Systemic risks
Risks arising from the breakdown of the entire system, rather than the failure of individual parts. They are characterised by modest tipping points combining indirectly to produce large failures with cascading of interactions of physical and transition risks (contagion), as one loss triggers a chain of others, and with systems unable to recover equilibrium after a shock. An example is the loss of a keystone species, such as sea otters, which have a critical role in ecosystem community structure. When sea otters were hunted to near extinction in the 1900s, the coastal ecosystems flipped and biomass production was greatly reduced.
Systemic risks are threats that can jeopardize the functioning and stability of entire systems, rather than just affecting isolated elements or actors. They often arise from complex interactions between different components of a system, where an event in one area can trigger cascading effects that impact the entire system. A typical characteristic of these risks is tipping points, which indicate irreversible transitions to a new system state, such as financial crises or climate changes.
Global challenges such as climate change, pandemics, or cyberattacks highlight the far-reaching consequences of systemic risks that cross geographical and sectoral boundaries. They manifest in unexpected domino effects, where the failure of a single element leads to widespread disruptions in other areas.
Identifying and managing these risks is particularly challenging, as they are often accompanied by a delay in perception, making effective preventive measures difficult. Classical risk management approaches are insufficient; instead, comprehensive, cross-sector strategies and international cooperation are required to strengthen the resilience of systems. The regulatory context, such as the EU's Digital Services Act (DSA), demonstrates that even in digital areas, steps are being taken to identify and mitigate systemic risks. Therefore, systemic risks represent a central challenge for the stability and resilience of modern societies, necessitating innovative solutions in risk management and increased international collaboration.
