Perez Sierra (2018) Seminar_Systemic Risks & Sustainability

Institute of Social Sciences Department of Sociology with Focus on Risk and Technology Research

Seminar Theories of Risk Perception Systemic Risks & Sustainability Instructor: Johanny Perez Sierra, M.Sc. June 11th, 2018

Today‘s objectives 1. Understand the concept of Systemic Risks, triggers, critical aspects and the urgency to deal with them in modern society 2. Learn about various management options to deal with systemic risks 3. Gain awareness about the relationship between risks and sustainable development

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Concept

Systemic Risks

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Emergence of Systemic Risks Contribution of Rosa, Renn and McCright, 2014 • Systemic risks:

“threat or probability of breakdowns in an entire system, as opposed to breakdowns in individual parts or components, and is evidenced by co-movements (correlations) among most or all parts” • Main characteristics: ‾ Sequential effects farther from the system where risk emerged ‾ Danger of collapsing vital functions of society

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: www.dreamstime.com

• Started in 2007 • Crisis in US subprime mortgage market • Followed into an international banking crisis • E.g., bankruptcy Lehman Brothers, European debt crisis, Great Recession 6/11/2018

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Systemic Risks

Perspective of the OECD

Systemic Risks: View from the OECD Overview (OECD, 2003) • Organization for Economic Co-operation and Development (OECD)

• OECD’s view on Systemic Risks: Impact on fundamental structures to society, such as: health, transportation, ecosystem, communication, etc.

• Various evidence that impacts from such risks have incremented lately

Picture’s source: www.dw.com

• Since 1960s larger effects from natural disasters

• E.g., inundations, cyclones and aridity in the last 10 years, • Caused 79,000 deaths p.a. and influenced 200,000 people Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: www.skymetweather.com/

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Systemic Risks: View from the OECD Overview (OECD, 2003) • Re-emergence of contagious diseases thought to be eradicated and appearance of new harder ones with severe consequences in specific regions • E.g., Diphtheria, influenza, malaria, yellow fever, among others • Since 1970s increase of technological accidents, incl. detonations, fires, and accidents on the roads – ca. 8,000 deaths p.a.

Picture’s source: www.e-ijd.org

• Economic impacts from such events increased from USD 2 billion to USD 70 billion p.a. in the period b.

1960s and 1990s Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Systemic Risks: View from the OECD Influencers in the Emergence of Systemic Risks (1/4) (OECD, 2003) • Transformation in the i) kind of risks and ii) society’s ability to handle them Important trends influencing this process: 1. Population’s growth

Picture’s source: www.allianz.com

‾ Anticipated to augment by 50% within 50 years ‾ Mainly in developing countries, cities with precarious sanitary circumstances ‾ Nations will age not only in OECD ‾ Constant and large migration flows: due to economy or environment Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: www.newsnation.in

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Systemic Risks: View from the OECD Influencers in the Emergence of Systemic Risks (2/4) (OECD, 2003) 2. Environmental threats

‾ Global warming will persist, conducting to recurrent rains and severe weather phenomena around the globe, incl. dryness, hurricanes or torrents ‾ Storages of drinking water will be on higher demand and rivalry for its access will increase

Picture’s source: www.theadvocate.com

‾ Continuous loss of biodiversity

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Systemic Risks: View from the OECD Influencers in the Emergence of Systemic Risks (3/4) (OECD, 2003) 3. Technological progress ‾ Development will persist at much faster pace, even applied before understanding scope of impact ‾ New technologies in life sciences change organisms, thus transforming the environment at a quick rate ‾ Higher interconnection among different global sectors including trade, transportation and communication Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: pixabay.com

Picture’s source: cookingwithlittlebuddy.com

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Systemic Risks: View from the OECD Influencers in the Emergence of Systemic Risks (4/4) (OECD, 2003) 4. Societal structure ‾ Competitiveness and improvement in technological performance will provoke accumulation of wealth in specific economic fields ‾ Disparity in earnings and insolvency could remain in and between countries ‾ Governance will be transformed, where the governmental functions have been privatized and where there is more influence from:

Picture’s source: www.japantimes.co.jp

‾ Media ‾ NGOs and global organizations Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Systemic Risks: View from the OECD Urgent subjects in risk management for the future (OECD, 2003) • Higher complexity of risks (subject to more interconnected factors): e.g., more flow of people, products, services and information • Common severe and far-reaching disasters (density and scope of risks increases), taking into account costs Picture’s source: www.bankinghub.eu

• Previous risk policies are obsolete for the new challenges, • The need to be flexible and expect the unexpected: high uncertainty and inconclusive scientific results Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Systemic Risks: View from the OECD Urgent subjects in risk management for the future (OECD, 2003) • Duties among stakeholders to govern risks needs to be managed: who is responsible?

