Shadows of Huaynaputina: the mega-events that could reshape our world
A volcanic eruption in 1600 may have changed history. Today, businesses need to build resilience against many such systemic global risks.
On February 19, 1600, Huaynaputina, a vast strato-volcano in the Moquegua region of southern Peru, exploded catastrophically, burying 10 villages in ash and killing more than 1,500 people in the region. The blast was so severe that geologists Ken Verosub and Jake Lippmann of the University of California, Davis, believe it altered global weather and may have changed the course of human history.1 Their research shows that the winter of 1601 was among the coldest on record, with severe weather effecting crops across Europe, the Americas and Asia.
Nowhere, however, were the effects felt more strongly in Russia, a country already going through extreme political turmoil following the death of the last Russian Tsar of the Rurik Dynasty, Feodor Ivanovich, in 1598. The extreme winter of 1601 was a contributing cause to the Great Russian Famine of 1601 to 1603 which killed two million people, roughly a third of the country’s population at the time. The extent of this disaster in turn fuelled unrest and public dissatisfaction in an era known as the Times of Trouble, which ended with the fall of Tsar Boris Godunov and the rise of the Romanov’s. It’s an event that, four centuries later, still echoes around the world and can be felt in the current tensions between Russia and its neighbors.
Future shock
Today, we see the potential for many such world-changing events. The Global Risks Report 2018, which is published by the World Economic Forum in collaboration with leading risk experts including Zurich Insurance Group, explores 10 such possible “Future Shocks”, emerging interconnected risks which hold the potential for “cascading disruption” with global systemic effects.
These include the collapse of global trade, disruption to our global food supply chain, a digital dystopia in which cyber-crime and disruptive technologies destroy the economic advantages of a globally connected economy, rising populism and the decline of democracy, and a technology-driven rise in inequality leading to mass social disruption.
Global cooperation
A key characteristic of these risks is that they cross borders and regulatory regimes, and can thus only be addressed through international cooperation. As Zurich’s Chief Risk Officer, Alison Martin, says: “The global risks we face today are so structural in nature that without a systemic response we face the prospect that not only the global economy, but also our environment, international relations or any other system could completely collapse.”
The economic stakes are incredibly rel="noopener noreferrer" high. For example, a 2017 study led by climate scientist James Hansen found that failure to reduce carbon emissions could cost the global economy as much as USD 535 trillion by the end of this century.2 That’s USD 6.7 trillion a year, or roughly four times more than the combined annual military spending of all the countries in the world in 2017. Similarly, research conducted by Zurich and the Atlantic Council found that a failure to address cyber risks could have a USD 120 trillion impact on global GDP by 2030.3
That places an enormous burden on governments and intergovernmental organizations to foster cooperation and collaborate to mitigate or eliminate interconnected global challenges. Business also have a role to play and, to be successful, will need to include assumptions around the impact of global systemic risks into their risk management approach and proactively engage with their various stakeholders to address these challenges.
“Holistic risk management today requires us to be aware of all the risks that may impact us and to use new tools to develop the necessary resilience to manage the systemic risks we face,” say Zurich’s Alison Martin. “It’s crucial that business leaders are not blinkered by bias, whereby they see only the traditional, obvious or short term risks.”
Future Shocks of the Global Risks Report 2018
Grim reaping: Simultaneous breadbasket failures threaten sufficiency of global food supply.
A tangled web: Artificial intelligence “weeds” proliferate, choking off the performance of the internet.
The death of trade: Bilateral trade wars cascade and multilateral dispute resolution institutions are too weak to respond.
Democracy buckles: New wave of populism threatens the social order in one or more mature liberal democracies.
Precision extinction: AI-piloted drone ships wipe out large proportion of global fish stocks.
Into the abyss: A cascading series of economic/financial crises overwhelm political and policy responses.
Inequality ingested: Bioengineering and cognition-enhancing drugs widen the gulf between haves and have-nots.
War without rules: State-on-state cyber-attacks escalate unpredictably owing to a lack of agreed protocols.
Identity geopolitics: Self-determination around contested borders sparks regional conflict.
Westphalia 2.0: Regulatory, cybersecurity and protectionist concerns lead to the fragmentation of the internet.
Find out more here: Future shocks by the World Economic Forum
1 Global Impacts of the 1600 Eruption rel="noopener noreferrer" of Peru’s Huaynaputina rel="noopener noreferrer" Volcano, Eos, Vol. 89, No. 15, 8 April 2008 - http://onlinelibrary.wiley.com/doi/10.1029/2008EO150001/pdf (905 KB/PDF)
2 J. Hansen et al.: Young people’s rel="noopener noreferrer" burden: requirement of rel="noopener noreferrer" negative CO2 emissions; Earth Syst. Dynam., 8, 577–616, 2017 -
https://www.earth-syst-dynam.net/8/577/2017/esd-8-577-2017.pdf (13.2 MB/PDF)
3 Risk Nexus: Overcome by cyber-risks; Zurich Insurance Group and The Atlantic Council, September 2015 - https://www.zurich.com/en/knowledge/articles/2015/09/overcome-by-cyber-risks
