AEx RSG : Global Systemic Risks

Founding: INRIA's Exploratory Action

Duration: 2020-2024

Summary

The objective of this project is to develop methodologies and tools for estimating global systemic risks, as well as elements of strategic analysis for mitigating or adapting to these risks for the public and private sectors. Global risks are related to environmental problems and their connections with and between many sectors of human activity and to different economic, societal and (geo)political dynamics.

Background

Les sociétés modernes sont caractérisées par un très haut niveau d'interconnexions entre de nombreux secteurs, notamment économiques, sociaux et géo-politiques, ainsi que par les impacts environnementaux de l'activité humaine et leurs conséquences négatives pour les sociétés elles-mêmes. Ces interconnexions généralisées, de même que les liens entre activité humaine et destruction environnementale, sont porteurs de risques intrinsèques, dits systémiques du fait des rétroactions présentes entre toutes les parties du système socio-environnemental global.

Modern societies are characterized by a very high level of interconnections between many sectors, including economic, social and geo-political, as well as by the environmental impacts of human activity and their negative consequences for the societies themselves. These widespread interconnections, as well as the links between human activity and environmental destruction, carry intrinsic risks, known as systemic risks due to the feedback between all parts of the global socio-environmental system.

From the point of view of the broad categories of processes involved, the overall systemic risks can in a first approach be grouped into two categories:

• "Trend" risks, linked to the long-term (several decades) evolution of our globalized socio-ecosystem. They are essentially due to the growing tension between our use of resources, our production of varied and often diffuse pollution, and the capacity of our (semi-)natural environment to absorb the associated impacts, as well as to the consequences of environmental changes induced on the said socio-ecosystem. These risks are both amplified and underpinned by specific socio-political, economic and historical dynamics.

• Risks of "systemic contagion", shorter term (weeks or months) but intermittent and random. This type of risk is linked to the very high level of global interconnections between many sectors of human activity, to the intrinsic instabilities generated by these interconnections, and to their possible propagation by domino effect in all sectors of society. These risks are intensified by the current geopolitical dynamics, and by the aggravation of environmental problems.

Project

The emblematic model of the first category is the World3 model developed by the Meadows group for its famous report on the limits of growth. Turner's reanalyses have renewed interest in this model while raising more specific questions about the robustness of the conclusions drawn from it. We plan to answer these questions through analysis on three complementary fronts:

• An analysis of the parameterization choices based on a sensitivity analysis that is much finer than the existing ones.
• An analysis of the modeling choices based on a sectoral and geographical disaggregation of the model.
• Elements of epistemological analysis.

In terms of risks of systemic contagion, and although an exhaustive analysis of all categories of potential risks is impossible in an exploratory phase, the energy/finance/supply chain nexus plays a particular role in our societies and presents a specific criticality. Sectoral or intersectoral analyses of certain aspects of this nexus already exist in the literature, but apparently no overall model has been produced on this subject, and in particular no dynamic model. Such an achievement would in itself constitute a significant step forward.

Specifically, the work envisaged relates to the following points:

• To identify and model the most important feedback loops in the coupled energy/supply chain/logistics/finance system.
• To estimate the likelihood of failure of the different links (in particular identify the most fragile ones).
• To assess the systemic impacts associated with the risk of failure of specific links; Identification of critical links.
• To define mitigation strategies for the most critical risks.

Contacts

Pierre-Yves Longaretti Pierre-Yves.Longaretti@inria.fr STEEP - INRIA Grenoble

Emmanuel Prados Emmanuel.Prados@inria.fr STEEP - INRIA Grenoble

Serge Fenet Serge.Fenet@inria.fr STEEP - INRIA Grenoble