• Risk management has to include perceptions and societal positions towards them; improve communication b. managers and the public

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture's source: www.innovationmanagement.se

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Systemic Risks: View from the OECD Governance of Systemic Risks (Rosa, Renn and McCright, 2014) • Employ the Risk Governance Framework (International Risk Governance Council) • Strategies based on: ‾ Probability

‾ Resilience ‾ Discourse Picture’s source: hackernoon.com

‾ Analytic-deliberative processes (Regulatory framework)

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks

Management of Systemic Risks Context (Klinke and Renn, 2004) • No single solution for handling risks; no general fairness codex – risk is a variable concept (diverse choices, values and concerns)

• Obstacle: need to design specific procedures for each risk situation (governance)

Crossculturalism + wide-range of disciplines

Regular Procedures

Management of Sytemic Risks

• Systemic risks: high interlinkages of risks to humans and the environment, derived from: i) natural phenomena (highly influenced by humans’ behavior)

ii) Growth (financial, social and technical), and iii) governmental responses at a local and global level • Need: innovative ways for risk assessment (multiple sources combined into a holistic reference (in location or practicality) Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Context (Klinke and Renn, 2004) • “Agent-consequence analysis” is no longer functional for studying systemic risks – essential: understand synergies and effects among types of risks

• Tasks of an effective governance of systemic risks: ‾ Expand the range of potential impacts to people and the ecosystem (e.g., complex diseases, effects on well-being and lifestyles) ‾ Acquire a more comprehensive view on risks, splitting it into parts and analyzing connected responses ‾ Document the reactions and vulnerabilities of different societal groups (e.g., per gender, race, faiths, etc.) – threshold to resist negative events ‾ Facilitating the integration of economic, financial and social consequences in the risk appraisal mechanism – higher effectiveness for decision making (practicality) ‾ Elaborate innovative technologies with wider range for buffering

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Supplementary risk assessment criteria (Klinke and Renn, 2004) • The German Advisory Council on Global Change (WBGU) consulted in 1998 multiple experts and reviewed various documents on the matter Criteria to deal with systemic risks: ‾ Degree of impact (e.g., fatalities and losses) ‾ Likelihood of the incident (statistical representation) ‾ Representation of all possible trigger of uncertainty ‾ Predominance (spread) of the impacts (“intragenerational justice”) ‾ Durability of the effects (“intergenerational justice”) ‾ Revocability to repair damages

‾ Retarded consequences of physical, chemical or biological characteristics ‾ Fairness in the distribution of risks and benefits ‾ Ability to generate social unrest / campaigns Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Supplementary risk assessment criteria (Klinke and Renn, 2004) • Ability to generate social unrest subdivided into: ‾ Disparity (one-sidedness) and unfairness: allocations of risks and benefits across actors, location or period ‾ Psychological pressure and anxiety derived from the emergence of risks ‾ Level of defiance against social institutions or risk management organizations ‾ Tertiary effects in various sectors and erosion of trust in the government • Challenge: ability and capability of risk agencies to consider all criteria? ‾ Limited time

‾ Pragmatic (8 parameters + 4 more) • To ease this transition, suggested: a traffic light model (3 sections)

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Supplementary risk assessment criteria (Klinke and Renn, 2004) Traffic light model ‾ Normal area: low complexity, well known, expected low fatality and little ambiguity ‾ Intermediate area: high statistical incertitude, potential to general societal unrest, little knowledge about possible consequences ‾ Intolerable area: more severe than before

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: Renn and Graham, 2006

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) • Derivation of numerous risk classes not fitting into a simplified model • Need to order risks (with radical characteristics) to facilitate: i) risk governance and ii) legitimation • The WBGU structured risks within six clusters, represented with figures of the Greek mythology

‾ Symbolize a process from survival to an ordered agricultural economy ‾ Emergence of an attitude of prognostication and readiness ‾ Shift in the position of humans: element of vs. influenced by nature

‾ Representation of awareness: co-creators of future and not vulnerable to fortune

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Sword of Damocles • Damocles was invited by his king to a banquet (benefit) • He ate his meal having a razor-sharp sword over his head (risk) • Sword of Damocles represents “a threating danger in luck” • Danger: lethal consequence at any time but under low probability • Risk field: numerous technologies threaten to be highly destructive, although the likelihood is very low • Examples: nuclear energy, vast chemical industries, planes, etc.

