Modern pluralistic societies face many challenges. Human life, societal welfare and the environment are especially challenged by large, systemic risks such as climate change, epidemics, financial breakdown and social inequality. Systemic risks can be characterized by four major properties. First, systemic risks are characterized by scientific complexity and epistemological uncertainty. Science cannot identify the probabilities or the extent of damage in any accurate fashion. Instead, science utilizes models of scenario building to sketch out the stochastic nature of systemic risks. Second, systemic risks are transboundary and global in nature. They transgress nation states and call for international cooperation. Third, although systemic risks originate in one subsystem of society or the environment, the ripple effects of these risks affect all social subsystems, such as the economy, politics, and civil society. Fourth, future technological and societal developments are non-linear. Science struggles to identify tipping points of technological and social trends. Nevertheless, political decision makers call for scientific advice to govern our emergent future. Systemic risks pose great challenges to governance because they are highly interconnected and complex, stochastic and non-linear in their cause-effect relationships. Furthermore, they are often underestimated in public policy arenas and public perception. Consequentially, systemic risks demand cooperative management efforts of experts, corporate sector, civil society and regulators. Effective risk management must strike a balance between efficiency and resilience, and the solutions devised must be fair to all people affected. Effective, inclusive governance strategies are necessary to pursue the goals of resilience and sustainable development.
The presentation draws on evidence from the project “Systemic Risks” conducted at the Institute for Advanced Sustainability Studies Potsdam, Germany. The presentation investigates the complex interface of science, politics and the economy. Furthermore, the presentation aims at informing better governance of systemic risks.