What is fuelling the change in our turbulent times?
Accelerated human discovery, fuelled by a growing population and the emergence of new economic regions, coupled with the demise of communism and widespread acceptance of capitalism, is a primary force. This has led to a doubling of scientific knowledge every seventeen years.
Changing expectations of this growing world population, coupled with a greater sense of self-determination, have led to ever-growing aspirations for a better life. These forces interact in a complex way to alter markets, business and regional economics. These effects are enhanced by the removal of many barriers to trade that previously protected conglomerates and small businesses alike.
The recent terrorist attacks on the United States have illustrated the inter-relatedness of many different industries on a truly world-wide scale and shown the need of all types of organisation to 'think the unthinkable' in their analyses of corporate risk profiles. Besides the benefits to businesses in using globalisation to reduce business exposure and risk, must be weighed the danger and scope for the globalisation of terror and human misery.
Globalisation has been powered by massively improved electronic communications, the dramatic rise in airline networks (although now entering a period of contraction), as well as by reduced economic and social barriers (GATT, NAFTA and EU). Financial resources are readily available anywhere in the world and can be moved quickly to the point of demand. Labour mobility has significantly increased - this is the age of the economic migrant, to an extent unmatched since the exodus from Europe to the New World in the nineteenth century. Corporations have evolved new models of employment, downsizing and process re-engineering are commonplace, even in the public sector. Such practices, combined with the elimination of entire industries, have fundamentally altered the relationship between the employer and the employee and eroded the concept of loyalty. No longer are 'jobs for life'.
High speed computing, the widespread use of the PC, and the universality of the Internet have also accelerated change - as well as generating new classes of risk. This is well illustrated by dramatic growth in virus damage over the last decade - see figure 4, below.
Figure 4: Damage from computer viruses
This is by no means an exhaustive list, but the combined impact of these factors makes forecasting the future much, much harder. The conditions that existed in the past are less likely to lead to successful predictions of the future - and therefore accurate estimates of risk - than ever before.
Has the rate of change slowed and is there any prospect for a reduction in risk and uncertainty? The answer is a resounding 'no'. The impact of discoveries in quantum computing, nano-technology and bioengineering, genetically modified (GM) crops, and understanding of the human genome, have yet to be considered. Significant political and socio-economic questions confront the global economy - 'How do we deal with the widening gap between the rich and poor?'; 'Can the world accommodate the exploding population growth?'; 'How can we combat globalised terrorism?' What will be their impact on risk management over the next decade?
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