Picture’s source: Wikipedia.com

Damage

Likelihood 6/11/2018

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Cyclops

• Giants afflicted with a single eye (name) • Partial perception of a situation • Similar with risks, when lacking a broad-range view of the scope of impact

• Highly damaging risks and well understood • Common: unsureness about driving agents, other occasions, human actions determine likelihood (high uncertainty) • Examples: earthquakes, volcanic eruptions, floods, etc.

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: Wikipedia.com

Damage

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Likelihood 6/11/2018

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Pythia • Oracles were requested by Ancient Greeks in times of incertitude • Popular: O. Delphi with blind prophet Pythia • She consumed noxious gases to be able to foresee the future and give counselling • Yet, messages were uncertain • Risk field: both likelihood and impacts are irresolute (high uncertainty!)

• Examples: changeable climate (global warming), melting of West Antarctic ice sheet, GMOs, etc.

Picture’s source: Wikipedia.com

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Damage Likelihood Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Pandora’s box • Gods wanted to discipline humans for having fire (Prometheus) • Pandora was given as a gift and in the wedding received a boy, which was unluckily full of demons and places, together with optimism • Box closed = no harm, open= all monsters released, provoking constant, large and invariable damages • Risk field: changes in the ecosystem without able to identify particular damages

• Effects known after expansion of the technology • Example: chlorofluorocarbons (introduced for alleged low effects on people and environment, later known to degrade ozone layer) Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: sofiawellman.com

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Damage

Likelihood

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Cassandra • A prophet of the Trojans, foresaw the effects of the Greek’s success • Her landsmen did not listen to her • Risk field: enigma – likelihood and damages are extensive and well understood, but consequences are perceived long after impacts occur • Risks are neglected and reduced • Examples: climate change (human sourced), reduction of biodiversity • Likelihood is high but the effects are delayed, thus people ignore the danger Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: Wikipedia.com

Damage

Likelihood 6/11/2018

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Management of Systemic Risks Risk Classification (Klinke and Renn, 2004) Risk type: Medusa • One of the 3 fanciful Gorgons’ sisters (monster) • Dreaded because people were converted into stone • Risk field: some events provoke such anxiety and alarm in people, especially new events • Innovations are feared, despite being scientifically proved to pose low risk • They present featured that evoke fear, generate psychological distress and unrest among social groups (gap between lay people and experts)

Picture’s source: Wikipedia.com

Damage

Likelihood

• Example: electromagnetic fields, involuntary effects Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Management of Systemic Risks Risk Management Strategies (Klinke and Renn, 2004)

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Risks and Sustainability

Risks and Sustainable Development Contributions of Becker, 2014 (1/9) • Varying and rival interpretations of the term development, used over 250 years but relevance increased after WWII • Development has been employed as: ‾ A narrative for an ideal future stand for humanity (purpose) ‾ Transformation occurring through time (conversion)

‾ Intended actions of agents aiming at growth (performance) • Having a purpose implies a group of parameters that people “value” intend to “improve” (normative nature) Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (2/9) Understanding of development based on interlinked components Adapted from Becker, 2014

Valued parameters and aim to transform

Intentional actions towards transformation

Awareness about present condition Development‘s Components

Favored scenario for transformation

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Wished status of parameters

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Risks and Sustainable Development Contributions of Becker, 2014 (3/9) • Desired status is changeable over time (one per situation) and is contextual

Exemplification of development’s components Adapted from Becker, 2014

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (4/9) • Sustainable development (as in the Brundtland Report in 1987): “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”

Picture’s source: www.admtl.com

• Implications of the definition - Development can: i) be sustained over time, and ii) protected/ensured from incidents or courses of action • Not only external phenomena, but also strategies for development can also cause undesired consequences – problems to maintain development Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (5/9) • Undesired events (either abrupt or progressive) can divert people/societies from their intended course of action (“development scenario”) – curbing sustainability Possible change from desirable path

Sustainable Development

Sustained through time

Protected from undesired situations and resulting consequences

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (6/9) • The future is uncertain and people per se cannot foresee it (multiple scenarios)

Uncertainties in development

• Humans can plan their prospect by organizing uncertainties – predict certain effects/impacts of a decision or event • Choose actions to help bring back to wished future or condition Vital to manage risks to achieve Sustainable Development!

