Category: Latest News

Acclimatise removes its company page from Facebook

Acclimatise removes its company page from Facebook

Acclimatise has taken the decision to remove its company page from Facebook. It has come to our attention that Facebook has included a loop-hole in its fact-checking program that allows non-expert staff members to overrule the judgement of climate scientists and make climate disinformation ineligible for fact-checking by classifying it as ‘opinion’. This has undermined the credibility of Facebook’s partnership with Science Feedback, to allow trained climate scientists to evaluate the accuracy of viral content.

We believe that Facebook is facilitating the spread of misinformation about climate change, which directly undermines Acclimatise’s mission to make the world more resilient to climate change and its impacts. As a company driven by its values, Acclimatise has a responsibility to take action on issues that cause harm to our staff, our environment and the wider community. 

Facebook’s continued failure to stop the spread of misinformation and hate speech on its platform is also of great concern to us. This inaction fuels racism, violence, and may undermine democracy and the integrity of elections around the world.

We are deeply concerned that the company has named Breitbart News a “trusted news source” and made The Daily Caller a “fact-checker” despite both publications having deplorable values. In view of the dangerous misinformation about climate change and the conflict with our own values, we have decided to sign up to the Stop Hate for Profit campaign.

Financing resilience in Honduras: final webinar and lessons learnt

Financing resilience in Honduras: final webinar and lessons learnt

By Caroline Fouvet and Laura Canevari

Nine months after its launch, the IDB Invest-funded initiative to support Honduran banks identify climate resilient investments, concluded during a well-attended webinar. Organised by IDB Invest and AHIBA (Asociación Hondureña de Instituciones Bancarias) and facilitated by Acclimatise, the event provided an opportunity to go over the project’s methodology to identify resilient investments and to hear national technology providers’ perspectives on market trends for resilient technologies, their benefits and financing challenges. Further, IDB Invest and Bancolombia also reflected on their experience promoting sustainable finance across Latin America and its benefits. Overall, the ultimate objective was to promote a better understanding of the business opportunities arising from financing technologies and products that can increase climate resilience in at-high-risk sectors.

As 60 people, including over 30 representatives from the banking sector, tuned into the webinar to hear about the initiative’s insights and lessons learnt, speakers went through the following key elements:

Financing resilient solutions requires innovation in how investment opportunities are identified and framed

In order to determine how to finance climate resilient solutions, banks should first analyse their investment portfolio to see what sectors are the most relevant, which of them are the most vulnerable to climate change and what climate change risks they are facing. Grounded on this understanding of climate risks in their portfolios, they can then identify those technologies, products and services that could help avoid, minimise and manage those risks. They can also determine what is the market potential for those technologies and carry assessments of the business environment. This is all the more relevant in a country considered one of the most vulnerable to climate change globally.

It is important also for banks to understand that the mechanisms to finance resilient solutions differs from traditional financing in that:

  • The purpose of the credits must be clear and demonstrate climate resilience benefits;
  • The process for the selection of eligible investments must be transparent and eligibility criteria on the resilience benefits must be incorporated in the credit approval process;
  • Resources are administered to ensure traceability of credits and portfolios dedicated to resilient investments
  • Monitoring and evaluation is undertaken to ensure access to information on climate resilient credits and their achieved benefits

Similarly, banks must be aware that commercialising resilient products and how to incentivise and increase credit demand also differs from traditional financing and the key role played by technical assistance and strategic alliances with solution providers.

Financing resilient solutions is a business opportunity for banks in Honduras

The webinar has also helped to demonstrate that there is already a market for a number of resilient solutions in the country, driven by companies’ need to improve their competitiveness and ensure their survival in the face of climate impacts. To make the case, Acclimatise presented 11 resilient solutions that were identified and characterised following the abovementioned approach, and reflected on the observed demand and market potential and the return on investment profile of these investment opportunities.

