Just went to a public lecture in LSE Old Theatre, titled "Global Risk: How Civil Society Responds". Speakers include Professor Lord Giddens (former LSE director), Professor George Gaskell, and Professor Mary Kaldor.
The lecture focused on the increasingly important role of risk in the global society, and with the advancing application of risk in everywhere, it is vital to answer a few main questions:
- What is risk?
- Why is risk important?
- How is risk relevant to us?
- Who define risk and its benefits?
- Who does risk management benefit?
- How much of risk is tolerable?
- etc etc etc...
From the lecture, here is what I understand about risk and its implication onto the global society, a.k.a nations across the world.
Formal definition of risk (from ST330 module: Stochastic and actuarial methods in finance) is potential for unexpected events to occur or for expected events not to occur.
More intuitive approach: Risk refers to future, uncertainty and involves calculation and measurement. There is a difference between risk and uncertainty, in a sense that risk is measurable, while uncertainty is immeasurable.
Well, it is getting a bit boring with all the definitions so I should get into the points.
In the past accidents are characterized as acts of God, nature or just by luck. There is no sense of insurance and predictive measures to account for risk. Peter Bernstein's book "Against the Gods" mentioned the starting of the notion of risk in the voyagers' exploration records. In 1970's, the notion of risk became exponentially important and suddenly we see risks everywhere, and we find applications of the knowledge of risk everywhere.
Risk is deeply ingrained in our life, as our society is future-oriented and globally integrated, and there is a rise in the incidents of man-made risks. Professor George Gaskell described the phenomenom of a "Risk Colonization", where we see risk measurement, management and control in every sector, from health to law to finance. By employing the notion of risk, we aim to increase efficiency and assist in our decision-making process in uncertainties.
Risk management is observed in various social issues - tsunami preventive measures, terrorism control, climate change management, gender difference, migration problem solving, etc etc. With the widening application of risk management in everyday's life, there is, however, a potential threat of "Risk of risk", in which the process of managing society risk leads to institutional risk, which causes a spiral effect of risk creation. With so much of the 'known' unknowns and 'unknown' unknows, the global society needs to decide which risk is tolerable, and which is relevant?
Besides the spiralling effect of risk that Professor George Gaskell mentioned, Professor Lord Giddens explained about the issue of informing the public about the risks they are facing. There is a fine line between scaremongering and coverup in risk control in public. How much do we want to expose to the public? and how much risk we can take?
With globalization, the notion of risk developed from social contracts, to national policies, and to global convenance. As the knowledge grew, we noticed the gap between political party and the society, and we saw the different weights carried by the rich countries and the poor ones in deciding the risks and methods to counter them. Professor Gaskell raised one crucial point, "Who defines risk and the control methods? Who does it (risk management) benefit? What level of risk is reasonable?"
There is also another issue of the increases in the 'blame culture', reported by the New Scientist. Human have collectively become more inclined to blame than we used to be. The increased frequency and size of litigation and compensation amplified the society's tendency to start blaming one another for any risk and any accidents. Where do we stop, and how far we want to assess the risk in everything?
There is still much room for debate in the application of risk in our society. I do not deny that risk is an important element in our life, in fact, I myself study the subject that deals mainly with risk assessment, management and control. Risk gives security and stability, but the global society needs to have intensive public debates, proper analysis and deep research on risk to manage risk properly, and prevent exploitation of this wonderful idea by certain irresponsible groups. With the notion of risk spreading from finance to larger perspective of global/ social issues, there needs to be a careful examination on the control measures and application.
One last thing I am still waiting for a reasonable explanation: Certain people use the name of risk to carry out pre-emptive actions, supposedly as 'preventive' measures to protect the world. Yet, have we properly assesed the risks, our tolerance for the relevant risks, and the realistic probability, if not, the proofs of the risks? We need to think more, and we need more global participation in decision making rather than power concentration in a few big powers.