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2. Distinguishing Among Climate Change-Related Risks
- Author:
- Lisa Sachs, Denise Hearn, Matt Goldklang, and Perrine Toledano
- Publication Date:
- 02-2025
- Content Type:
- Special Report
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Understanding the diverse types of climate change-related risks is crucial for developing effective strategies to address the global climate crisis. A holistic yet disaggregated approach allows for a comprehensive view of the challenges while enabling targeted responses from various stakeholders. This document outlines three main categories of climate-related risks: planetary, economic, and financial, detailing their relevance to various stakeholders, timeframes, and potential response strategies. This short brief aims to disentangle the complex nature of risk discussions for productive discourse and appropriate risk management approaches for different stakeholders. In practice, discussions related to assessing and responding to climate change risk have conflated categories of risk, confusing discussions and undermining the effectiveness of related strategies. We hope this brief can bring clarity and rigor to analyses of risk and support constructive discussion among policymakers, financial institutions, social sector actors, and the public. We plan to follow this short briefing with a longer report including more detailed analysis, integrating feedback to these initial ideas.
- Topic:
- Climate Change, Finance, Economy, Investment, Risk, and Sustainability
- Political Geography:
- Global Focus
3. The Polish Economy 2023 and Beyond: How to Mend Home Loans
- Author:
- Andrzej Reich, Dariusz Filar, and Michal Polasik
- Publication Date:
- 01-2024
- Content Type:
- Working Paper
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The subject of this publication, reflecting the discussion held between experts on 30 March 2023, is that of housing loans in Poland. The publication focuses primarily on discussing the state of mortgages (at the end of the first quarter of 2023). This state is the effect of (a) legislation, (b) institutional solutions, (c) past processes in the financing of housing loans, and recently also (d) the high level of inflation dampening both lending by the banks and the level of interest among bank customers. The publication's second purpose is to present recommendations which, once put into effect, could rectify today’s lamentable situation. All of the proposals presented in this publication lead to one general recommendation: the answer to the current shortcomings lies not in isolated, single changes; what is essential is a new system for the market. This new system should be (a) flexible, (b) free of legal risk while at the same time (c) better protected against market risk, and (d) it should also contain a more comprehensive range of products; on this market (e) the state, as the regulator, should intervene ex-ante and not only ex-post (as has been the case in Poland for the last 20 years), while (f) customers should have the essential minimum of financial knowledge, first and foremost regarding awareness of the risk related to, which by their very nature are long-term loans.
- Topic:
- Markets, Economy, Interest Rates, Risk, Mortgages, Banking, Loans, and Financial Education
- Political Geography:
- Europe and Poland
4. The El Niño Southern Oscillation and Geopolitical Risk
- Author:
- Cullen Hendrix
- Publication Date:
- 05-2024
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper investigates whether the El Niño Southern Oscillation (ENSO)—the warming and cooling cycle in the central and eastern Pacific Ocean that affects both global atmospheric and ocean conditions—is a driver of geopolitical risk at the global scale. Using nonlinear cross-convergent mapping, a technique for characterizing causal relationships in dynamic systems, it finds ENSO is causally related to geopolitical risk at the global level, but that finding is not replicated at the country level for countries whose economies are most strongly influenced by ENSO cycles. Put differently, ENSO-related geopolitical risk is an emergent phenomenon evident only at the Earth system level. Then, using monthly observations of ENSO and geopolitical risk, the paper reports a curvilinear, contemporaneous relationship between ENSO and risk, with La Niña conditions associated with lessened geopolitical risk relative to El Niño and neutral climate conditions. The effects are statistically and substantively significant, and the relationship is demonstrated to be stronger in more recent decades (post-1990). The effect for geopolitical risk of transitioning from La Niña to neutral ENSO conditions is of similar magnitude to that of the outbreak of a major interstate war.
- Topic:
- Security, Agriculture, Climate Change, Politics, Geopolitics, Risk, Weather, and El Niño
- Political Geography:
- Global Focus
5. Japanese Economic Security as “Derisking”
- Author:
- Kazuto Suzuki
- Publication Date:
- 01-2024
- Content Type:
- Working Paper
- Institution:
- Korea Economic Institute of America (KEI)
- Abstract:
- This paper examines the concept of “derisking” and how the Japanese Economic Security Promotion Act (ESPA) has responded to it within the framework of deterrence theory. It explores how ESPA allows deterrence by denial against economic coercion by other states and is itself a derisking measure. It contends that deterrence by denial, which means reducing dependency and improving resilience, could include stockpiling strategic materials, diversifying sources of supply, developing alternative materials, and developing alternative products. However, this paper argues that there is a need to strengthen the mechanism for collaborative deterrence by denial, such as the “Coordination Platform” presented at the G7 Hiroshima Summit. As for other forms of deterrence, such as institutional deterrence and deterrence by punishment, their effectiveness is insufficient, and they face many implementation problems. Therefore, this paper argues that the most optimal derisking strategy at this point is the combination of ESPA and the “Coordination Platform” to strengthen the capabilities of deterrence by denial.
- Topic:
- Risk, Deterrence, Economic Security, and Coercion
- Political Geography:
- Japan and Asia
6. What traders know: the (mis)perceptions of formal and informal cross-border traders
- Author:
- Paolo Falco and Eleanor Wiseman
- Publication Date:
- 04-2024
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- ross-border traders face a choice between official and unofficial border crossings. The latter allow them to evade taxes, but expose them to other risks, such as bribes, fines, and arrest. We investigate the perceptions of cross-border traders about the risks of trading officially vs unofficially at the border between Kenya and Uganda. We find that traders overestimate the risks of trading officially relative to the same risks when trading unofficially. In reality, the measured risks of trading through the official border are lower.