Similarly, representatives from  Inelec, Frio Industrial and Durman, which are local providers for some of the resilient solutions identified, took the floor to introduce these technologies, including energy efficient air conditioning, smart cooling solutions and solar irrigation. The providers reflected on the ROI profile of each of these investments, noting a steady increase in the market demand for their products and services; but acknowledging that certain barriers still remain, in particular the high cost of the initial investment and a lack of adequate financial products to support investment in these technologies are obstacles still to be surpassed.

As noted by Sandra Rivera from PESIC (the Energy Efficiency Project in the Industrial and Commercial Sectors (PESIC), a concrete way to push resilient technologies forward is to build up strategic alliances between technology providers, business owners and engineers providing technical assistance and confirming the technologies’ resilience benefits, such as lower energy consumption. PESIC aims both to increase technical and institutional capacities in energy efficiency, and to develop financial instruments that favour investments in energy efficiency equipment and practices.

Another important avenue to promote resilient investments is through the development of strategic alliances between the banks and the different providers and distributors of climate resilient solutions in Honduras. AHIBA, as the national association of commercial banks in the country, has an important role to play in this, as it can support the development of these alliances and the transfer and sharing of experiences promoting resilient investments between the banks.

Practical experiences and lessons learnt in capturing “green” and “resilient” financing opportunities across Latin America

The event also featured reflections from IDB Invest, who described the mechanisms put in place to promote sustainable finance on the region, including green and sustainable bonds. In addition, the Colombia bank Bancolombia share its experience in the development of credit lines to support sustainable and climate resilience investments. Bancolombia highlighted the importance that adhering to international protocols (such as the Equator Principles and CDP) as well as national ones (i.e. the Green Protocol) and the need to have buy in from the board of directors. Moreover, they noted that having an  Environmental and Social Risk Management system significantly facilitated the development of a green strategy, as well as the development of a taxonomy to clearly define what constitutes a green and a resilient investment, to provide banks with an operational framework. Many banks indeed already finance climate resilience, but it is likely they are not yet aware of it, given they lack a proper taxonomy and system to track credits that build climate resilience.

Both presenters agreed on the benefits of sustainable finance in general and climate resilient finance in particular. These benefits include, among others, better access to long-term financing in capital markets, improved value of customer franchise and response to demands for socially responsible investments. When it comes to financing climate resilience, this enables banks to avoid losses arising from climate impacts and potential associated default payments on their loans, while also catering to the financing needs of new market segments, and as such expanding their activity.

In the time of COVID-19, the need to foster a green recovery has clearly emerged. This includes the importance of considering climate change resilience to ensure the new economy is built upon climate-proof foundations. Banks henceforth occupy a centre role in this endeavour, in Honduras and across the world.  

Cover photo of the Honduras Mountains. By Gerardo Predo on Unsplash.
NAP Global Network releases new toolkit on private sector engagement

NAP Global Network releases new toolkit on private sector engagement

A new toolkit has been released to support country efforts to engage the private sector in the National Adaptation Plan (NAP) processes. The toolkit, released by the NAP Global Network, is aimed at national governments and other practitioners who are engaged in developing and implementing NAPs. Featuring examples of best-practice from around the world, and a wide range of tools including several developed by Acclimatise, the toolkit acts as a guide to encourage the appropriate support of the private sector in facilitating countries’ NAPs.

The document Toolkit for Engaging the Private Sector in National Adaptation Plans (NAPs) is designed to accompany the UNFCCC Technical Guidelines for the NAP Process. It includes links to useful tools to engage the private sector, such as a research paper written by Acclimatise’s Virginie Fayolle and Caroline Fouvet, and others for DFID’s Action on Climate Today (ACT) programme. The paper, “Engaging the Private Sector in Financing Adaptation to Climate Change: Learning from Practice”presents a comprehensive framework for identifying the key enabling factors for private sector actors to invest in climate change adaptation, signalling approaches that public policy-makers and donors can take to engage the private sector.

The toolkit also includes links to resources that help governments to integrate climate change into decision-making processes such as the Caribbean Climate Online Risk and Adaptation tooL – CCORAL – an online support system for climate resilient decision making, developed by Acclimatise for the Caribbean Community Climate Change Centre (CCCCC).


