Managing risk in a globalised world

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.