- Topic:
- Borders, Risk, Trade, and Informal Economy
- Political Geography:
- Uganda, Kenya, and Africa
7. The perception of climate change in Senegal coastal areas
- Author:
- Serigne Momar Sarr, Adama Faye, Dibor Sarr Faye, and Thierno Sarr
- Publication Date:
- 04-2024
- Content Type:
- Special Report
- Institution:
- Oxfam Publishing
- Abstract:
- The cognitive dimension of climate change is a subject that is rarely analysed. However, communities’ endogenous adaptation strategies are heavily dependent on their perception of the risks linked to climate change. An analysis of individuals’ representations and perceptions of climate change makes it possible to improve the ability to adapt of territories confronted by it. In this analysis, the relations of interdependence between perception, knowledge and adaptation strategies show how communities living in the coastal area of Senegal interpret climate change, in particular in the fields of agriculture, water resources and coastal areas. Considering these representations favours the co-construction and acceptability of the adaptation strategies. It enables state and non state actors to better understand the communities’ needs as regards public climate policies, whereas the media can identify levers they can use to devise effective public information campaigns on the climate, in order to reduce the vulnerability of communities that face climate hazards.
- Topic:
- Climate Change, Risk, Adaptation, and Perception
- Political Geography:
- Africa and Senegal
8. How to de-risk: European economic security in a world of interdependence
- Author:
- Jean Pisani-Ferry, Beatrice Weder di Mauro, and Jeromin Zettelmeyer
- Publication Date:
- 05-2024
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- Pandemic-related supply disruptions, the energy crisis provoked by Russia’s invasion of Ukraine and economic coercion by China have put economic security high on the European Union policy agenda. The question is how exactly the EU should ‘de-risk’ its external economic relationships without foregoing the benefits of trade. The standard answer is that it should identify product-level trade dependencies, mainly on the import side, and reduce them, mainly through diversification of suppliers, while otherwise maintaining maximum trade integration. This Policy Brief argues that this answer falls short. First, product-level dependencies cannot be identified reliably even with sophisticated analysis and data. As a result, both ‘missed dependencies’ and ‘false positives’ are inevitable. Second, external shocks and coercion could be propagated through exports, productive assets held abroad and financial channels as much as through imports. The analysis has five main implications Import de-risking should focus on a few product categories for which the costs of supply interruptions would be unquestionably large. This reduces false positives. De-risking and/or buffers to deal with exports and financial coercion require more attention. De-risking must be complemented by raising resilience against all shocks, whatever theirorigin. This requires a deeper and broader European single market. De-risking and resilience must be complemented by deterrence. A sufficiently high probability of chronic trade conflict – or one very large conflict – may justify reducing overall integration with a large trading partner, on both the export andimport sides. EU economic security policies have been right to emphasise the reduction of import dependence on chips and critical raw materials, and the creation of a powerful legal instrument to deter coercion (the Anti-Coercion Instrument). In most other respects, there is room for improvement.
- Topic:
- European Union, Risk, Trade, Imports, Economic Security, and Interdependence
- Political Geography:
- China and Europe
9. UIP Deviations in Times of Uncertainty: Not all Countries Behave Alike
- Author:
- Purva Gole, Erica Perego, and Camelia Turcu
- Publication Date:
- 07-2024
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- In this paper, we reconsider the role of uncertainty in explaining uncovered interest rate parity (UIP) deviations by focusing on 60 emerging and developing (EMDE) and advanced (AE) economies, over the period 1995M1--2023M3. We show that differentiating between EMDE currencies and AE currencies is crucial for understanding UIP deviations as the behaviour of excess returns differs in the two groups in periods of uncertainty: deviations become wider for EMDEs and narrow for AEs. These new results are consistent with the idea that in periods of uncertainty, global investors might change their risk preferences and move from high currency-risk investments in EMDEs towards less risky ones in AEs. This evidence holds for both the short-run and long-run UIP, and becomes stronger since the Global Financial Crisis (GFC).
- Topic:
- Interest Rates, Risk, Uncertainty, and Emerging Economies
- Political Geography:
- Global Focus
10. A Security Symphony: Harmonizing Cybersecurity Regulation
- Author:
- Aspen Digital
- Publication Date:
- 05-2024
- Content Type:
- Special Report
- Institution:
- Aspen Institute
- Abstract:
- Global cybersecurity regulation is fragmented, inefficient, and often ineffective. More than 60 countries are implementing an array of legal frameworks, making it difficult to regulate cyber practices across borders. Costly on many levels, inconsistent regulations and varying compliance standards allow bad actors to seek out gaps in the system and facilitate attacks that span geographies. With the current amplification and intensity of cyber threats, government and industry need to share tactics, techniques, and procedures with each other as well as with partner nations. If the field doesn’t achieve a higher degree of harmony in the global regulatory landscape, multiple dimensions will remain inefficient and costly: operations, risk management, research and development, and more. In A Security Symphony, Aspen Digital’s Global Cybersecurity Group calls for establishing regulatory harmonization principles, with a focus on collaboration and standardization. The principles span the core categories of interoperability and transparency, market competition, and mutual recognition frameworks. The paper also demonstrates the real-life harms of lacking coordination as well as the benefits of harmonized models through case studies on the 2016 dismantling of the “Avalanche” network and the Factor Analysis of Information Risk (FAIR). A collective of cybersecurity experts committed to democracy and freedom online, the Global Cybersecurity Group is uniquely positioned to offer cross-border guidance to their peers and like-minded nations.
- Topic:
- National Security, Cybersecurity, Regulation, and Risk
- Political Geography:
- Global Focus