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This paper explores the building blocks of risk governance systems that are equipped to manage systemic risk in the 21st century. Whilst approaches to risk governance have been evolving for more than a decade, recent disasters have shown that conventional risk management solutions need to be complemented with a multidimensional risk approach to govern complex risks and prevent major, often simultaneous, crises with cascading and knock-on effects on multiple, interrelated systems at scale. The paper explores which risk governance innovations will be essential to provide the enabling environment for sustainable development that is resilient to interrelated shocks and risks.

This interdisciplinary literature review-based thought piece highlights how systemic risk is socially constructed and identifies guiding principles for systemic risk governance that could be actionable by and provide entry points for local and national governments, civil society and the private sector. particularly in low- and middle-income countries (LMIC), in a way that is relevant to the achievement of the 2030 Agenda for Sustainable Development. This considers preparedness, response and resilience, but more importantly prospective and corrective risk control and reduction strategies and mechanisms. Only when systemic risk is framed in a way that is relevant to the political agendas of countries will it be possible to begin a dialogue for its governance.

The paper identifies opportunities at the global, national and local levels, which together draw up a viable framework for systemic risk governance that (1) embraces the governance of sustainability and resilience through a strengthened holistic governance framework for social, economic, territorial and environmental development; (2) improves managing conventional risk to ultimately manage systemic risks; (3) fosters the understanding of vulnerability and exposure to gain insight into systemic risk; (4) places a greater focus on prospective risk management; (5) manages systemic risk in local infrastructure systems, supply chains and ecosystems; (6) shifts the focus from protecting privatized gains to managing socialized risk.

The choices and actions that societies take on the path of their development are contributing intentionally or unintentionally to the construction of systemic risks, which result in knock-on effects among interconnected social, environmental, political and economic systems. These risks are manifesting in major crises with cascading effects and a real potential to undermine the achievement of the SDGs, as COVID-19 is a stark reminder of. This paper offers the contours of a new risk governance paradigm that is able to navigate the new normal in a post-COVID world and is equipped to manage systemic risk.

Systemic risks originate in tightly coupled systems. They are characterised by complexity, transboundary cascading effects, non-linear stochastic developments, tipping points, and lag in perception and regulation. Disasters need to be analysed in the context of vulnerabilities of infrastructure, industrial activities, structural developments and behavioural patterns which amplify or attenuate the impact of hazards. In particular, disasters are triggered by chains of events that often amplify and also multiply damages. The paper aims to discuss these issues.

The paper applies the concept of systemic risks to disasters more precisely to the combination of natural and human-induced disasters. The paper refers to the International Risk Governance Council’s Risk Governance Framework and applies this framework to the systemic aspects of disaster risks.

The paper maps out strategies for inclusive governance of systemic risks for disaster prevention and mitigation. Furthermore, the paper highlights policy implications of these strategies and calls out for an integrated, inclusive and adaptive management approach for the systemic aspects of disaster risks.

The paper fulfils the identified need to analyse disaster risks in the context of vulnerabilities of infrastructure, industrial activities, structural developments and behavioural patterns which amplify or attenuate the impact of hazards.

This paper aims to identify key factors for a contextualised Systemic Risk Governance (SRG) framework and subsequently explore how systemic risks can be managed and how local institutional mechanisms can be tweaked to deal with the complex Indonesian risk landscape.

Using a case study from Palu triple-disasters in Central Sulawesi, Indonesia, the authors demonstrate how inland earthquakes in 2018 created cascading secondary hazards, namely tsunamis, liquefactions and landslides, caused unprecedented disasters for the communities and the nation. A qualitative analysis was conducted using the data collected through a long-term observation since 2002.

The authors argue that Indonesia has yet to incorporate an SRG approach in its responses to the Palu triple-disasters. Political will is required to adopt more appropriate risk governance modes that promote the systemic risk paradigm. Change needs to occur incrementally through hybrid governance arrangements ranging from formal/informal methods to self- and horizontal and vertical modes of governance deemed more realistic and feasible. The authors recommend that this be done by focusing on productive transition and local transformation.

There is growing awareness and recognition of the importance of systemic and cascading risks in disaster risk studies. However, there are still gaps between research, policy and practice. The current progress of disaster risk governance is not sufficient to achieve the Sendai Framework for Disaster Risk Reduction (2015–2030) unless there is an effective governing system in place at the local level that allow actors and institutions to simultaneously manage the interplays of multi-hazards, multi-temporal, multi-dimensions of vulnerabilities and residual risks. This paper contributes to these knowledge gaps.

Global and interconnected supply chains are increasingly exposed to systemic risks, whereby individual failures propagate across firms, sectors and borders. Systemic risks have emerged from the decisions of individual firms, e.g., outsourcing and buffer reduction, and are now beyond their control. This paper aims to identify appropriate approaches to mitigating those risks.

Systemic risks require analyzing supply chains beyond a dyadic perspective. This study approaches the problem through the lenses of complex systems and network theories. Drawing on the lessons learned from other systemic-risk-prone systems, e.g. energy and financial networks, both in research and practice, this study analyzes the adequate level of governance to monitor and manage systemic risks in supply chains.

The authors argue that governance institutions should be mandated to overview and reduce systemic risks in supply chains from the top down, as central bankers do for the financial system. Using firm-level data and tools from network analysis and system dynamics, they could quantify systemic risks, identify risk-prone interconnections in supply chains and design mitigating measures. This top-down approach would complement the bottom-up supply chain management approach and could help insurers design policies for contingent business interruptions.

