Avian Flu Diary: OECD Report: Future Global Shocks

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Now in its 50th year, the OECD (The Organisation for Economic Co-operation and Development) – with 34 Member States – works to stimulate economic progress and world trade.

Today, in a 139 page report, they provide a warning that - as the world becomes more interconnected and interdependent - that `Global Shocks’ to the world economy become more likely.

In the report, they define a Global Shock as: a rapid onset event with severely disruptive consequences covering at least two continents.

They write:

Extremely disruptive events, such as earthquakes, volcanoes, financial crises and political revolutions destabilize critical systems of supply, producing economic spillovers that reach far beyond
their geographical point of origin.

While such extreme events have been relatively rare in the past, they seem poised to occur with greater frequency in the future. Global interconnections accompanying economic integration enable some risks to propagate rapidly around the world.

While discussing a wide range of future shock scenarios, the authors concentrated most of their attention on five highly disruptive future shock events.

A Pandemic
A Cyber Attack
A Financial Crisis
A Geomagnetic Storm
Social Unrest/Revolution

They also make special note of the risks of increased antibiotic resistance, and the need for new antibiotics to be developed.

Although I’ve not yet had time to read the entire 139 page report (or the six background papers and case studies on: Systemic Financial Risk; Pandemics; Cyber Risks; Geomagnetic Storms; Social Unrest and Anticipating Extreme Events) what I have briefly skimmed makes for fascinating reading.

For those who want the condensed version, the OECD has put out a press release, which read at the link below.

Economy: Global shocks to become more frequent, says OECD

27/06/2011 - Disruptive shocks to the global economy are likely to become more frequent and cause greater economic and societal hardship. The economic spill-over effect of events like the financial crisis or a potential pandemic will grow due to the increasing interconnectivity of the global economy and speed with which people, goods and data travel, according to a new OECD report.

“Future Global Shocks” analyses five potential major risks in the years ahead: a pandemic, a cyber attack disrupting critical infrastructure, a financial crisis, socio-economic unrest and a geomagnetic storm.

The growing threat of a pandemic was highlighted by the SARS outbreak in 2002, which spread quickly from Hong Kong around the world as travellers caught the virus and then flew home. The increasing number of heavily populated megacities, notably in Asia, exacerbates the risk, particularly in business travel, tourism and migration hubs like Dhaka, Manila and New Delhi.

(Continue . . . )

Today, when a volcano spews ash in Iceland, it can disrupt airline traffic and commerce a thousand miles away in Europe, costing hundreds of millions of dollars.

A financial crisis in Greece or Spain can cause economic, social, and political reverberations felt around the world.

As we saw in 2003 with SARS – the outbreak of a novel virus in rural China can quickly end up being a public health crisis around the world.

And as this report points out, wildfires last year in Russia consumed 20% of their Wheat crop, reducing grain exports and fueling a spike in global food prices, which led to social unrest and revolution in the Middle East this Spring.

The point being, that it doesn’t take a disaster to directly hit your community for it to eventually impact your life.

Large disasters have ripple effects that can be felt around the globe.

Today, it is hard to know what will be the next trigger event that will spark a future global shock. The world is full of so-called `unknown unknowns’.

Four months ago, few people would have seriously concerned themselves that a 9.0 earthquake, and a 100 foot tsunami, would soon devastate northern Japan, disable four nuclear reactors, and change the view of nuclear energy in many countries around the world.

But regardless of the source of the next future global shock, being prepared to deal with it is of paramount importance.

For governments, international organizations, and multinational corporations that means detailed risk analysis, contingency planning, and developing a higher order of international cooperation.

While you and I can do little about governmental and international preparedness, there is also a role and responsibility for individuals, families, small businesses, and their communities.

That’s something that FEMA, Ready.gov, and many other agencies remind us of constantly. That we owe it to ourselves, our families, and our communities to be better prepared do deal with future emergencies and disasters.

A nation’s resilience in the face of a major crisis –whether it be local or global - truly comes from the bottom up, not from the top down.

For more on individual and community preparedness, you may wish to revisit: