Professor Dirk Helbing at ETH Zurich's Risk Center discusses the "increasing interdependencies between the world's technological, socio-economic, and environmental systems have the potential to create global catastrophic risks."

Our current global networks for communication, finance, travel etc. allow destruction to propagate. They're too hierarchical and have few safety features such as breaks and parallel processing. He recommends a complex systems perspective which replaces top down control with self-organization. Replacing hierarchical control with self-organization is a move away from Dominator systems architecture.

Global Networks Must Be Redesigned, Experts Urge

"The financial architecture is not properly designed," concludes Helbing. "The system lacks breaking points, as we have them in our electrical system." This allows local problems to spread globally, thereby reaching catastrophic dimensions.

… today's risk analysis falls short. "Predictability and controllability are design issues," stresses Helbing. "And uncertainty, which means the impossibility to determine the likelihood and expected size of damage, is often man-made."

… all the data in the world cannot compensate for ill-designed systems such as the current financial system. Such systems will sooner or later get out of control, causing catastrophic human-made failure. Therefore, a re-design of such systems is urgently needed.
It is time to recognize that crowd disasters, conflicts, revolutions, wars, and financial crises are the undesired result of operating socio-economic systems in the wrong parameter range, where systems are unstable."

Nowadays, thanks to new complexity science models and large-scale data sets ("Big Data"), one can analyze and understand the underlying mechanisms, which let complex systems get out of control.

Disasters should not be considered "bad luck." They are a result of inappropriate interactions and institutional settings, caused by humans. Even worse, they are often the consequence of a flawed understanding of counter-intuitive system behaviors. "For example, it is surprising that we didn't have sufficient precautions against a financial crisis and well-elaborated contingency plans," states Helbing.

Contemporary information and communication technologies (ICT) are also far from being failure-proof. They are based on principles that are 30 or more years old and not designed for today's use. The explosion of cyber risks is a logical consequence.

Coming Era of Social Innovation

A better understanding of the success principles of societies is urgently needed. "For example, when systems become too complex, they cannot be effectively managed top-down" explains Helbing. "Guided self-organization is a promising alternative to manage complex dynamical systems bottom-up, in a decentralized way." The underlying idea is to exploit, rather than fight, the inherent tendency of complex systems to self-organize and thereby create a robust, ordered state. For this, it is important to have the right kinds of interactions, adaptive feedback mechanisms, and institutional settings, i.e. to establish proper "rules of the game." The paper offers the example of an intriguing "self-control" principle, where traffic lights are controlled bottom-up by the vehicle flows rather than top-down by a traffic center.

Moreover, social capital such as cooperativeness or trust is important for economic value generation, social well-being and societal resilience, but it may be damaged or exploited. "Humans must learn how to quantify and protect social capital. A warning example is the loss of trillions of dollars in the stock markets during the financial crisis." This crisis was largely caused by a loss of trust. "It is important to stress that risk insurances today do not consider damage to social capital," Helbing continues. However, it is known that large-scale disasters have a disproportionate public impact, in part because they destroy social capital. As we neglect social capital in risk assessments, we are taking excessive risks. [emphasis in purple mine]

Tags: Dirk Helbing, global networks, risk assessment

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Replies to This Discussion

As good as this sounds, we seem to have been moving in the opposite direction for many years. Hierarchical control seems to be more and more a part of our society. The controls we had on big business seemed to really start disappearing during the Reagan years and have been losing ground ever since. It's here, perhaps more than anywhere else, that power seems to have become concentrated in fewer and fewer hands.

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