The Second Burma Black Swan -- Nargis

A Wake up Call for The World?

London, UK - 7th May 2008, 18:33 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

The second grotesque tragedy unfolding in Burma in less than a year post the political turmoil -- with 60,000+ dead and millions left homeless post cyclone Nargis -- is just one of the many examples of what we are witnessing in the fast changing global landscape. It is this changing landscape that has brought humankind face to face with a gruelling set of fast moving survival challenges. Natural catastrophes amplify food crises as witnessed by the rising price of rice in the aftermath of Nargis. Over the past several years, the global community has witnessed a significant increase in the severity and propensity of large scale natural disasters. This has resulted in a phenomenal change in perceptions about global risk management when undertaking horizon scanning over the coming decades.

It is not simply about poor or rich nations any more. It is all about prepared and un-prepared nations! Opportunity and risks go hand in hand for everyone and every nation. The world has reached a point, where every nation, region and government needs to address the emergence of complex global challenges to their benefit. What we are witnessing right now is "Failure in Planning and Failure in Risk Management!" Nations and their existing and emerging industries amidst globalising economies necessitate new yardsticks for identifying, measuring, managing, and monitoring industry and national risks. The Burma crisis necessitates planning and risk management for a variety of reasons, one being that without a persuasive plan, we will not succeed in managing critical global risks. Further, without a structured risk management effort, no plan will ever succeed!

For any nation to succeed in the globalising market -- with emerging complex global challenges -- requires planning and risk management! It also requires appropriate policy framework and supporting infrastructure. Besides appropriate policy frame work, the nature and degree of technological innovation, information revolution and maturity of several key processes and industries taking place in a country determine its foundation for the benefits of globalisation for the country concerned. Developing this infrastructure rapidly, effectively and keeping it up-to-date are crucial, critical and fundamental responsibilities of every nation and its government.

Each and every nation and its government needs to assess where they are and where they want to reach. They also need to understand and to assess the impact of their current policies and regulations and address if any revisions need to be made to benefit in this age of knowledge management, innovation and globalisation. Just like any other innovation, if addressing complex global challenges is not planned properly, its risks are not identified, assessed and managed; those complex global challenges have the capacity to wreak havoc on some countries while simultaneously opening the doors of opportunity for others.

A very structured effort needs to be under way to proactively respond to Burma-type disasters, and realistic plans need to be in place with effective triggers to save humankind's very existence in the 21st century. There needs to be a better understanding of the risks involved at local, national, regional and global levels. When dealing with disaster management, every country needs to shift their response from reactive to proactive mode.

Natural Disasters come in many forms, and pose not only a significant obstacle to economic development but they also impact people and communities. We live in a time when every nation needs to be on an actively defensive strategy, prepared for not only the challenges threatening their communities, but also the resulting economic development and threat to their very existence. It is not the natural disaster itself, but rather the associated damages following human and economic disaster that exert an enormous toll on development and growth for any nation. Irrespective of whether a given nation is developed or developing, every nation needs to learn to manage the economic and development impacts of natural disasters. At present, our approach even in the most advanced countries is based on a reliance on the defence force, which in turn are not really trained to deal with natural disasters. They also improvise as they go along, often learning from their mistakes on the scene. This is not the way that civilisation has evolved to deal with complex civil challenges such as health care, provision of clean water or town planning. Our approach is highly methodical in almost all other human endeavours barring emergency natural disaster relief. Look at hurricane Katrina's response, for example, in one of the most advanced societies on earth both in technological and economic terms.

Today, more than ever before, the global decision makers need the ability to obtain decisive answers in a timely manner that will help manage the complex challenges posed by natural disasters. Nations, their governments, industries and communities need not only to demonstrate a clear sense of leadership, but also adapt to proactive approaches and work in a united way towards managing the growing complexity of the challenges facing human kind and our very existence.

Planning and risk management go hand in hand! If global, national and industry risks are not properly identified, assessed, and managed, havoc could be created for the human race, and it would not be far fetched to note that humanity's existence could be threatened. There is a clear lack of any structured effort in managing not only natural disaster risks, but also in managing established and emerging industry risks with national and global implications. The decision makers and global stakeholders need to understand that not knowing risks does not mean that there are no risks. We cannot be in the state of denial and hope that the risks will all go away. Such thoughts belong in a fantasy world. A structured effort is very critical to understanding national and industry risks. Detailed, structured effort to study all possible risk variables, including the interdependency risks, is critical and essential for the success of any nation and its industries in the medium to long term. There needs to be a cultural shift from "fire-fighting" and "crisis management" to proactive decision making that avoids problems before they arise. Anticipating what might go wrong should become a part of everyday business for any nation and its industries. After all, as individuals we are used to taking out insurance for our cars and homes but when it comes to the nation state -- which is a collection of individuals -- the capacity to seek hedging and alternative risk transfer in regard to emerging global risks is sadly missing.

In any socio-economic system, progress and success for any nation requires undertaking risk. Risk taking is the first and most fundamental and essential step in any progress. Like with any innovation, tackling complex global challenges on the one hand and preparing for globalisation on the other, also comes with both risks and rewards. What are the risks societies and nations face as the envisioned changes from complex global challenges and globalisation come into effect? The question is better framed: how can nations benefit from these great opportunities brought about by the requirement to solve complex global challenges via innovations and manage the risks inherently associated with them?

ATCA proposes a pro-active approach rather than a reactive one, and calls for an open risk dialogue involving nations, their industries, businesses, scientists, regulators, law makers, risk managers, and all the other relevant stakeholders. It is critical for any nation and its industries to know what interlinked problems risks can give rise to, noting the extent and frequency. Furthermore, the economic impact of such risks needs to be pre-estimated. There is a clear need for the formation of an international network of scientists and visionaries for the assessment of global, national and industry risks. The role of this much required group should be to identify and to manage the potentially catastrophic global risks.