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (7/9) • Sensibility to damages = vulnerability (associated with dreadful effects + uncertainty; in reference to a specific phenomenon) • Vulnerability: “Uncertainty about what could happen and what the consequences would be, given a specific hazard event”

Interrelation among characteristics that vary vulnerability

• Questions to answer:

‾ What could occur in case of a particular situation? ‾ What is the likelihood to happen? ‾ If it takes place, what can we expect?

• Humans lessen vulnerability by adapting out human-environment system and developing capacity to respond!

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (8/9) • When confronting risks or dealing with events, human-environments Variations from desired path beyond can be: human and environmental limits i) reactive (respond to a disruption) but also ii) proactive (predict events and gain experience) • Resilience: “capacity of a system to continually change and adapt yet remain within critical thresholds” • Grow progressively but within boundaries Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Risks and Sustainable Development Contributions of Becker, 2014 (9/9) • What capabilities should be strengthened to achieve sustainable

Interrelation among competences for systems to be resilient and handling risks

development (be resilient, protect what we value now and ahead)? ‾ Adaptation ‾ Forecast ‾ Monitoring ‾ Mature (“learn from experience”) ‾ Reactiveness Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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References

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References • Becker, P., 2014. Sustainability Science: Managing Risk and Resilience for Sustainable Development, 1st ed. Elsevier Reference Monographs, s.l., 302 pp.

• OECD, 2003. Emerging systemic risks in the 21st century: An agenda for action, Paris.

• Renn, O., Klinke, A., 2004. Systemic risks: a new challenge for risk management.

EMBO reports 5 Spec No, S41-6.

10.1038/sj.embor.7400227.

• Rosa, E., Renn, O., McCright, A. (Eds.), 2014. The Risk Society Revisited: Social Theory and Governance.

• Stirling, A., 2017. Precautionary appraisal as a response to risk, uncertainty, ambiguity and ignorance, 267 pp.

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Reflection

Lessons learned, Q&A

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Lessons learned, Q&A • Questions? Lessons learned?

• Slides available in ILIAS! • Delivery of Reports!

Urgent: Recovery of missed classes!

• Next week: Oral Presentation – Group #4 • Consultation of scores: 16.07.18, 26.07.18 or 27.07.18 • Topics for Bachelor Thesis Suggestions • Seminar’s evaluation: review of results Critical thinking (tips in ILIAS) & Dynamic for discussion Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

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Topics for Bachelor Thesis Suggestions • Study the applicability of the Social Amplification and Attenuation Theory of Risk in current societal concerns ‾ e.g., climate change, migration, technologies and employment, etc.

• Assess how much the Reflexive Modernization theory of risk could explain important societal transformations in Germany, Europe or around the world ‾ e.g., increasing nationalism, veganism, gender equality, etc.

Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J.

Picture’s source: TechCrunch.com

Picture’s source: townpress.co.za

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Topics for Bachelor Thesis Suggestions • Case studies to understand how emerging technologies and new trends (e.g., internet, Facebook, sharing economy) could provoke Systemic Risks, and ‾ Reflect on approaches on how to handle them: Provide recommendations for risk managers • Appraise experts and lay people’s attitudes towards current problematics (seen as risks) in the German society

Picture’s source: disruptionhub.com / facebook.com

‾ E.g., terrorism, migration, future of the EU, unemployment and increasing cost of living ‾ And explain why (related theories of risk perception): culture, psychology, affections Seminar: Theories of Risk Perception, University of Stuttgart │Instructor: Perez Sierra, J. 6/11/2018

Picture’s source: www.theimaginativeconservative.org / Daily Trust

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Institute of Social Sciences Department of Sociology with Focus on Risk and Technology Research

Thank you!

Questions and meeting arrangements: per email!

Johanny A. Perez Sierra, M.Sc. e-mail j.perez-sierra@sowi.uni-stuttgart.de phone +49 (0) 711 685-81049 www. uni-stuttgart.de/soz/tu/index.html University of Stuttgart Institute of Social Sciences, Department SOWI V Room 3.015 Seidenstr. 36, 70174 Stuttgart