COVID-19’s historic and continuing tragic cost in lives, health and societal well-being represents the first near-Black Sky-class pandemic event in modern times. A similar pandemic with a higher morbidity, could lead to a global, complex catastrophe, associated with large scale infrastructure disruption, and the potential for unprecedented risk to societal continuity.
Risk to the fragile global financial system.
Our modern global financial system enables the production of goods and services across the world, and the supply chains that convey those goods and services to consumers. Our civilization could not be sustained without this system, making it a particularly important, aggregating example of modern civilization’s vulnerability to a potentially more severe pandemic. A good visualization of this risk was provided by an article in the July/August 2020 issue of The Atlantic, entitled “The Looming Bank Collapse.” The article highlights economists’ concerns in the early months of the pandemic. Watching the unfolding economic stresses, economists concluded that the pandemic brought our world dangerously close to the collapse of the global financial system.
Civilization does not currently have a “fallback plan” for such a collapse. Without the banking, credit, insurance, reinsurance, monetary and other financial instruments essential to economic and societal continuity, economies could not function.
The risks associated with a more extreme pandemic are unthinkably catastrophic. In a scenario in which, for example, a pandemic’s impact caused collapse of global financial frameworks, societal and national continuity would be at risk, worldwide.
What can be done?
The world’s leading financial institutions work diligently to develop resilient mechanisms to ensure that shocks to the system can be survived. These mechanisms must now be expanded to address far more extreme risks than those addressed currently – including implementing a capability to enable prearranged financial guarantees for critical services and corporations, coupled with a recognized, temporary transaction logging system designed to operate even in long duration, subcontinent-scale power outages.