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Rare, Systemic Risks and the Need for Global Preparedness

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In an increasingly uncertain global investment environment, where “1 in 100” year simultaneous events such as major hurricanes, cyber-attacks, viruses, financial and economic crisis, business model failures, etc, are occurring with increased frequency, having an understanding of these risks, their complex empirical relationships and interactions and their associated complex negative consequences is becoming more important for international investors who structure their investments based on a balance between an accepted level(s) of exposure to a certain type(s) of risk(s) and an associated level of expected target rate of return.   For instance, pandemics such as Coronavirus (Covid-19) and extreme weather events driven by a changing climate such as storms, floods, heat waves, droughts, wildfires, and cyclones are characterized as “systemic” in nature, because they have the potential to cause a system-wide breakdown or significant disruption to man-made economic, financial, and security systems supporting our way of life.  Similarly, each of these events is called an “extreme” risk event because they are “rare”, i.e., events that are generally seen as deadly surprises, happening outside everyday experience, and their likelihood are difficult to estimate. These events are capable of causing a huge change in everyday life, at least locally, and they do have the momentum to turn society upside-down in a few months, day’s, perhaps even minutes by causing massive destruction to human life and property. 

According to Swiss Re 2020 Sigma report, the year 2019 was the second warmest year, and the decade from 2010-2019 was the warmest on record.  In 2019 there were 317 global catastrophes due to extreme weather events, claiming the lives of 11,497 individuals worldwide with total global economic losses exceeding USD 146 billion.  Further, according to a 2012 report by the Centre for Climate Security, research shows that drought conditions in Russia and China, and subsequent global wheat shortages, contributed to higher food prices in Northern Africa and may have helped catalyse and broaden the appeal of the Egyptian uprisings in 2011, causing Egypt to suffer its worst economic crisis since 1930’s.  Similarly, African swine fever wiped out over one-quarter of the world’s pig population last year, causing food prices in China to increase by 16-22% so far in 2020.  Again, the worst colossal armies of locusts are systematically wiping out crops across much of Africa, the Middle East and Asia, and fear of Covid-19 is greatly disrupting global food supply.  The simultaneous interaction of two extreme and complex risks (Covid-19 and extreme weather) is amplifying the risk of a worldwide disruption to global food supply chains leading to a potential significant upward jump in food prices worldwide.  This, in turn, could trigger crises in many countries and as a result potential food riots might ensue.  In consequence, it erodes social cohesion and leads to an increase in the likelihood of social instability at the regional and global levels.

Furthermore, according to this new study , it provides observational evidence that the odds of major hurricanes around the world with Category 3, 4 and 5 storms is on the rise.  Further, the severity of economic losses associated with the rise in the number of extreme weather events such as intensification of storms, increase in heavy precipitation, more frequent and intense temperature extremes, more severe droughts, longer wildfire seasons, accelerating sea-level rise, desertification, and ocean acidification is also projected to rise in the near future.

Equally important, on March 11 the World Health Organization (WHO) declared the Covid-19 outbreak a “pandemic”.  Since it was first diagnosed earlier this year, it has spread to over 190 countries, infecting over 5 million people and claiming the lives of thousands worldwide.  The pandemic has caused an unprecedented worldwide economic shutdown.  More than 80 countries have closed their borders to incoming travel from infected countries, ordered businesses to close, and applied a range of policy instruments to contain the spread of the virus such as self-quarantine and social distancing measures.   According to some estimates , they indicate the virus could reduce global economic growth by 4% in 2020, and raised the likelihood of a global economic recession similar in severity to that experienced during the Great Depression of the 1930s.  Moreover, according to the World Trade Organization (WTO), Covid-19 represents an unprecedented disruption to the global economy and world trade, as production and consumption collapse across the globe with global trade in 2020 expected to fall by 13% to 32%, depending on the depth and extent of the global economic downturn.

According to some authors, State sovereignty in the modern sense of the word is built upon the States’ output and input legitimacy.  A States’ output legitimacy is directly linked to its ability to meet its citizen’s demands for basic resources or prosperity such as health services, food, water, energy, and employment.  While a States’ input legitimacy is defined as its ability to offer its citizens a say in the way they are governed through voting and legal recourse.  The rise in the number and associated negative economic, social, health, and security  implications of extreme weather events and also of the emergence of new viruses and the spread of existing or new disease vectors, in addition to the central assumption that past history is no longer a robust gauge of future developments of extreme risks exacerbate stressors on the critical resources underpinning State sovereignty and national security, these risks compromise a State’s ability to provide basic resources to its citizenry and can significantly erode the States’ output legitimacy.  Therefore, they contribute to a wide range of destabilizing trends such as population displacement, migration, and political unrest.  The erosion of the States’ output legitimacy can contribute to State fragility, internal conflict, and potentially State collapse, and could exacerbate geopolitical risk by activating dormant or active geopolitical intersections around the globe.

