Five lessons from COVID-19 on understanding and managing systemic risks

In an increasingly interconnected world, shocks are felt across sectors, borders and scales, revealing the systemic nature of risks. This holds true for the ongoing COVID-19 pandemic, for the effects of climate change, and also from the effects of newly emerging crises, such as the war in Ukraine. It is therefore critical that we analyse these events to derive lessons for risk management, so as to better prepare for future events. A new report by the UN Office for Disaster Risk Reduction (UNDRR) and the United Nations University - Institute for Environment and Human Security (UNU-EHS), “Understanding and managing cascading and systemic risks: lessons from COVID-19”, dives into the systemic nature of risks revealed by the COVID-19 pandemic. It presents cross-cutting findings from five case studies in different countries (Ecuador, India, Togo, Bangladesh and Indonesia), touching on different social and environmental issues. Moreover, lessons learned on the prevention and management of risks are highlighted.

The report in particular provides five interesting insights:

1. Cascading effects across sectors, systems and borders: The pandemic has been far more than a health crisis, and has affected societies to their core. In addition to the direct health-related impacts, the pandemic has also shown severe cascading effects on social, economic and financial systems across the globe, and countries that have not been relatively untouched by the direct impacts have still been impacted significantly in other ways. For example, Togo experienced a low number of COVID-19 cases overall, but restriction measures on the population, put in place to protect at-risk groups, severely impacted people’s livelihoods and created strains on the economy.
2. Compounding risks of climate change, natural hazards and the pandemic: Many countries have been facing additional challenges due to climate-related extreme events and natural hazards, such as floods, storms and earthquakes. For example, in the Indian Sundarbans, the combination of tropical cyclone Amphan with COVID-19 resulted in significant challenges for the local population: The cyclone caused widespread destruction of local schools, which further impaired children's education that had already been reeling from the effects of the pandemic. This compounding impact on children's education will likely have long lasting effects, and particularly for girls, a group whose drop-out rate was found to be higher than that of boys, a commonality that often occurs in the wake of disaster.
3. COVID-19 amplifies existing vulnerabilities: Cascading effects from the pandemic have exacerbated existing societal inequalities and marginalization in regards to income, gender, education and disability. In Ecuador, for example, those already living in overcrowded housing in Guayaquil were not able to socially distance, which contributed to higher infection rates among the poor.  Another example was found in Indonesia, where students in urban poor settlements lacking internet connection were confronted with reduced online schooling opportunities. Similar correlation between income and education was also observed in developed countries, such as Germany. These effects from the pandemic have resulted in widening the gap of inequality and injustice throughout societies. 
4. COVID-19 is hampering the progress towards the achievement of the SDGs: COVID-19 has affected all SDGs, notably SDG 1 (No Poverty), SDG 3 (Health & Well-Being), SDG 4 (Quality Education) and SDG 8 (Decent Work & Economic Growth). While some positive effects were observed, such as the introduction or expansion of social protection programmes in many developing countries and the acceleration of digitalization processes worldwide, the adverse effects significantly outweigh the benefits.
5. Lessons for prevention, preparedness and risk management: Risk cannot be entirely eliminated from systems, but rather must be constantly managed, monitored and treated, from local and regional to national and international level. Focus should be placed on comprehensive risk management strategies that enable managing future risks through a process of iterative learning and adaptation.