The NAP Global Network and the UNFCCC Adaptation Committee are hosting an interactive webinar about the toolkit this Wednesday 24th June 2020. Learn more and sign up below.

Engaging the Private Sector in National Adaptation Plans: A toolkit to guide effective strategies

Wednesday, June 24, 2020

14.00 – 15.00 CEST (8.00 – 9.00 EST)

Online: Microsoft Teams

Ask yourself, which business should be engaged in your climate change adaptation planning processes: the smallholder farmer or the big banker? Or when should you engage them: in the planning or implementation stage of the National Adaptation Plan (NAP) process?

In this interactive webinar, your decisions will guide the story!

Our policy advisors will ask for your input at five important junctures of a case study. The majority votes made by participants will impact the direction of the story, as you collectively play the role of a government worker responsible for the NAP process in a sunny and totally made-up island nation.

And don’t worry, we have a just the right guiding document to help with your decisions! This webinar is all about demonstrating the applicability of our new toolkit designed to help governments develop strategies to effectively engage private sector actors in their country’s NAP process:

Toolkit for Engaging the Private Sector in National Adaptation Plans (NAPs): Supplement to the UNFCCC Technical Guidelines for the NAP Process

Register online for the webinar now

Financing increased for early warning systems in Small Island Developing States

Financing increased for early warning systems in Small Island Developing States

Key nations have announced US$ 4.8 million in funding for the delivery of early warning systems and services to reduce loss of life from severe weather events in the Pacific region. The announcement was made 10 June 2020 during the 11th Steering Committee Meeting of the Climate Risk & Early Warning Systems (CREWS) initiative by its Member States, the governments of Australia, Canada, France, Germany, Luxembourg, Netherlands, Switzerland and the United Kingdom.

The CREWS initiative was established in 2015 at the United Nations Climate Change Conference (COP21) as a financial mechanism to save lives and livelihoods through the expansion of early warning systems and services in Least Developed Countries and Small Island Developing States. Its three Implementing Partners are the World Meteorological Organization, the World Bank Group / Global Facility for Disaster Reduction and Recovery and the United Nations Office for Disaster Risk Reduction.

Filipe Lucio of WMO indicated at the meeting that the funds would allow the island countries in the region to detect, monitor and forecast severe high-impact weather events. Additional services to be developed include access to longer-term seasonal predictions and operational early warning and response plans that ensure the most vulnerable people in the communities receive warnings.

CREWS Member States also approved the allocation of funds to support countries to monitor the effectiveness of their national early warning systems. Additionally, the preparations of another US$ 4 million project, covering the South West Indian Ocean that includes the countries of Comoros, Madagascar, Mauritius, Mozambique and Seychelles was initiated for funding in the near future.

To date, the CREWS Trust Fund has delivered over US$ 43 million in project funding and mobilized an additional US$ 270 million from public funds of other development partners – realizing accelerated life-saving action and maximized finance effectiveness.

In 2019, CREWS support was scaled up to 44 least developed countries and small island developing states. Through this work, more than 10 million people in some of the world’s most vulnerable communities now have access to better early warning services.

  • In Afghanistan, 3D printers are being used to build automatic weather stations, bringing early warning services to rural communities.
  • In Burkina Faso, more than 1,100 rural farmers received 130 weather forecasts in 2019, broadcast via local radio stations.
  • In Fiji, nearly one million people now have advance flash flood warnings, creating increased security and saving lives.
  • In Niger, more than 600 women were trained in early warning services and have now created women-led WhatsApp groups to amplify advance warnings throughout their communities.
  • Across the Caribbean, national emergency management offices, national hydromet offices, national gender bureaux, sectorial ministries, and non-governmental groups including women organizations are now working together to bridge the gender divide in access to early warning systems.