Certainly, the presence of geopolitical intersections-which are a direct consequence of the existence of irredentist or secessionist movements as a result of historically evolved geopolitical risk factors driven by territorial disputes, which manifest on the current global geopolitical map as geopolitical intersections- is at the core of geopolitical instability; ergo, geopolitical risk.  Further, these intersections have been a prominent cause of armed conflict and war in the modern era that causes ethnic groups to seek independence from or unification with another State.  The threats to State stability arising from the rise in the frequency and severity of either extreme weather events, or the spread of infectious disease, or even a simultaneous manifestation of both risks at the same time across the globe comes from the complex interactions of those risks with the existing security landscape and the ability of governments to effectively manage the immediate, short term and long term economic, social, and security consequences that arise as a result of these extreme events, which could amplify existing geopolitical risks by  weakening social cohesion, and exacerbating social unrest across the world due to increased pressure on public health supply chains and local health systems , increased likelihood of  interstate and intra-state conflicts over scarce resources,  prolonged periods of lockdowns, tighter restrictions on the cross-border movement of people and goods, affecting the global supply chain for food, energy, drugs, and medical devices, and   forced migration of climate refugees.  These risks and their impacts are expected to become more severe as changes in the climate intensify, and pandemics like Covid-19 occur more frequently.  According to these authors,  they warn that 1.7 million unidentified viruses known to infect people are estimated to exist in mammals and water birds. The transmission of any one of these viruses to humans may be more disruptive and lethal than Covid-19

Finally, the complex interaction between both extreme events (climate change and pandemics) in shaping risk introduces a new set of risk drivers when scanning the global investment horizon for opportunities.  For this reason, in order to be successful at managing the risks that arise from extreme events, strategic investors must think outside the box and focus on examining target countries vulnerabilities and risks associated with global, regional, and localized effects of extreme risk events by including the envelope of high-end,  unprecedented possibilities instead of assessing middle of- the-road probabilities on the basis of “historic “experience and they should not downplay the extreme possibilities at the high-end of the uncertainty range.  Further they should build prudent risk management frameworks that are not malleable to the” learn from failure” models that drive conventional risk management by constructing their frameworks with a deep, objective look at the risks they face and have methodology’s in place to adequately deal with low probability, high consequence outcomes, which can dominate calculations of total risk.  In any case, these are some current core ideas addressing how to think about extreme risks such as extreme weather events, pandemics, and particularly paying a closer attention to the consequences of a “perfect storm” scenario where manifestation of the complex interactions shaping these risks occurs simultaneously, negatively impacting social cohesion, State stability, strategic equations and the strategic equilibrium.   For if you are not aware of these rare and often socially damaging surprises and their potential to cause severe disruptions to human-made health, economic, financial , and security systems then certainly you could be caught off guard

Lawrence Habahbeh is a geopolitical expert based in Amman, Jordan. He holds an MSc in Actuarial Science from Heriot-Watt University in Edinburgh, and an executive certificate in geopolitical analysis from the Geneva institute of geopolitical studies (GISP). He chairs the resource and environment (R&E) member interest group at the Institute and Faculty of Actuaries (IFoA) and he is also a member of the COVID-19 action taskforce (ICAT) on investment impact for Life and Annuity insurers’ and enterprise risk management work streams at the IFoA, London, U.K.

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Biological warfare: A global security threat

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Biological warfare is not a new concept in arena of international politics as it has been used as a tool to sabotage enemy in previous centuries. Biological weapons are a sub-category of Weapons of Mass destruction (WMDs) in which there is a deliberate use of micro-organisms like pathogens and toxins to cause disease or death in humans, livestock and yields.Form its usage in 14th century by Mongols to its usage by imperial Japan during 1930s-40s against Chinese, it has always been a threat to global security. The evolution of bio-weapons can be broadly categorized into four phases; first phase includes the post WWII developments with the evident use of chlorine and phosgene in Ypres.The second phase was marked by the use of nerve agents like tabun, cholinesterase inhibitor and anthrax and plague bombs. The initiation of third phase was marked by the use of biological weapons in Vietnam war during 1970s where deadly agents like Agent orange were used. 4th and last phase include the time of biological and technological revolution where genetic engineering techniques were at their peak. Traditionally they have been used in wartime in order to defeat enemy but with the emergence of violent non-state actors, bioterrorism is another potential threat to the security of states. There are certain goals that are associated with the use of biological weapons. Firstly, it is purposed to hit to economy of the targeted country, breaking down government authority and have a psychological effect on masses of the targeted population. It is also a kind of psychological warfare as it may hit a smaller number of people but leaves impact on wider audience through intimidation and spreading fear. It also creates natural circumstances under which a population is induced with disease without revealing the actual perpetrator.