Instead of looking at supply chains purely from the firms’ angle, the perspective of insurers and governments is brought in to reflect on the governance of risks.

This study investigates the risk-taking behavior of financial institutions in the USA. Specifically, differences between taking risks that affect primarily the shareholders of the institution and risks contributing to the overall systemic risk of the financial sector are examined. Additionally, differences between risk-taking before, during and after the financial crisis of 2007/2008 are examined.

To analyze the determinants of stand-alone and systemic risk, a generalized linear model including size, governance, charter value, business cycle, competition and control variables is estimated. Furthermore, Granger causality tests are conducted.

The results show that systemic risk has a positive effect on valuation and that corporate governance has no significant effect on risk-taking. The influence of competition is conditional on the state of the economy and the risk measure used. Systemic risk Granger-causes idiosyncratic risk but not vice versa.

The major limitations of this study are related to the analyzed subset of large financial institutions and important risk-culture variables being omitted.

The broad policy implication of this paper is that systemic risk cannot be lowered by market discipline due to the moral hazard problem. Therefore, regulatory measures are necessary to ensure that individual financial institutions are not endangering the financial system.

This study contributes to the empirical literature on bank risk-taking in several ways. First, the characteristics of systemic risk and idiosyncratic risk are jointly analyzed. Second, the direction of causality of these two risk measures is examined. Moreover, this paper contributes to the discussion of the effect of competition on risk-taking.

The current pandemic and ongoing climate risks highlight the limited capacity of various systems, including health and social ones, to respond to population-scale and long-term threats. Practices to reduce the impacts on the health and well-being of populations must evolve from a reactive mode to preventive, proactive and concerted actions beginning at individual and community levels. Experiences and lessons learned from the pandemic will help to better prevent and reduce the psychosocial impacts of floods, or other hydroclimatic risks, in a climate change context.

The present paper first describes the complexity and the challenges associated with climate change and systemic risks. It also presents some systemic frameworks of mental health determinants, and provides an overview of the different types of psychosocial impacts of disasters. Through various Quebec case studies and using lessons learned from past and recent flood-related events, recommendations are made on how to better integrate individual and community factors in disaster response.

Results highlight the fact that people who have been affected by the events are significantly more likely to have mental health problems than those not exposed to flooding. They further demonstrate the adverse and long-term effects of floods on psychological health, notably stemming from indirect stressors at the community and institutional levels. Different strategies are proposed from individual-centered to systemic approaches, in putting forward the advantages from intersectoral and multirisk researches and interventions.

The establishment of an intersectoral flood network, namely the InterSectoral Flood Network of Québec (RIISQ), is presented as an interesting avenue to foster interdisciplinary collaboration and a systemic view of flood risks. Intersectoral work is proving to be a major issue in the management of systemic risks, and should concern communities, health and mental health professionals, and the various levels of governance. As climate change is called upon to lead to more and more systemic risks, close collaboration between all the areas concerned with the management of the factors of vulnerability and exposure of populations will be necessary to respond effectively to damages and impacts (direct and indirect) linked to new meteorological and compound hazards. This means as well to better integrate the communication managers into the risk management team.

This paper applies the theory of cascading, interconnected and compound risk to the practice of preparing for, managing, and responding to threats and hazards. Our goal is to propose a consistent approach for managing major risk in urban systems by bringing together emergency management, organisational resilience, and climate change adaptation.

We develop a theory-building process using an example from the work of the Greater London Authority in the United Kingdom. First, we explore how emergency management approaches systemic risk, including examples from of exercises, contingency plans and responses to complex incidents. Secondly, we analyse how systemic risk is integrated into strategies and practices of climate change adaptation. Thirdly, we consider organisational resilience as a cross cutting element between the approaches.

London has long been a champion of resilience strategies for dealing with systemic risk. However, this paper highlights a potential for integrating better the understanding of common points of failure in society and organisations, especially where they relate to interconnected domains and where they are driven by climate change.

The paper suggests shifting toward the concept of operational continuity to address systemic risk and gaps between Emergency Management, Organizational Resilience and Climate Change Adaptation.

This paper aims to explain the weaknesses and inconsistencies inherent in the Dodd-Frank Act of 2010 (USA).

The approach is entirely theoretical and multi-disciplinary (and relies on some third-party empirical research), and it consists of a literature review, critique and the development of theories which are applicable across countries.

The Dodd-Frank Act is inefficient and inadequate as a response to the global financial crisis. The Dodd-Frank Act has not resulted in significant economic growth and has increased transaction costs and compliance costs for both government agencies and financial services companies.

The author developed the theories introduced in the paper.

This study explores the relationships between governance quality and disaster risk in respect to the pillar values of public administration. The objective is to strengthen the focus and resolve of bureaucratic institutions to engage with disaster risk management (DRM) as a core function.

Multiple correlation analysis is conducted using data from global indices of disaster risk and governance quality. This is situated in the argument for the importance of public administration to conduct DRM under the auspices of core values for governance.

There are strong relationships between measures of disaster risk and various qualities of governance that adhere to the administrative theories of public welfare management, particularly through measures for mitigation and preparedness.

This study is conducted at the national level and may obscure regional effects of governance quality and disaster risk that occur in larger and environmentally diverse countries.

There are few studies that champion the value of public administration's qualities and values in the efforts of DRM. This research provides support for such a position by connecting governance quality to disaster risk and overlaying the influence of the core administrative values of efficiency, effectiveness, the economy and equity.