All About Risk: Thinking Dangerously about Climate Change, Hazards, and Finance

a triangulation of thoughts from two recent conferences

and one book:
Thinking Dangerously about Communication, Disaster and Risk
Integrating Research on Climate Change & Hazards
My Life as a Quant: Reflections on Physics and Finance

Risk Management and Risk Perception

It’s a classic chicken-and-egg problem: which comes first? The perception of risk, or attempts to manage it?  Don’t attempts to manage risk teach us how to perceive it? How can those who are tasked with managing risk (in whatever flavor) incorporate the range of human variability in perception to inform quality decision-making and effective system design? The dynamic of perception and management plays out in nested fashion from individual emotion & cognition to social interaction to the institutional mechanisms intended to regulate social relations which, in turn, shapes the boundaries of how a person is or isn’t supposed to behave in terms of expressing their emotions. If you’re a researcher, detachment is de rigueur.  I’m wondering how much of this subjectification comes from professionalizing the scientific method, and how much comes psychologically – as a protective buffer against the ramifications of what we know?

Emanual Derman published his autobiography in 2004, well before the mortgage-banking crash, and long before the BP-Gulf disaster. Derman’s work in financial engineering for Goldman-Sachs put him in league with the top echelon of traders and financial managers for nearly twenty years. When he writes, “The development of new options structures resembled an arms race” (p. 223), one understands that he is reflecting the violent realities at the core of economic risk. Indeed, he opens the book with a comparison and contrast between the culture of quantitative engineers (trained in theoretical physics & focused on current value) and financial risk managers & traders (thinking about the future). “The guts to lose a lot of money,” Derman asserts, “carries its own aura,” and “the capacity to wreak havoc with your models provides the ultimate respectability” (p. 12-13)

Respecting Collaboration regarding Slow Onset Hazards

The pressure to live fast-forward has contributed to deep, infrastructural level risks that require a new style of collaboration. I think incisive insiders like Derman, geographers exploring how (and why) to

  1. facilitate adaptation to slow-onset hazards,
  2. build local resilience,
  3. map local knowledge into policy and practice, and
  4. understand the relationship between land use, climate change, and hazards.

along with crisis communication researchers who are asking, “How do we develop communities who can talk with each other about:

  • local and federal tensions in crisis planning, emergency management, and disaster recovery?
  • normative questions concerning the role of experts, particularly in relation with regular people?
  • distributive justice questions of who shoulders what kinds and amounts of societal-level risk?”

Shared references more effective than “a common language”

My primary career of the last fifteen years has been as a sign language interpreter.  I’ve witnessed (one could even say “participated”) in interactions where people misunderstand each other using the same words  (to mean different things), as well as using different words (to mean the same thing). No doubt there are many instances in which the same words do mean the same things (or similar enough), as well as those moments when people become aware that they are using different words to mean different things (usually called a communication breakdown).  Granted, there is tremendous comfort in being able to take words at face value and move ahead on the assumption that you are being understood as you desire and understanding others as they intend. In fact, this is part of the emotional experience of belonging, of feeling home, of being with one’s own kind.

The thing is, we’re rarely lucky enough to be only with our own kind, and there are paltry few problems facing us today that can be solved by sticking exclusively to our own kind. What we need is the perception to recognize when we’re missing each other and the perseverance to figure out the meaningfulness of these gaps. We need a few targets: conceptual reference points that we hash out and define together to use as guideposts and landmarks for collaboration that not only presumes difference, but actually values and wants to preserve it.

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