Systemic risk and network dynamics

The increasing interdependence of critical systems such as financial markets, food-supply chains, and energy grids poses new challenges for risk management, which must account for cascading failures propagating across a network of dependencies.

© 100ker | Dreamstime

© 100ker | Dreamstime

The Evolution and Ecology Program (EEP) addresses these challenges as part of an interdisciplinary cross-cutting project developed with the Advanced Systems Analysis (ASA) and Risk, Policy and Vulnerability (RPV) Programs, which promotes methodological development, theoretical investigations, and insights from case studies.

  • A review published in the top-ranking journal Proceedings of the National Academy of Sciences of the USA [1] highlighted the perils of “femtorisks.” While small compared to traditionally well-recognized risks, femtorisks may go unnoticed and operate on longer timescales, yet propel systems down paths of increasing instability. The study recommends approaches inspired by evolutionary and ecological theory for assessing and managing such risks.
  • A novel framework for modelling and analyzing the impact of species extinctions in ecological communities, shows how risks of cascading detrimental impacts spreading through ecosystems can be predicted from structural features of their species-interaction networks [2].
  • In a joint investigation with IIASA’s ASA Program, EEP is spearheading the development of a software platform for assessing cognitive human limitations in quantifying systemic risks and the associated perils of cascading failures in interconnected systems (Figure 1).

Figure 1. A software platform is being developed for creating networks of increasing complexity and conducting surveys of users regarding their perceptions of the associated perils of cascading failures (click on image to enlarge).


References

[1] Frank AB, Goud Collins M, Levin SA, Lo AW, Ramo J, Dieckmann U, Kremenyuk V, Kryazhimskiy AV, Linnerooth-Bayer J, Ramalingam B, Roy JS, Saari DG, Thurner S & von Winterfeldt D (2014). Dealing with femtorisks in international relations. Proceedings of the National Academy of Sciences of the USA 111:17356–17362.

[2] Veshchinskaya V, Brännström Å, Rovenskaya E & Dieckmann U. Ecosystem vulnerability to species loss, in preparation.


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Last edited: 02 June 2015

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Ulf Dieckmann

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Systemic Risk and Network Dynamics

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Network dynamics and contagion effects in natural and human systems

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