08.Manage crisis and the “unknown unknown"

The job of policy-makers is increasingly one of crisis management. There is robust evidence that the world is increasingly interconnected, and unstable (also because of climate change). Crises are by definition sudden and unpredictable. Dealing with unpredictability is therefore a key requirement of policy-making, but the present capacity to deal with crises is designed for a world where crises are exceptional, rather than the rule. Donald Rumsfeld, former secretary of state, famously said during the Iraq war that while the US government was capable of dealing with the “known unknown”, the difficulty was the increasing recurrence of “unknown unknown”: those things that we don’t known that we don’t know.

There is evidence that the instability and chaotic natures of our world is increasing, because of its increasing connectedness. Every year, intense climate phenomena throw our cities in disarray, because of snow, flooding, fires. Each crisis seems to find our decision-makers unprepared and unable to deal with it promptly. As Taleb (2007) puts it, we live in the age of "Extremistan": a world of "tipping points" (Schelling 1969) “cascades” and "power laws" (Barabasi 2003) where extreme events are "the new normal". There are many indications of this extreme instability, not only in negative episodes such as the financial crisis but also in positive development, such as the continuous emergence of new players on the market epitomised by Google. The random vulnerability of today’s world is well illustrated by this chart from the EC DG RESEARCH.

Total Disasters Reported


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08.Manage crisis and the “unknown unknown"
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