This article was accessed via PreventionWeb. Read the original article here.
Cover photo of Fiji highway from Pexels.
PLACARD project calls for ‘resilient societies’ to rise from COVID-19 crisis

PLACARD project calls for ‘resilient societies’ to rise from COVID-19 crisis

By Will Bugler

A major European Commission-funded project known as PLACARD, called last month for governments to focus on building climate resilience as part of their COVID-19 recovery plans.

In a policy brief, issued in the final weeks of the project, the Platform for Climate Adaptation and Risk Reduction (PLACARD) project said that climate change adaptation and disaster risk reduction are vital in order to manage future systemic risks to European societies and economies. The brief had three central recommendations:

  1. Building more resilient societies, including advancing the European Green Deal, should be a central concern as Europe considers its recovery from the coronavirus pandemic. The COVID-19 recovery must be climate-compatible and focus on building long-term resilience, in addition to responding to short-term priorities.
  2. Climate change adaptation and disaster risk reduction are important processes for managing future risks and galvanising cooperation between communities, across sectors and scales and beyond borders. Insights from these areas should be leveraged for the European Green Deal and COVID-19 recovery.
  3. Improving communication, harmonising language, connecting actors, and building structures for cooperation will be essential for a resilient European Green Deal and green COVID-19 recovery. A wealth of tools and approaches are available to take immediate steps. Continued investments are needed to strengthen existing institutions and create new ones to manage risk and promote cooperation in a warming world.

PLACARD was a research programme that brought together leading practitioners in climate resilience and disaster risk reduction to improve response to climate-related shocks and stresses faced by European countries.

The briefing note, Adapting to extremes: Key insights for bridging climate change adaptation and disaster risk reduction in the European Green Deal, builds on insights developed across the project for bridging adaptation and risk reduction – especially in the context of the European Green Deal. It includes the central idea that recovery from the pandemic must be compatible with climate sustainability and focus on building “long-term resilience as well as short-term priorities”.

Climate adaptation and risk reduction, it says, are important processes for managing future risks and galvanizing cooperation between communities, in all sectors, on all scales, and across borders.

PLACARD was coordinated on behalf of the European Commission by the Portuguese research coalition FCiências.ID.

Cover photo by Stockhold on Unsplash.
Siberia dries out as forests burn and climate heats

Siberia dries out as forests burn and climate heats

By Kieran Cooke

Residents of the small Arctic town of Khatanga have never experienced anything like it: their home is changing at a gallop as Siberia dries out.

Khatanga – population around 3,500 – is well north of the Arctic Circle, with usual daytime temperatures at this time of year hovering round a chilly 0°C. On 22 May the temperature in the town reached 25°C – more than double the record to date.

Global warming is causing profound change across the Arctic, a region which acts like a giant air conditioning system regulating the Earth’s climate.

Temperatures are rising far faster than elsewhere: sea ice cover is rapidly disappearing, valuable fish stocks are moving ever further north in search of colder waters, land around the Arctic perimeter is drying out – particularly across the vast expanse of Siberia.

Permafrost is melting. This week a giant oil tank collapsed and ruptured at a nickel and palladium works near the city of Norilsk in northern Siberia, spilling thousands of tonnes of diesel into the nearby Ambarnaya river.

Worst for years

The storage tank is believed to have been built on permafrost: a state of emergency has been declared for what is being described as one of the worst environmental disasters in recent Russian history. State media say an area stretching over 350 square kilometres is polluted and will take years to clean up.

A series of wildfires, often enveloping hundreds of thousands of hectares of Siberia’s boreal forests, or taiga, have raged in many areas over recent weeks.

In early spring farmers across Siberia often light fires to clear land of dead grass and unwanted vegetation. A combination of high temperatures and strong winds has led to fires blazing out of control. Last year Siberia’s fires are estimated to have destroyed an area of forest the size of Belgium.

“2019 saw a record number of fires over the summer months in Siberia”, says Thomas Smith, an environmental geographer at the London School of Economics (LSE) and a wildfires expert.

“This year, aided by high temperatures and conditions that have promoted growth, the fires started early, though so far their incidence is about average and not as extensive as in 2019.

“Forest fires in this region of the Arctic used to happen about every hundred years and now we’re seeing them every summer”

“But what’s important are the peak summer months: the soils are dry and there’s plenty of fuel, so conditions are favourable for more widespread fires”, Dr Smith told Climate News Network.

One of the regions worst affected is in the south of Siberia, around Lake Baikal, the world’s largest and deepest freshwater lake, where an estimated half a million hectares of forest were destroyed by fire earlier this year.

Evgeny Zinichev, Russia’s emergencies minister, speaks of a critical situation unfolding in Siberia and across Russia’s Far East. “The main reason, of course, is unauthorised and uncontrolled agricultural fires”, he says.

“A less snowy winter, an abnormal winter, and insufficient soil moisture are factors that create the conditions for the transition of landscape fires to settlements.”

Other factors have also led to the spread of wildfires. After weeks of lockdown due to the Covid-19 pandemic, people trapped in often cramped and stiflingly hot apartment blocks have sought freedom in the countryside and forests, camping and lighting barbecues.

Hungry Chinese demand

In Soviet times the taiga was more closely monitored and policed: that system has tended to break down in recent years. The Covid crisis has also drawn attention away from the fires.

Corruption and illegal logging, driven in large part by China’s demand for forest products, is an additional threat to the taiga.

The warming and wildfires are having an impact not only across Siberia but around the world. Its forests act as an enormous carbon sink, storing millions of tonnes of climate-changing greenhouse gases.

Fires and logging release the gases into the atmosphere, creating what scientists call a positive feedback loop – the more gases that are released, the warmer and drier the air becomes, so that more areas of forest are at risk from fire.

“Substantial areas of forest in Siberia are on peat soils”, says Dr Smith. “When these soils dry out, fires go underground, threatening to release large amounts of carbon which can lead to a catastrophic climate event.”

Wide impact

Smoke from the fires is carried by winds to other parts of the globe, trapping warm air near the Earth’s surface. The warm air generated by the fires is also likely to result in a further depletion in ice cover and warming of the Arctic seas.

The temperature rises and the growing incidence of wildfires in Siberia have other effects too.

A recent study published in the journal Scientific Reports says the fires mean that more nutrients, particularly nitrogen, leak into streams and waterways.

“Forest fires in this region of the Arctic used to happen about every hundred years and now we’re seeing them every summer”, says Bianca Rodriguez-Cardona, of the University of New Hampshire, Durham, US, one of the study’s authors.

“This increase in fires leads to more input of inorganic solutes into local streams which can alter the chemistry and trigger issues like increased algal blooms and bacteria that can be harmful to humans who depend on these waterways for drinking water, fishing and their livelihoods.” When these waters reach the Arctic they can also dramatically alter the chemistry of the surrounding seas, says the study. – Climate News Network

This article was originally posted on the Climate News Network.
Cover photo: The Siberian taiga blazes as petroleum gas burns off in a flare. Image: By Copper Kettle, via Wikimedia Commons
Acclimatise releases its latest GCF proposal toolkit

Acclimatise releases its latest GCF proposal toolkit

Three years after producing the first guide of this kind, Acclimatise is releasing today its latest Green Climate Fund (GCF) Proposal Toolkit. This guide integrates the latest GCF policy changes and funding proposal template v2.0 in order to provide the most recent guidance to project proponents, accredited entities and national designated authorities and help them to navigate the ever-changing GCF project requirements.

Our authors have leveraged their experience in assisting countries and organisations access GCF funding and supporting the GCF Secretariat share tips and guidelines to help you work in the most efficient way possible. You can find more information about how Acclimatise can help you mobilise, catalyse, and leverage public and private capital to deliver your climate investment strategies and financing for climate-resilience solutions on our website. Contact the authors: Ms. Virginie Fayolle & Ms. Maya Dhanjal.

Download the toolkit by clicking here.

Cover photo by Joe Saade, UN Women.
European Central Bank issues consultation on guidance for banks on managing and disclosing climate risks

European Central Bank issues consultation on guidance for banks on managing and disclosing climate risks

By Robin Hamaker-Taylor

On 20 May 2020, the European Central Bank (ECB) published a draft guide setting out its expectations for banks on managing and disclosing climate-related and environmental risks under the current prudential framework. The ECB wants banks to account for these risks given that they drive existing prudential risk categories and can substantially impact the real economy and banks.

The ECB issued this new guidance to clarify how ECB Banking Supervision is expecting banks to consider these risks in their in their governance and risk management frameworks and when formulating and implementing their business strategy, according to the ECB press release. Apart from setting out expectations around climate risk management, the guide also outlines expectations on enhancing banks’ climate-related and environmental disclosures. The ECB is pursuing transparency, with increased disclosures as a main route for this.

In issuing this guide, the ECB is moving in step with other central banks around the world. The guide was developed in close cooperation with European national authorities and aims to ensure high supervisory standards are applied consistently across the euro area. The ECB’s guidance, for example, echoes the Bank of England’s 2019 BoE Supervisory Statement (SS) on banks’ and insurers’ climate risks – read more about the BoE SS here. Importantly, the ECB’s guide is designed to fit within the boundaries of applicable European Union and national law. It aims to foster banks’ preparedness for managing climate-related and environmental risks under current prudential rules, in accordance with the European Commission’s Action Plan on financing sustainable growth and the European Banking Authority’s Action plan on sustainable finance. Click here to read our recent summary of the current status of the Commission’s Action Plan.

The ECB is now seeking feedback on their draft guide, with the consultation running until end of 25 September 2020. The guide itself and a list of frequently asked questions (FAQs) are available on the ECB’s Banking Supervision website. Following the end of the public consultation, the ECB will publish the comments received together with a feedback statement.

Cover photo by Martin Krchnacek on Unsplash.
Direct virus lessons we can learn as we go

Direct virus lessons we can learn as we go

By Alex Kirby

What history knows as the 1918 ‘flu pandemic infected about a quarter of the world’s population at the time – around 500 million people – and left virus lessons for this generation, whether or not it’s learned them.

Thankfully, the 2020 coronavirus outbreak shows no sign yet of matching last century’s virulence. There are growing calls, though, for the world not just to get back to normal, but to turn this global horror into an opportunity to rebuild by finding a better normal to reclaim.

In late 2018 the Rapid Transition Alliance was launched with the intention of building a community to learn from moments of sudden change and to apply those lessons to the climate emergency.

Changes in the biosphere are happening faster than changes in human behaviour, so the question the Alliance asks is this: how do we match the speed and scale of social and economic change with the science – and what it is telling us to do?

It is now working with two other British organisations, the original Green New Deal group and Compass, the campaign that builds support for new ideas among social movements, decision-makers and political parties.

In the first of several digital meetings the three have begun to sketch out a framework for how society can “learn as we go” from unprecedented events. They have identified five principles for a just recovery, which say in essence:

  • Health is the top priority, for all people, with no exceptions. That means resourcing health services everywhere and ensuring access for all.
  • Providing economic relief directly to the people is vital, particularly those marginalised in existing systems. Concentrate on people and workers and on short-term needs and long-term conditions.
  • Assistance directed at specific industries must be channelled to rescuing communities and workers, not shareholders or corporate executives, and never to corporations whose actions worsen the climate crisis.
  • The world needs to create resilience for future crises by creating millions of decent jobs that will help power a just transition for workers and communities to the zero-carbon future we need.
  • We must build solidarity and community across borders: do not empower authoritarians, do not use the crisis as an excuse to trample on human rights, civil liberties, and democracy.

An indication of the degree of international support for the five principles is available here.

Making things happen

The principles are already accepted by millions of people, but are no closer to reality, for all that. If they were, the climate crisis would be almost over. What can the three groups offer to make them happen?

The coordinator of the Rapid Transition Alliance is Andrew Simms, author of a summary of what the discussions have agreed so far. He told the Climate News Network: “Nobody can guarantee that things will turn out any certain way.

“But once people have seen what it is possible for a nation to do, and how fast it can do it, it is much harder for those in power to justify inaction, or wrong action.

“The current pandemic crisis is wreaking havoc on families, communities and whole economies. But it is also changing our ideas about what really matters to people and also what it is possible to do as a nation when faced with a great challenge.

“There is a new appreciation of key workers who provide the goods and services that a society really relies on – like health services and those in the food supply chain – but who typically lack recognition or are poorly paid.

Good-bye to inertia

“One of the greatest enemies in overcoming the climate emergency has been the sheer inertia of business-as-usual. Now there is a great sense of people taking stock of what is truly important.

“Vitally, when there is a fundamental threat to society, we have seen that financial resources can be mobilised. Fundamental change cannot happen without there being a consensus that it is both desirable and possible.

“The last few weeks have made visible underlying cracks in society, but also our ability to fix them. Once people have seen that, they are unlikely to settle for less.”

This first meeting spent some time talking practicalities, including how to protect wages and income. One example was the call by a member of Parliament for the introduction of a basic income scheme. Globally, the pandemic has prompted the United Nations to call for a worldwide ceasefire.

Overall, the summary says, greater consensus is emerging on how our economy and way of life relies on public not private interests, from health services to community aid groups, and that both local and national government have a vital enabling role on the need to improve the resilience of the economy at a national and local level.

Broadband before wheels

A radical reappraisal of transport came days after the meeting from the president of the UK’s Automobile Association (AA), Edmund King, who predicted a major shift in behaviour after the pandemic.

“People travelling up and down motorways just to hold meetings is inefficient, expensive and not good for the environment”, he said. “I think the use of road and rail and indeed bus will be reduced after this crisis.”

The AA, seen for years as a stalwart member of the roads lobby, said government funds for new transport infrastructure, including roads, might be better spent on improving broadband access to support home working.

The meeting agreed that the UK economy lacks a supportive town centre retail banking infrastructure with the capacity to administer a support scheme.

The build-up to the 2007-2008 financial crisis saw the evacuation of local banking services from the high street, and now the pandemic was making clear that the withering of local financial infrastructure in the UK must be reversed.

Universal and more mutual banking services are needed to build more resilient local economies, the three groups agreed. More progressive business models like social enterprises, which have direct community links, and the co-operative movement may help to provide answers.

This article was originally posted on the Climate News Network.
Cover photo by G-R Mottez on Unsplash.
Are there fundamental characteristics of systemic risks?

Are there fundamental characteristics of systemic risks?

This is the fourth in a series of eight articles co-authored by Marc Gordon (@Marc4D_risk), UNDRR and Scott Williams (@Scott42195), building off the chapter on ‘Systemic Risk, the Sendai Framework and the 2030 Agenda’ included in the Global Assessment Report on Disaster Risk Reduction 2019. These articles explore the systemic nature of risk made visible by the COVID-19 global pandemic, what needs to change and how we can make the paradigm shift from managing disasters to managing risks. 

This is a deeper, more technical dive into important recent work predicated on the concepts discussed in the last article in this series (#3 of 8). They suggest that the shape of risk is similar in very different systems. The ‘homomorphism’ of systemic risks in different domains suggests that as attempts are made to understand the effects of endogenous triggers and critical transitions, there will be more patterns apparent in different domains. This will allow the development of a consistent understanding of the fundamental characteristics of systemic risk.

An apparently stable macro-configuration of a complex system – like the global aviation system – will break down, and will be re-shaped by amplifications of a series of micro-events (like restrictions of flights to and from just a small number of countries) until a new, stable macro-configuration emerges. To apprehend these critical aspects and to disseminate new approaches for decision makers at various scales (in a relatively simple-to-understand format), we need a more comprehensive understanding of the spatio-temporal dimensions of complex, systemic risks and the differentiated nature of ‘complicated’ and ‘complex’ systems.

