The properties of global risk networks and corresponding risk management strategies

ABSTRACT

Global risks interconnect with one another and threaten our society as a highly interdependent system. However, knowledge on how risk materializations influence one another is limited. Thus, this study provides a network model to measure risk interdependence and presents recommendations on the integrative risk management framework.

This study develops a global risk network and calculates its key indicators of structural characteristics. Results show that global risks are closely interconnected and a particular triangle relationship exists among environmental, geopolitical, and societal risks. To improve the resilience of a risk system, the systematic important risks, which are “man-made environmental catastrophes” and “interstate conflict” in this study, should be monitored and controlled. Furthermore, we simplify the risk system by entirely managing risks in the same group based on our reclassification. Our method is considerably effective in detecting upcoming crisis and assists supervisors take timely action to prevent crisis.

KEYWORDS:

• global risk
• risk interdependence
• network structure characteristics
• integrative risk management

Additional information

Funding

This research was funded by the National Key R&D Program of China (2016YFC0801500) and the National Natural Science Foundation of China (71642005 and 71403251).