Symposium on Managing Systemic Risk in Energy, Environment, and Infrastructure
Center for the Management of Systemic Risk (CMSR)
Global Systemic Risk Research Community
Princeton Institute for International and Regional Studies (PIIRS)
Program for Financial Studies
Columbia Business School
The Professional Risk Managers’ International Association (PRMIA)
Professor Venkat Venkatasubramanian
Samuel Ruben-Peter G. Viele Professor of Engineering
Co-Director, Center for the Management of Systemic Risk
Professor Paul Glasserman
Jack R. Anderson Professor of Business
Columbia Business School
Motivation: Recent systemic failures in different domains such as the BP Deepwater Horizon oil spill (2010), Indian Power Blackout (2012), and the Global Financial Crisis (2008-09) have reminded us, once again, of the fragility of complex sociotechnical systems. Catastrophic failures in critical infrastructure due to hurricanes Katrina (2005) and Sandy (2012) are also systemic failures. Another major event is the Piper Alpha disaster (1988) where an offshore oil platform operated by Occidental Petroleum in the North Sea, U.K., exploded killing 167 people and resulted in $2 billion in losses. The Challenger (1986) and Columbia (2003) space shuttle disasters, Schering Plough inhaler recall (1999), the Northeast electrical power blackout (2003), the spread of SARS (2003), and the Johnson & Johnson multi-drug recall (2010) are all examples of systemic failures in different domains.
Although these failures occurred in different domains and were triggered by different events, there are, however, notable failure mechanisms that are common among them. Understanding and learning from these mechanisms are essential to avoid such disasters in the future. To accomplish this, one needs to go beyond analyzing them as independent one-off accidents, and examine them in the broader perspective of the potential fragility of all complex sociotechnical systems.
Systemic failures typically occur due to this fragility in complex sociotechnical systems. Modern technological advances are creating an increasing number of complex engineered systems, processes, and products, which pose considerable challenges in ensuring their proper design, analysis, control, safety, and management for successful operation over their life cycles. It is their scale, nonlinearities, inter-connectedness, and interactions with humans and the environment that can make these systems-of-systems fragile, when the cumulative effects of multiple abnormalities can propagate in numerous ways to cause systemic failures. In particular, the nonlinear interactions among a large number of interdependent components—and the environment—can lead to “emergent” behavior—i.e., the behavior of the whole is more than the sum of its parts, which can be difficult to anticipate and control.
One needs to study all these disasters from a common systems engineering perspective, so that one can thoroughly understand the commonalities as well as the differences, in order to better design and manage such systems in the future. Further, such studies need to be carried out in concert with public policy and regulatory experts so that all the scientific, engineering, and human decision-making lessons can be translated into effective policies and regulations.
Goal: To address these needs, we are organizing a series of one-day symposia at Columbia bringing in world-class experts on systemic failures in four major domains—Finance, Sustainable Energy and Environment, Smart Infrastructure, and Healthcare—to promote discussion and cross-fertilization across domains. The first of this series was held on June 26, 2014, focused on the theme of Managing Systemic Risk in Finance, which was very successful.
We are now organizing the second symposium on the theme of Managing Systemic Risk in Energy, Environment, and Infrastructure, on May 26, 2016, at Columbia University. We will have leaders from academia, industry, business, and regulatory agencies as speakers, panelists, and audience members.