Lee Howell addresses the question: What does it mean for a country to show resilience in the face of risks it cannot manage alone?
From natural disasters to financial shocks, global risks are exogenous events, which go beyond the capacity of a country or corporation to manage on their own. Traditionally, the practice of risk management has focused almost entirely on preventable risks, where a culture of strict compliance can mitigate, or even avoid, worst-case outcomes. Filling the analytical gap on global risks, the World Economic Forum publishes annually its Global Risks report to assess the likelihood, impact and inter- linkage of 50 such risks. Its central prescription is that countries as well as companies need to focus much more on building their resilience.
What does it mean for a country to show resilience in the face of risks it cannot manage alone? A structural engineer would define resilience as the capacity to withstand more stress, and to return to normal after a stressful event. This is a suitable definition for a bridge or a skyscraper, but not necessarily for a country. History has very few examples, if any, of a country that withstood a major stress only to return to its previous state.
In a national context, stress often reveals a variety of critical but lesser-known systems through which a country manages to adapt by finding different ways to carry out essential functions. This realisation is behind the effort by the World Economic Forum’s Risk Response Network (RRN) to develop a diagnostic tool to assess a country’s resilience to possible global risks.
Read the full article at pwc.com.