Systemic risk and network dynamics

Cascading failures are increasingly being recognized as an important risk factor, and IIASA research into better understanding this systemic risk is progressing quickly, with fruitful collaborations between EEP and the Risk, Policy and Vulnerability and Advanced Systems Analysis Programs. The challenges posed by systemic risks are addressed through a concerted application of methodological development, theoretical investigations, and insights from case studies.

• A comprehensive survey of how humans perceive systemic risk revealed systematic biases that, if not accounted for, may lead to large underestimations of the potential for cascading failures in interconnected systems [1].
• A study investigating the world’s seafood trade network (Figure 1) showed how local shocks in production can propagate through this network and result in a deprivation of available seafood protein in regions such as Central Africa and West Africa [2].
• Developing a novel framework for modeling systemic risk in ecological communities, researchers elucidated how structural features of species-interaction networks can be used to predict the risk of cascading damages arising from species loss [3].

Figure 1. Global seafood trade among regions as determined from the UN Comtrade Database. The abbreviation MENA is short for Middle East and North Africa [2].

Last edited: 20 April 2016