Managing risk in a globalised world
To address the challenges of sustainability and financial stability, focusing on how economic and business drivers are managed is key.
RISK is at the heart of all innovation. Globalisation has accelerated scientific and technological progress and produced great societal gains. However, a paradox of successful globalisation is that while interconnected supply chains, for example, greatly reduce the impact and likelihood of a number of risks, they also magnify and spread others.
As globalisation increases, so does risk. The interconnectedness of markets adds complexity to risk management. From a regulatory perspective, this requires international standards, regulatory responses and coordinated action to be implemented across international, regional, national and local levels.
Today, a more scientific approach is taking over the knee-jerk reaction of a quick regulatory fix to a crisis along with a fundamental reshaping of the macro-financial policy architecture. Categorised as the "system of systems", modern economic and financial systems comprise a nested set of sub-systems, each one itself exhibiting complexity.
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