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Measuring, modeling, and managing systemic risk: the missing aspect of human agency
Umeå University, Faculty of Science and Technology, Department of Mathematics and Mathematical Statistics.ORCID iD: 0000-0001-9862-816x
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2020 (English)In: Journal of Risk Research, ISSN 1366-9877, E-ISSN 1466-4461, Vol. 23, no 10, p. 1301-1317Article in journal (Refereed) Published
Abstract [en]

It is problematic to treat systemic risk as a merely technical problem that can be solved by natural-science methods and through biological and ecological analogies. There appears to be a discrepancy between understanding systemic risk from a natural-science perspective and the unresolved challenges that arise when humans with their initiatives and interactions are included in systemic-risk considerations. It is therefore necessary to investigate possible fundamental differences and similarities of systemic risk with and without accounting for human involvement. Focusing on applied and implementation aspects of measuring, modeling, and managing systemic risks, we identify three important and distinct features characterizing such fundamental differences: indetermination, indecision, and responsibility. We contend that, first, including human initiatives and interactions in systemic-risk considerations must emphasize a type of variability that is especially relevant in this context, namely the role of free will as a fundamental source of essential indetermination in human agency. Second, we postulate that collective indecision generated by mutual uncertainty often leads to the suspension or alteration of rules, procedures, scripts, and norms. Consequently, the associated systemic risks cannot be incorporated into explanatory models, as the new causal rules cannot be predicted and accounted for. Third, analogies from biology and ecology, especially the idea of ‘contagion,’ downplay human agency, and therefore human responsibility, promoting the false belief that systemic risk is a merely technical problem. For each of these three features, we provide recommendations for future directions and suggest how measuring, modeling, and managing approaches from the natural-science domain can best be applied in light of human agency.

Place, publisher, year, edition, pages
Routledge, 2020. Vol. 23, no 10, p. 1301-1317
Keywords [en]
Systemic risk, human agency, measuring systemic risk, managing systemic risk, modelling systemic risk
National Category
Social Sciences Interdisciplinary
Identifiers
URN: urn:nbn:se:umu:diva-164627DOI: 10.1080/13669877.2019.1646312ISI: 000485129600001Scopus ID: 2-s2.0-85071978306OAI: oai:DiVA.org:umu-164627DiVA, id: diva2:1368905
Available from: 2019-11-08 Created: 2019-11-08 Last updated: 2021-01-07Bibliographically approved

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Brännström, Åke

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