To characterize systemic risks, which involves dealing with information gaps or ambiguity, it helps to capture the random patterns of possible disasters such as the COVID-19 pandemic on maps of values describing the vulnerability of people, infrastructure, economies and activities. A resulting systemic risk model will then allow for a quantification of mutually dependent losses in space and time. This will allow for the use of stochastic risk management models. Stochastic systemic risk assessment tools recognize complexity and the inherent unpredictability and chaos in complex systems.

These models do not try to simplify things to make calculations easier. They represent how complex components – such as interactions and interdependencies between disease spread vectors, human behaviour, health system infrastructure and other economic activities – are distributed across systems. And even if the probability is low, they encompass extreme events. This is known as distributional heterogeneity and additivity of extreme events. The global COVID-19 pandemic is an example of a low probability, extreme event. Such systemic risk tools are thus difficult to establish. The approach differs from multi-hazard modelling which relies on “regularity assumptions”. These attempt to make reality less complex and disorderly to ease calculation.

Scenario analyses and stochastic simulations are in use in many applications in the financial sector, including in the insurance industry. Their purpose in the insurance sector is to identify and evaluate risks and to examine possible interconnections and amplifications among them. For example, in the area of natural hazards, they simulate earthquake strength and possible hurricane paths, they define impact scenarios and they analyse potential losses. The findings are then used for pricing, internal guidelines, public policy and management of a portfolio of insured assets.

To focus the attention of analysts and decision makers on the indicators that best capture the character of systemic risk, the impending phase transitions and regime changes of the underlying complex systems, we need new approaches to modelling and understanding of the nature of systemic risks.

If appropriately co-produced, systemic risk modelling will uncover the incentives driving policymaker resistance to going beyond conventional views of risk and those allowing salient early warnings from systemic risk indicators to be ignored or rejected.

The adoption of a multi-agent system in assessments subject to systemic risk is an emerging approach. But it is becoming more and more important, particularly in the context of the COVID-19 pandemic. This approach represents network effects and considers the random nature of human behaviour and (emotional) decision making. A multi-agent system is a loosely coupled network of software agents. These interact to solve problems beyond the individual capacities or knowledge of each problem solver. Certain agents may pose a deliberate threat such as delaying restrictions of movement of populations already experiencing the early stages of exponential cases of infection. People being unaware of the exponential effect of not practicing distancing may pose an unintentional threat. In such cases, systemic risk management requires other agents across all interconnected and interdependent subsystems to take countermeasures to maintain the integrity of the entire system. The application of multi-agent systems research is appropriate and appealing as a way of providing decision friendly scenarios and options to policy makers attempting to manage complex, systemic risk events such as the COVID-19 pandemic.

As is now understood in country after country, systemic risks might be easy to mitigate early. Yet failure (or even intentional ignorance) to appreciate the role of underlying drivers of systemic risk will allow small, manageable risks to grow into major whole-of-society problems. Failed interventions and missed opportunities will increase both economic and human losses. Developing and implementing multi-disciplinary and transcontextual approaches to identify and act on precursor signals and systems anomalies is critical to reduce or avoid discontinuities in critical interdependent complex systems.

To date, assessment and management methodologies for systemic risks are still in early gestation. They are not yet part of the current operations of twenty-first century risk management institutions. Nonetheless, with the onset of the COVID-19 pandemic, there is a growing sense of urgency for a paradigm shift. This is hitting every major twentieth century risk management institution, from governments to insurers. The limitations of the linear constructs of that era are now revealed, with the occurrence and prospect of massive failures across and between systems.

Now is the time to experiment, to explore and invest in developing new approaches, to try to understand the fundamental characteristics of systemic risks. These should be applied, assessed and finessed in managing the COVID-19 pandemic. This may then, by extension, be applied to the potential specificities limiting vulnerabilities of other complex, systemic risks, such as the climate and ecological crises.

Building off this discussion of the characteristics of systemic risk, the next article in this series (#5 of 8) explores the need to improve decision making capabilities, in particular during complex, cascading risk events such as the COVID-19 pandemic. It will also explore opportunities to renovate governance approaches to be able to better focus on the systemic nature of risk.

Cover photo by Chloe Evans on Unsplash