With the advancement in genetic engineering techniques more lethal biological weapons are being produced everyday around the world. Countries which are economically deprived are more likely to pursue such goals as it is difficult for them to go for heavy military sophistication keeping into consideration their poor economic conditions. Biological weapons serve as inexpensive tool for developing countries to address their issues in prevailing international security environment. During the initial decades of cold war, united states of America (USA) and Soviet Union went for acquiring tons of biological weapons alongside nuclear proliferation.

 The quest for these weapons reduced during 1970s with the formation of Biological and Toxin Weapons Convention (BWC). This convention was presented in 1972 before countries and finally came into force in 1975 with 150 countries who signed this convention and 140 countries who fully joined this treaty. This convention prohibits any biological weaponization in order to promote peace and stability around the world. But this convention has obvious defects as it is unable to address many issues like it doesn’t prevents itself the use of biological weapons but just reinforces 1925 Geneva Protocol which forbids the use of bio-weapons. Convention allows ‘defensive research’ to which there are many objections that what is incorporated into this defensive research. It is non-binding to the signatory states and in case if countries are proliferating it lacks the effective oversight techniques to look after them either they are pursuing these biological weapons capabilities or not. Since the inception of this convention till now it has clearly failed in stopping the countries from acquisition as well as usage of these weapons. This is evident as there were many cases after 1975 where these weapons were used as in 1980s when Iraq used mustard gas, sarin and tabun against Iran and many other ethnic groups inside Iran. Another incident which was highlighted was Sarine nerve gas attack in Tokyo subway system leaving thousands injured and many got killed. In post-cold war era, however, the number of these attacks reduced as much attention was shifted to terrorism after 9/11 attacks with the change in global security architecture.

“Anthrax letters” in post 9/11 attacks revealed yet another dimension of bio-weapons which was the threat of bioterrorism from non-state actors. US became a victim of bio-terrorism when in 2001 a powder was transported through letters containing bacterium called anthrax infecting many people. One purpose which terrorists have is to make general masses feel as if they are unsafe in the hands of their government which can be best achieved through the use of these weapons. The fact that biological weapons are cheaper and more devastating than conventional weapons make it more likely for biological weapons to be used by terrorists. Also, the fact that they are easy to hide and transport and a smaller quantity can leave long-lasting impacts on larger population makes these weapons more appealing.  Now that we are facing a global pandemic in the form of COVID-19 which according to some conspiracy theories is a biological weapon pose even more serious challenge to the international security in coming decades. There is no such scientific research which proves Corona Virus as a biological weapon but the realization here is that whether or not it is a biological weapon but world was least prepared for it. Not only the developing countries but also developed states suffered more despite having enormous medical infrastructure. The fact that there has been decline in the incidents related to bioterrorism should never let us think that there is no possibility of such attacks. The fact that world failed to handle Covid-19 puts a question mark on the credibility of measures if we are faced with bio-terrorism. The medical community as well as general population needs to develop an understanding of how to respond if there is such attack. At the international level there is a dire need to develop some strong norms which discourage the development and use of such weapons in any capacity.    

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The ‘Post-Covid-19 World’ Will Never Come

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On May 3rd, the New York Times bannered “Reaching ‘Herd Immunity’ Is Unlikely in the U.S., Experts Now Believe” and reported that “there is widespread consensus among scientists and public health experts that the herd immunity threshold is not attainable — at least not in the foreseeable future, and perhaps not ever.”

In other words: the ‘news’-sources that were opposing the governments’ taking action against Covid-19 — libertarian ’news’-sites that oppose governmental laws and regulations, regardless of the predominant view by the vast majority of the scientists who specialize in studying the given subject — are looking wronger all the time, as this “novel coronavirus” (which is what it was originally called) becomes less and less “novel,” and more and more understood scientifically.

The “herd immunity” advocates for anti-Covid-19 policies have been saying that governments should just let the virus spread until nature takes its course and such a large proportion of the population have survived the infection as to then greatly reduce the likelihood that an uninfected person will become infected. An uninfected person will increasingly be surrounded by people who have developed a natural immunity to the disease, and by people who don’t and never did become infected by it. The vulnerable people will have become eliminated (died) or else cured, and so they won’t be spreading the disease to others. That’s the libertarian ’solution’, the final solution to the Covid-19 problem, according to libertarians.

For example, on 9 April 2020, Forbes magazine headlined “After Rejecting A Coronavirus Lockdown, Sweden Sees Rise In Deaths” and reported that, “Sweden’s chief epidemiologist Anders Tegnell has continuously advocated for laid back measures, saying on Swedish TV Sunday that the pandemic could be defeated by herd immunity, or the indirect protection from a large portion of a population being immune to an infection, or a combination of immunity and vaccination. However, critics have argued that with a coronavirus vaccine could be more than a year away, and insufficient evidence that coronavirus patients that recover are immune from becoming infected again, the strategy of relying on herd immunity and vaccinations [is] ineffective.”

The libertarian proposal of relying upon “herd immunity” for producing policies against this disease has continued, nonetheless.

CNN headlined on 28 April 2020, “Sweden says its coronavirus approach has worked. The numbers suggest a different story”, and reported that 

On March 28, a petition signed by 2,000 Swedish researchers, including Carl-Henrik Heldin, chairman of the Nobel Foundation, called for the nation’s government to “immediately take steps to comply with the World Health Organization’s (WHO) recommendations.”

The scientists added: “The measures should aim to severely limit contact between people in society and to greatly increase the capacity to test people for Covid-19 infection.”

“These measures must be in place as soon as possible, as is currently the case in our European neighboring countries,” they wrote. “Our country should not be an exception to the work to curb the pandemic.”

The petition said that trying to “create a herd immunity, in the same way that occurs during an influenza epidemic, has low scientific support.”

Swedish authorities have denied having a strategy to create herd immunity, one the UK government was rumored to be working towards earlier on in the pandemic — leading to widespread criticism — before it enforced a strict lockdown.

FORTUNE magazine headlined on 30 July 2020, “How parts of India inadvertently achieved herd immunity”, and reported that, “Around 57% of people across parts of India’s financial hub of Mumbai have coronavirus antibodies, a July study found, indicating that the population may have inadvertently achieved the controversial ‘herd immunity’ protection from the coronavirus.” Furthermore:

Herd immunity is an approach to the coronavirus pandemic where, instead of instituting lockdowns and other restrictions to slow infections, authorities allow daily life to go on as normal, letting the disease spread. In theory, enough people will become infected, recover, and gain immunity that the spread will slow on its own and people who are not immune will be protected by the immunity of those who are. University of Chicago researchers estimated in a paper published in May that achieving herd immunity from COVID-19 would require 67% of people to be immune to the disease. Mayo Clinic estimates 70% of the U.S. population will need to be immune for the U.S. to achieve herd immunity, which can also be achieved by vaccinating that proportion of a population.

On 27 September 2020, Reuters bannered “In Brazil’s Amazon a COVID-19 resurgence dashes herd immunity hopes”, and reported that, “The largest city in Brazil’s Amazon has closed bars and river beaches to contain a fresh surge of coronavirus cases, a trend that may dash theories that Manaus was one of the world’s first places to reach collective, or herd, immunity.”

Right now, the global average of Covid-19 intensity (total cases of the disease thus far) is 19,693 persons per million population. For examples: Botswana is barely below that intensity, at 19,629, and Norway is barely above that intensity, at 20,795. Sweden is at 95,905, which is nearly five times the global average. Brazil is 69,006, which is around 3.5 times worse than average. India is 14,321, which is slightly better than average. USA is 99,754.  

However, the day prior, on May 2nd, America had 30,701 new cases. Brazil had 28,935. Norway had 210. India had 370,059. Sweden’s latest daily count (as-of May 3rd) was 5,937 on April 29th, 15 times Norway’s 385 on that date. Sweden’s population is 1.9 times that of Norway. India’s daily count is soaring. Their population is four times America’s, but the number of new daily cases in India is twelve times America’s. Whereas India has had only one-seventh as much Covid-19 intensity till now, India is soaring upwards to become ultimately, perhaps, even worse than America is on Covid-19 performance. And Brazil is already almost as bad as America, on Covid-19 performance, and will soon surpass America in Covid-19 failure.

There is no “herd immunity” against Covid-19, yet, anywhere. It’s just another libertarian myth. But libertarians still continue to believe it — they refuse to accept the data.

