In: Folke, Carl, et al. 2020."Our Future in the Anthropocene Biosphere: Global sustainability and resilient societies." in Nobel Prize Summit: Our Planet, Our Future. Stockholm, Sweden: Beijer Discussion Paper Series No. 272.
Increased trading with financial instruments, new actors and novel technologies are changing the nature of financial markets making trade faster, more information dense and more globalized than ever. These changes in financial markets are not incremental and linear, but transformative with the emergence of a new "machine-ecology" with intricate system behavior and new forms of systemic financial risks. We argue that the nature of these changes pose fundamentally new challenges to governance as they require policy-makers to respond to system properties characterized by not only complex causality, but also extreme connectivity (i.e. global), ultra-speed (i.e. micro-seconds) and "hyperfunctionality". Governance can fail at the system level if a subsystem performs its function to such an extreme; this could jeopardize the efficiency of the system as a whole. We elaborate in what ways governance scholars can approach these issues, and explore the types of strategies policy-makers around the world use to address these new financial risks. We conclude by pointing out what we perceive as critical research fronts in this domain.
Global risks are now increasingly being perceived as networked, and likely to result in large‐scale, propagating failures and crises that transgress national boundaries and societal sectors. These so called "globally networked risks" pose fundamental challenges to global governance institutions. A growing literature explores the nature of these globally networked or "systemic" risks. While this research has taught us much about the anatomy of these risks, it has consistently failed to integrate insights from the wider social sciences. This is problematic since the prescriptions that result from these efforts flow from naїve assumptions about the way real‐world state and non‐state actors behave in the international arena. This leaves serious gaps in our understanding of whether networked environmental risks at all can be governed. The following essay brings together decades of research by different disciplines in the social sciences, and identifies five multi‐disciplinary key insights that can inform global approaches to governing these. These insights include the influence of international institutions; the dynamics and effect of international norms and legal mechanisms; the need for international institutions to cope with transboundary and cross‐sectoral crises; the role of innovation as a strategy to handle unpredictable global risks; and the necessity to address legitimacy issues.
While some of the future impacts of global environmental change such as some aspects of climate change can be projected and prepared for in advance, other effects are likely to surface as surprises -- that is situations in which the behaviour in a system, or across systems, differs qualitatively from expectations. Here we analyse a set of institutional and political leadership challenges posed by 'cascading' ecological crises: abrupt ecological changes that propagate into societal crises that move through systems and spatial scales. We illustrate their underlying social and ecological drivers, and a range of institutional and political leadership challenges, which have been insufficiently elaborated by either crisis management researchers or institutional scholars. We conclude that even though these sorts of crises have parallels to other contingencies, there are a number of major differences resulting from the combination of a lack of early warnings, abrupt ecological change, and the mismatch between decision-making capabilities and the cross-scale dynamics of social-ecological change. Adapted from the source document.
Unexpected epidemics, abrupt catastrophic shifts in biophysical systems, and economic crises that cascade across national borders and regions are events that challenge the steering capacity of governance at all political levels. This article seeks to extend the applicability of governance theory by developing hypotheses about how different governance types can be expected to handle processes of change characterized by nonlinear dynamics, threshold effects, cascades, and limited predictability. The first part of the article argues the relevance of a complex adaptive system approach and goes on to review how well governance theory acknowledges the intriguing behavior of complex adaptive systems. In the second part, we develop a typology of governance systems based on their adaptive capacities. Finally, we investigate how combinations of governance systems on different levels buffer or weaken the capacity to govern complex adaptive systems. Adapted from the source document.
Unexpected epidemics, abrupt catastrophic shifts in biophysical systems, and economic crises that cascade across national borders and regions are events that challenge the steering capacity of governance at all political levels. This article seeks to extend the applicability of governance theory by developing hypotheses about how different governance types can be expected to handle processes of change characterized by nonlinear dynamics, threshold effects, cascades, and limited predictability. The first part of the article argues the relevance of a complex adaptive system approach and goes on to review how well governance theory acknowledges the intriguing behavior of complex adaptive systems. In the second part, we develop a typology of governance systems based on their adaptive capacities. Finally, we investigate how combinations of governance systems on different levels buffer or weaken the capacity to govern complex adaptive systems.