Systemic risk is a well-known challenge to policy makers, but it has often appeared in different guises. Over the years, it has been associated with the collapse of the financial system, climate change, terrorism and globalization (Centeno et al. 2015). Its relevance has been increased by the Covid-19 pandemic in which the fragility of interconnected networks has become clearer to the public and to decision makers. There are different elements that need to be considered in order to understand the root causes of this process (Pescaroli and Alexander 2018). In recent decades, risk has become more complex and harder to predict, requiring a shift in the paradigm of managing it (Helbing 2013, Linkov et al. 2014). According to the International Risk Governance Council:
“traditional probabilistic risk-assessment methodologies, which are based on linear or well-established cause-and-effect-relationships, cannot be successfully applied to risks that arise in such systems and may even have counter-intuitive and unintended consequences” (IRGC 2018, p.9)
The societal use of technology continues to evolve strongly and orients the use of geographical space, the environment, and the synchronization of time. Powered by the increasing dynamism of the world, interconnectedness is a fundamental feature of these systems, but they may be exposed to disruptions which have highly varied causes (IRGC 2018). The increasing complexity of supply networks, outsourcing, and the evolution of justin-time production systems have reduced the redundancy and tolerance of disruption of the supply chain (Burnard and Brahma 2019). Crisis management now needs to move beyond hazard-oriented scenarios and tackle multiple threats that develop simultaneously (Pescaroli and Alexander 2016). These include the concurrency of climate extremes, hybrid attacks that are conducted in the midst of ongoing emergencies, and the cascading effects of technological failure (Pescaroli and Alexander 2018). Unfortunately, the term ‘systemic risk’ has often lost its significance as it is bandied about between science, policy and practical application.
In the following sections, we explore the political and operational challenges of integrating systemic risk into the practice of emergency management, organizational resilience and climate change adaptation. This is accomplished by means of a theory-building process supported by the analysis of experience derived from the Greater London area of the United Kingdom. In particular, using a multi-disciplinary perspective on disaster studies, we explore the unifying role of critical infrastructure. Our goal is to move towards the creation of a roadmap that can be used by decision makers.
Systemic risk is the likelihood that particular failures in a subsystem or organisation will have repercussions throughout the system in which they occur. We regard it as a latent property with the potential to be cumulative. It can remain unnoticed in organizations, but when triggered it can compromise operational capacity. According to the IRGC (2018) systemic risk can be considered as:
highly interconnected risks “with complex causal structures, non-linear cause-effect relationships”, and there is “lack of knowledge about interconnections in an interdependent and complex environment, prevention” (IRGC 2018, p.12).
This is substantially different from so-called 'conventional risks' that are associated with “recognisable patterns and management regimes that are relatively stable”.
In the social, political, economic, and ecological domains, systemic risk can be associated with cascading, compound, interacting and interconnected crises and their interaction with the root causes of emergencies and disasters (Pescaroli and Alexander 2016, 2018). Organizational resilience is defined as “the ability of an organization to anticipate, prepare for, and respond and adapt to incremental change and sudden disruptions in order to survive and prosper” (BS 2014). Climate change adaptation is described as “the process of adjustment to actual or expected climate and its effects, in order to moderate harm or exploit beneficial opportunities” (IPCC 2018). These three concepts can be viewed in the light of the need to create some form of “dynamic flexibility” in order to manage extreme situations (Alexander 2013).
In the following sections the paper approaches the challenges of managing systemic risk in emergency management, organizational resilience and climate change adaptation. It then develops a case study based on London’s experience of understanding and managing systemic risk, after which it offers some discussion and a conclusion. The case study is analysed in two complementary steps that have organisational resilience as a common element. First, the paper explores how emergency management approaches systemic risk, focusing on some initiatives developed by the London Resilience Partnership from 2002 onwards. This section includes examples of exercises, contingency plans and responses to complex incidents. Secondly, the paper analyses how systemic risk is integrated into strategies and practices of climate change adaptation, such as the use of scenario planning to identify common contexts. The review takes account of the work of the London Climate Change Partnership from 2001 onwards. It also considers decision-making pathways, and various means of understanding interdependencies between different operational domains.