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Application of Cyber Security: A Comparative Analysis of Pakistan and India

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In today’s world, communication is controlled by the internet. The Internet is what links the communication protocol of a state to its cyber domain. Cyber security encompasses techniques, technologies, methods and blueprints made to secure networking systems from potential cyber-attacks. Efficient systems of cyber security therefore mitigate and reduce the danger of network systems being attacked or accessed by unauthorized systems.

Despite the existence of such robust networks and security protocols, the exploit of such systems is always a click away, due to the integration of the internet as a worldwide network, and in times of global outbreaks and crisis, internet activity also inevitably increases. This was particularly observable with the spread of the Covid-19 as a global pandemic, which also saw an increase in over-the-web activity, and gave a new breathing space for cyber-criminals. According to estimates, Covid-19, as a pandemic, can already be classified as the largest ever existing threat to cyber-security across the globe, since the induction of the world wide web as a global chain of networks. Thus, it would be fair to say that the effects of the covid-19 were not selectively felt by developing states only, but also encapsulated great powers of the contemporary era.

While contextualizing Pakistan and India in the cyber-security debate following the events of the covid-19 scenario, the trend in increased virtual cyber-attacks and espionage was no different to the rest of the world. The real question mark lies in the ability of both countries to effectively deal with the overwhelming cyber-activity in the post-pandemic era. The government of Pakistan established the National Center for Cyber Security (NCCS) in June 2018, and continues to strengthen its cyber-security domain, with a dynamic change in policy making, centric to cybersecurity and threats to cybersecurity from its immediate adversary, India. The current Prime Minister of Pakistan, Mr. Imran Khan, also launched ‘Digital Pakistan Vision’, with the primary   objectives of  increasing connectivity, rectifying digital infrastructure, and investing in the awareness of digital skills and promotion of entrepreneurship. Pakistan also approved the first ‘Digital Pakistan Policy’, aiming to focus on investment opportunities by IT companies and building the framework necessary for a digital ecosystem. Although a sustained effort has been made to strengthen the cyber-domain of Pakistan, there are many technicalities and loopholes that must be addressed with high priority. One, the lack of an effective communication method, that is free from external intrusion, and allows for the restriction of unwanted network traffic on its master server. In more recent times, an intrusion occurred during the webinar of Institute of   Strategic Studies (ISSI) due to non-encrypted internet connection, which allowed unspecified individuals access to the digital webinar. Two, the lack of stable internet connectivity, which prevents effective implementation of security protocols and acts as a hindrance to critical data packets, that must be sent between cyber-security officials in an event of a cyber-attack or espionage of any degree. Three, the existence of exploitable source code in key governmental websites and pages that are always prone to cyber-attacks, and must be revisited in the near future.

On the other hand, India saw a 37% in cyber-activity in the wake of the covid-19 pandemic; an eye-opener for state officials, who have prioritized cybersecurity as the next immediate threat to Indian National Security. In recent developments, India has also launched several directives to its cyber-security strategy in the post-pandemic era, including the initiative launched by The Ministry of Electronics and Information Technology (MEITY), namely ‘Cyber Surakshit Bharat’ with the coordination and support of the  National E-Governance Division. According to MIETY, 44 training and mock drills are being given to 265 organizations from different states of the world, a landmark achievement in Indian cyber-security history. However, just like its South Asian neighbor Pakistan, India is also equally overwhelmed by the threat and emergence of hostile cyber-activity. With a 45% ratio of internal cyber attacks, and a 38% ratio of external intrusions from proposed adversaries, China and North Korea, India has strengthened its ties with Israel to revamp its cyber-security strategy,  in order to mitigate the immediate threat to its cyber-domain, both internally and externally.

Conclusion and Recommendations

There is an immediate need to extend and further research the cyber capabilities of both Pakistan and India, which would primarily define the different types of technologies and how they are being actively made a part of the National security policy of both Pakistan and India. These efforts must be the immediate need of the hour, with the uncertainty of the Covid-19 and its irregular patterns becoming an inevitable fate of regional and global politics, in the times to come. While India seems to have its primary bases covered, there is no denying that the Covid-19 pandemic did not have a sparing effect on its cyber-domain, either, leaving the door open for Pakistan to make significant improvements to its cyber domain and cyber-security strategy, in order to effectively deter the threat faced from its adversary. Moreover, Pakistan can also seek inspiration from a potential integrated tri-service defense cyber strategy, that is being highly considered by Indian cyber-security and state officials, which would aid in keeping any form of cyber-hostility at bay in upcoming times.

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