Why We Are Talking About Polycrisis Events
With all of the buzz out there, it is hard not to consider that a policycrisis is on the horizon. Depending on who you talk to, some believe we are already experiencing it. Experts warn of severe crises that can simultaneously affect the world and your company. Others believe this is just a rebranding of history happening and a nod to the complex nature of our interconnected world today. Let’s dive into the understood meanings and their applicability to business resilience.
Overall, it references a shock that triggers other events that have massive effects on intricate systems and combine to compound impacts. In its purest form, understanding the risk of such an event is a risk intelligence exercise of mapping potential cascading possibilities. Each risk has a relative value of damaging the entire ecosystem and conflating the effects because of the interdependencies.
Its Not A New Idea
Economic historian Adam Tooze first popularized the term in the 1970s. As I mentioned, for some, it is already in play. They see the impacts of the worldwide pandemic, the War in Ukraine, and the subsequent economic upheavals as proof that we live in a polycrisis. Reviewing Tooze’s substack article from earlier this year, Chartbook #130 Defining polycrisis – from crisis pictures to the crisis matrix is helpful. He borrowed the concept from Jean-Claude Juncker that Tooze used in his book Shutdown. It’s a term for interlocking and simultaneous environmental, geopolitical, and economic crises.
Adam Tooze expressed concerns about multiple crisis events due to their potential to create complex, interconnected challenges that are difficult to manage and resolve—stemming from the understanding that polycrises can amplify and compound the effects of crises, leading to more profound and wide-ranging impacts. He’s not alone. Others are concerned about the systematic risk, issues of resource allocation, and the combination of complexity and economic uncertainty. And finally, issues of ability for stable governance, coordination, and social or political disruption all outcomes.
The Concern Is Easy To Grasp
Although some might think that dealing with multiple concurrent incidents is unlikely, I argue that in today’s environment, it is not. Instead, with the fractured state that the pandemic left us in, it’s not a stretch to think a region, country, or company could face a war on multiple fronts. That’s what FEMA felt it just went through for the COVID response. Of course, I don’t mean an actual fight, although the Ukrainian conflict certainly raises the possibility of simultaneously addressing more than one significant event.
For Adam Tooze’s part, he argues that we started to live in a state of polycrisis in 2008. With a professional’s outlook, you likely are looking at it from a resilience standpoint. With the cascading events of the worldwide PHEIC, the military conflict in Europe, and subsequent economic shocks, it makes sense that our CEOs and ourselves or on edge. Or on the lookout to be prepared for such a shock. A polycrisis regarding a company’s likelihood of dealing with a significant crisis simultaneously is on the horizon. This could be a large-scale utility outage like what happened with the Rogers outage in Canada and concurrently dealing with another impactful event. Such events could stress the resilience of any business.
It's More Likely Than Not
It’s not hard to see why crisis managers and resilience practitioners need to be watchful. In my experience, there have already been multiple occurrences of events happening at the same time. As the world continued to respond to the pandemic, events like Hurricane Ian impacted the Southern United States. Looking at the World Economic Forum’s Global Risks Report 2023 and the apparent interconnections, a great deal of inherent risk could quickly emerge into not one but multiple crises.
Determining the specific likelihood of a polycrisis impacting a company today is challenging as it depends on factors such as the industry, location, and the nature of potential crises. However, it is crucial to recognize that the possibility of facing multiple situations simultaneously exists in today’s interconnected and volatile world. Natural disasters, political unrest, economic downturns, cybersecurity threats, and public health emergencies can overlap and create a polycrisis situation. Therefore, it is prudent for businesses to assess their vulnerabilities, develop robust risk management strategies, and maintain flexibility to adapt to changing circumstances and mitigate the potential impacts of a polycrisis.
Different Types of Polycrisis Events
Polycrisis events refer to situations characterized by the simultaneous occurrence of multiple crises that pose significant threats to individuals, communities, or nations. These crises may interact and exacerbate each other, making it more challenging to address and manage them effectively. While the specific types of polycrisis events can vary, here are some examples:
- Humanitarian and Environmental Crisis: This type of polycrisis involves a combination of humanitarian emergencies, such as conflicts or displacement of populations, and environmental crises, like natural disasters, droughts, or climate change impacts. These events often lead to mass displacement, food shortages, and the need for extensive relief efforts.
- Economic and Political Crisis: This type of polycrisis occurs when a severe economic downturn or financial crisis is coupled with political instability or governance challenges. It can lead to social unrest, protests, high unemployment rates, currency devaluation, and economic recession.
- Health and Social Crisis: This polycrisis involves simultaneous health crises and social challenges. For instance, it could encompass a widespread disease outbreak (such as a pandemic) and issues like healthcare system overload, misinformation, vaccine hesitancy, and social inequalities.
- Technological and Security Crisis: This type of polycrisis involves a combination of technical failures or vulnerabilities and security threats. Examples may include cyberattacks, infrastructure disruptions, data breaches, and their subsequent impacts on critical services, privacy, and national security.
- Socio-Political and Environmental Crisis: This polycrisis involves social and political unrest or conflicts arising from environmental issues. It can include protests, activism, or clashes related to ecological degradation, resource scarcity, land disputes, or the impact of large-scale development projects.
Key Takeaways
It’s important to note that polycrisis events can have compound linkages, and the abovementioned examples are not exhaustive. The specific combination and interactions of crises can vary depending on the context and circumstances of a given situation. It is not hard to see the possibility of both these classic definitions and how a company could experience catastrophic-level events impacting its customers, employees, and operations.
Protecting Your Organization From A Polycrisis
Crisis managers should be concerned with a polycrisis because it presents new challenges that can amplify the impacts of stand-alone events. Response requires a comprehensive and integrated approach to effectively address and mitigate their effects. From a resilience perspective, we want to continue understanding risks, conducting ongoing planning efforts, and exercising against large-scale scenarios. Of course, I suggest stress-testing our organizations against a polycrisis as well.
To mitigate the impacts of a polycrisis on a business, it is crucial to prioritize and diversify supply chains, ensuring redundancy and flexibility while implementing robust risk management strategies. These strategies must address various crisis scenarios and their potential interdependencies. Additionally, fostering strong communication channels with stakeholders, such as customers, employees, and suppliers, and proactively adapting business operations and contingency plans can help navigate the challenges and maintain resilience during a polycrisis.
Closing Thoughts
To me, this threat presents a real and present danger. If we are already in a polycrisis environment, a significant cascading event could further degrade our already challenging circumstances. As outlandish as it may seem to some, it is our job to push to protect our businesses against worst-case events. If we only conduct plausible scenarios or plan for minimums, we are doing a disservice to maintaining or building resilience. Let me know your thoughts in the comments section below to continue the conversation.
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