Being Governed by Man-made Risk

The world is being consumed by unforeseen man-made events that have taken the pundits and prognosticators by complete surprise. Whether it is the outcome of the Brexit vote, successive terrorist attacks in Europe, the attempted coup in Turkey, increasingly sophisticated cyber-attacks, or fracking-induced earthquakes, the pace of change is accelerating, and man-made risk is at the center of it all. So much so, that we are now being governed by man-made risk. At no time in history have so many unanticipated man-made events occurred at the same time, having so much impact on so many people, and in so many ways. We have been reduced to merely reacting to these events, because we do not have the ability to predict them, and because so many of our approaches to risk management lack foresight and agility.

For these reasons we must change how we recognize and think about man-made risk. Terrorism, climate change, cyber risk, political change, and other forms for man-made risk can no longer be consigned to the rear of the global threat matrix; On the contrary, they should be moved to the top of the queue. In spite of all the forecasting tools at our disposal, even in the age of instant global communication, surprises continue to abound, and occur completely outside of our control.

For example, the Islamic State's (IS) declared Ramadan offensive took an unprecedented human toll this year, even though the world was put on notice that is was coming. While not widely reported in the West, the number of global deaths attributed to the offensive (which ended on July 5th) exceeded 1,200 and involved at least 13 countries (Iraq, Syria, Libya, Afghanistan, Kazakhstan, Bangladesh, Jordan, the U.S., France, Yemen, Turkey, Kuwait and Saudi Arabia). The vast majority of these deaths occurred in Iraq (685), Syria (150), and Libya (148), although substantial numbers of deaths also occurred in the U.S. (49), Yemen (43), Turkey (44), and Afghanistan (47). Even having been put on notice, the IS was able to kill so many people because of an in ability to anticipate the attacks (which largely exploited soft targets) and a failure to react in a pre-defined manner when the attacks occurred. The airport attacks in Brussels and Istanbul, and the truck attack in Nice, point to the West's ongoing vulnerabilities. The rest of the world is more vulnerable in a general sense, because of the absence of resources to adequately address the problem.

Turkey -- a stable country with an entrenched democracy -- was shaken to its core by a few hundred disaffected soldiers. Even though Turkey's president Erdogan has a vise-like grip on power, he and his intelligence apparatus apparently had no idea it was coming. Intelligence and security agencies around the world continue to sift through immense amounts of data to uncover nuggets of information that might prove useful, but as the threat vectors grow, the challenge becomes all the more insurmountable. This is particularly true when there are no detectable indications that an event or attack is coming.

Although the tea leaves were there for all to read in the UK, few accurately predicted that the Leave campaign would prevail. The outcome of the Brexit vote underscores how many countries are not only prepared to pull the handbrake on globalization, but are willing to reverse course, despite the dire warnings of the integrationists. Nationalism and economic nationalism are prominent influences in elections all over the world. And in the U.S., terrorist attacks, immigration, race relations, and a host of other issues have consumed the political landscape, opening the door for extremists to gain traction in the electoral process.

The world continues to set monthly temperature records, hurricanes set new intensity records each year, and weather patterns are being routinely upended as a result of climate change. The fracking 'revolution' has prompted frequent earthquakes in places that had rarely or ever seen them, such as the U.S. state of Oklahoma, which is now one of the world's earthquake capitals. Cyber attacks now occur on a daily basis, impacting individuals, businesses and governments alike. The intersection of man-made and natural risk - such as in the case of the Fukushima Disaster - is also impacting the risk management landscape as never before. In short, the era of man-made risk has raised the stakes for all concerned.

In response, voters, shareholders and consumers should become increasingly prepared to take risks, break with the status quo, set a new bar of awareness vis-à-vis man-made risk, and integrate a willingness to do something meaningful about it. We no longer have the luxury of presuming these risks are someone else's problem, for they are now determining how we all live our lives. Being governed by man-made risks implies, however, that we have the power to do something about it, but doing so will require thought leadership, the devotion of many more resources to combat these issues, and a sustained effort aimed at combatting them - at all levels of society. Man-made risk is everyone's problem, is on all of our doorsteps, and will require our best effort to combat its ill effects.

*Daniel Wagner is CEO of Country Risk Solutions. Dante A. Disparte is CEO of Risk Cooperative. They are the co-authors of "Global Risk Agility and Decision Making".