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The Coalescence of Global Risk

There have been times throughout history when the amalgamation of risk creates a perfect storm. This appears to be one of those times. Political, economic, security, environmental, and sociocultural risk are coalescing and culminating in a turning point. Once that turning point is reached, it will unleash centrifugal forces that no one and nothing can stop. If that sounds alarmist or unlikely, consider the following.

Although the world is at relative peace, from a historical perspective, the nature and number of political flashpoints that are blinking red should raise a few eyebrows. India’s recent actions in Kashmir risk igniting yet another war between New Delhi and Islamabad. Hong Kong’s protests have brought the Special Administrative Region to the brink of an invasion from Chinese troops. The standoff with North Korea appears to be in a permanent holding pattern. The conflict in Yemen has turned into a predictable quagmire for Saudi Arabia. A potential military conflict with Iran remains an ever-present threat. The Cold War between China and the U.S. has entered a deep freeze. I’ll stop there.

On the economic front, the world’s stock markets appear to have finally figured out that bad news cannot simply be ignored indefinitely. Their theme song for the past 10 years have been that of the Broadway play Annie (that “the sun will come out, tomorrow”), but is quickly turning into REM’s “Everybody Hurts.” The mindset that got the world into the Great Recession is back (well, actually, it never left): greed is good, memories are short, and all those rules and regulations that have been put in place since then to prevent a repeat performance are for someone else to comply with. Sorry to break it to you, stock traders and masters of the universe, but the markets do not just go in one direction. The chickens are coming home to roost.

North Korea’s Kim Jong-Un is still an unsettling force in the region. (KCNA)

The security environment has not been this bad since the collapse of the former Soviet Union. With the demise of the INF Treaty, a new nuclear race is on, but this time the nuclear “club” has some new members. China, Russia, and the U.S. are not only building hypersonic weapons, but space is in the process of becoming weaponized. Cyberspace has become the new battleground, with countries like Iran and North Korea punching well above their weight. Breaches of government databases, national election systems, various types of infrastructure, and the most “secure” corporate security systems have all become commonplace. Virtual jihad proliferates behind the scenes, posing a growing, unseen threat. I could go on.

Climate change is finally getting the attention it deserves, but the most learned climate scientists tell us that even if every safeguard and guardrail put in place today were to work splendidly, the genie we have collectively unleashed will already likely result in a breach of the 2 degree Celsius marker set for the rising temperature of the world’s oceans. We have already seen the result: the ice caps and glaciers are melting at an unprecedented pace, island chains are in the process of disappearing, some of the world’s coastal cities experience regular episodes of flooding, hurricanes and typhoons have gotten consistently stronger, and either excessive water or drought are impacting large swathes of the world’s land surface. This could very well be just the beginning.

Socioculturally, many of the forces that have arisen in the past are alive and well. Racism, bigotry, and unbridled small-mindedness are rampant in many parts of the world. Legal and illegal immigration are in the process of changing the ethnic and socioeconomic landscape of dozens of countries. The middle class is rapidly evaporating in many countries around the world, leading to rising levels of underlying tension. This is creating a new challenge for lawmakers and ordinary citizens, who are struggling to identify an appropriate and effective response.

There have been a few times in the course of modern history when the scale and scope of risk has been this high, but rarely, if ever, has it been this multifaceted and complex. Yes, strong men have arisen, hatred has dominated the landscape, conflicts (or, the threat of them) have been persistent, and economies have been under pressure in the past, but never before has the rise of new forms of technology converged with the clash between mankind and the environment. And never before have all of these variables been present at one time.

Put it all together and one cannot escape the conclusion that we may be about to enter a very dark period. The net result of centrifugal forces can sometimes be delayed, but in the end, they almost always spin out of control. That appears to be the direction the world is heading. It is anyone’s guess when or exactly how these forces will manifest themselves in the future, but the era of relative peace, rising stock markets, and calm appear to be coming to an end. Replacing them will be conflict, recession, and rising tension.