PIIRS Global Systemic Risk Research Community at Princeton University

There is no better indicator of increasing globalization than the massive and accelerating increase in international transactions beginning in the late 1970s. These in turn have required the construction of a complex system of global nodes and links providing the channels through which these can flow. The interdependence of massive global interactions and structures has caused systemic risk to increase exponentially in recent times. Tangible risks—in systems as diverse as energy exploration and production, electricity transmission, computer networks, healthcare, food and water supplies, transportation networks, commerce, and finance—now threaten global political, economic, and financial systems that affect citizens of every nation. As a result, the study of risk has the potential to become an important and influential academic and policy field.

The research community on Global Systemic Risk at Princeton University provides structure for a core group of scholars across a wide variety of disciplines to establish a common dialogue in this emerging field. Working as a group, the depth and breadth of their interests will help to establish a comprehensive and cohesive framework for the study of risk and thus move the field forward. The research community will receive up to $750,000 in support from PIIRS over three years and is led by Chair of the Sociology Department Miguel Centeno, Musgrave Professor of Sociology and a professor of sociology and international affairs.

The community — with a core group of 22 scholars — will frame its multidisciplinary inquiry from a number of vantage points to better understand the nature of risk, the structure of increasingly fragile systems, and the ability to anticipate and prevent catastrophic consequences.

These include:

  • Computer Science
  • Economics
  • Engineering
  • Finance
  • History
  • History of Science
  • Mathematics
  • Operations Research
  • Philosophy
  • Physical Sciences
  • Politics
  • Psychology
  • Public Policy
  • Sociology

More specifically, Global Systemic Risk will focus on the robustness and fragility of global human-made organizational systems and is concerned with risks that have short- to medium-term likelihood and consequences. 

The most obvious example of how interactive systems can lead to risk is the financial crisis of 2007-2008. Over and above regulatory failure and personal malfeasance, the manner in which declines in the real estate values of pockets of American suburbia led to the greatest economic challenge since the Great Depression reflects the interconnectivity and interdependence of financial institutions. The research community argues that other global systems may be subject to the same kind of emergent disruptions: those caused not by the characteristics of any single part, but from the interaction of large numbers of apparently autonomous agents. The global energy system, information networks, and  air and sea transport may increase the efficiency of production and distribution, but may also make these more susceptible to catastrophic failure. Our food and epidemiological security, for example, may be improved by paying greater attention to how the systemic whole comes to represent more than the sum of its parts.

For more information, contact Jayne Bialkowski, program manager.

Spring 2016 Events

Columbia Symposium Page

Thursday, May 26, 2016
Symposium on Managing Systemic Risk in Energy, Environment, and Infrastructure
Princeton-Columbia Joint Conference
Venkat Venkatasubramanian, Columbia University, Conference Co-Director & Co-Host
Miguel Centeno, Princeton University, Conference Co-Director & Co-Host
Paul Glasserman, Columbia Business School, Conference Co-Director & Co-Host
All Day, Kellogg Center, Columbia University, NYC


Venkat

Thursday, February 18, 2016
Can Extreme Income Inequality Pose Systemic Risk?:
Mathematical Foundations of a stable capitalist society

Venkat Venkatasubramanian, Co-Director of Center for the Management of Systemic Risk, Samuel Ruben-Peter G. Viele Professor of Engineering, Department of Chemical Engineering, Columbia University
4:30pm, Aaron Burr Hall, Room 219



Sardar

Monday, May 2, 2016
Risks and Rewards of Complexity in the Global Supply Chain
David Sardar, Globalization, Complexity, and Risk Consultant
4:30pm, Aaron Burr Hall, Room 219


Research

Link to ArticleThe Emergence of Global Systemic Risk (2015)
Miguel A. Centeno, Manish Nag, Thayer S. Patterson, Andrew Shaver, and A. Jason Windawi
Annual Review of Sociology pg. 41.

Abstract:
We discuss the increasing interdependence of societies, focusing specifically on issues of systemic instability and fragility generated by the new and unprecedented level of connectedness and complexity resulting from globalization. We define the global system as the set of tightly-coupled interactions that together allow for the continued flow of information, capital, goods, services, and people. Using the general concepts of globality, complexity, networks, and the nature of risk, we analyze case studies of infrastructure, trade, finance, the environment, and epidemiology in order to develop empirical support for this concept of global systemic risk. We seek to identify and describe the sources and nature of such risks and methods of thinking about risks which may inform future academic research and policymaking decisions.


Link to WebsiteGlobalization and Network Mapping (2011)
Miguel Centeno and Manish Nag
Princeton University

Summary:
Globalization is a complex process in all senses of the word: it involves potentially millions (if not billions) of actors, has existed in different forms for thousands of years, encompasses a varied set of human relationships from exchanges to conquest, and may produce "emergent" properties that cannot be predicted based on the characteristics of its component parts. How then to understand it without speaking of banal generalities or becoming engrossed in details not relevant to the overall structure? We suggest that using graphics and cartography may represent one productive method. For the past decade, several of us have been working on how to create portals that would assist in the understanding of and research on globalization.


Link to ArticleA Risky Proposition: Has Global Interdependence Made Us Vulnerable? (2014)
Michael Hotchkiss
Princeton Discovery Magazine 2014-2015


Contact Us

For more information about the Global Systemic Risk Research Community, please email the group's coordinator, Thayer Patterson, at tspatter-at-princeton.edu.