurricanes and wildfires, and the interaction of infrastructure disruption and other hazards can have devastating impacts.
– Leslie (2022)
Cascading and compound risks
One element of systemic risk is cascading risks – where a hazard can set off a chain of events posing additional, and compounding, risks. Another is compound risks – where two independent hazards co-occur, creating new risks.

– IPCC author Mark Howden speaking at the 2022 Global Platform on DRR
During the COVID-19 crisis, the risks associated with climate-related hazards around the world have been compounded by additional risks associated with the pandemic. Countries in South and South-East Asia, for example, battled to control the virus alongside droughts, floods and cyclones.
– ESCAP (2022)

In February 2021, in Texas, a coldwave and winter storm prompted systemic failure when the state’s power grid was simultaneously overloaded by high demand for heating while inadequately winterised infrastructure stopped working. The resulting power failures set off a chain of cascading risks affecting fresh water supply, food distribution, health services, and causing over 264 deaths.
– Bridger (2022)

In early 2022, global food security was threatened by systemic risks involving heatwaves in southern Asia and conflict in Ukraine, severely affecting the availability and cost of grain worldwide.
– Srivastava, Sarkar-Swaisgood, Dubey et al (2022)
– Concept Note: COVID-19 and Systemic Risk (UNDRR, 2021)
COVID-19
The COVID-19 pandemic has drawn widespread attention to the systemic nature of risk. The spread of the virus across the world affected all aspects of society – with drastic impacts on employment, international trade, food supply – and this required a cooperative, systemic approach to risk management.
– Concept Note: COVID-19 and Systemic Risk (UNDRR, 2021)

A threat to sustainable development
The systemic effects of climatic hazards – like floods, droughts, storms – compounded by non-climatic crises with global reach – like conflict, pandemics, and economic disruption – threaten to steal precious development gains.

Food security in Somalia

– Source: 2022 Global Assessment Report from Thalheimer et al. (2022)
– 2022 Global Assessment Report
New approaches are needed
UNDRR’s 2022 Global Assessment Report (GAR) calls for a systemic approach to risk governance:
"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… systemic risk governance needs to recognize complex causal structures, dynamic evolutions and cascading or compound impacts."
The GAR sets out a 3-point call to action for tackling systemic risks:
- Measure what we value
- Design systems to factor in how human minds make decisions about risk
- Reconfigure governance and financial systems to work across silos and design in consultation with affected people
Source: 2022 Global Assessment Report
Videos
A way forward to integrating cascading risk into local resilience strategies in Central Asia
This research focuses on Central Asia–a diverse region of major strategic importance, often underexplored in Western academia–namely capital cities Nur-Sultan, Bishkek, and Dushanbe.
Elsevier
2022: A year when disasters compounded and cascaded
Driven by the hazard characteristics and the underlying diverse socio-economic vulnerabilites and exposure, the major disasters in 2022 were complex with compounding and cascading impacts.
United Nations Economic and Social Commission for Asia and the Pacific
The new landscape of systemic risk and the Post-2020 Global Biodiversity Framework
This event will explore the challenges and opportunities for understanding, managing and reducing systemic risk in a world that has been transformed by the COVID-19 pandemic and the triple planetary emergency, especially biodiversity loss.
United Nations Office for Disaster Risk Reduction, Partnership for Environment and Disaster Risk Reduction, Friends of Ecosystem-based Adaptation
Deepening synergies between the Post-2020 Global Biodiversity Framework, the Sendai Framework for Disaster Risk Reduction, the 2030 Agenda, the Paris Agreement and risk-informed sustainable and regenerative development
This side event will transmit input to the Review of the Sendai Framework, which culminates in a high-level meeting at the UN General Assembly in May 2023 and will thus feed into the 2023 global stock-takes of the SDGs.
United Nations Office for Disaster Risk Reduction, Partnership for Environment and Disaster Risk Reduction, Friends of Ecosystem-based Adaptation
Assessing cascading effects from multiple hazards: an example from Sweden
This brief provides an overview of methods and tools to assess the cascading effects that multiple events may have on critical infrastructure and social groups and a summary of their application in a Swedish case study.
Stockholm Environment Institute
Overcrowded housing a key factor during pandemic
Residential overcrowding, low educational attainment and low income had a crucial impact on how hard the pandemic hit various groups in the community, a study from the University of Gothenburg shows.
University of Gothenburg