Author: Ron Dembo
On 8 April, the US National Intelligence Council revealed a dismal forecast for a world stretched to its limits already by the Covid-19 pandemic.
While not representing any official US view, the quadrennial Global Trends Report creates strategic forecasts with good credentials – often, US spy agencies directly inform their work alongside a host of analytics companies, universities, and government agencies. The outlook was grim:
The Covid-19 pandemic has reminded the world of its fragility and demonstrated the inherent risks of high levels of interdependence. In coming years, the world will face more intense and cascading global challenges ranging from disease to climate change to the disruptions from new technologies and financial crises.
Continuing, the authors warned of a “looming disequilibrium between existing and future challenges and the ability of institutions and systems to respond”.
The Uneven Impacts of Climate Change
Examining the physical effects of climate change, the authors predict an increasing intensity of extreme weather events such as storms, droughts and floods. They see melting glaciers and ice caps, rising sea levels and rising temperatures.
The consequences of these changes will be felt disproportionately by those in the developing world. There, climate change will collide with and exacerbate existing risks to energy, food and water security, to health and to economic prosperity. New unknown threats will undoubtedly emerge.
Resiliency measures will be key to survival, but again such measures are unlikely to be distributed evenly.
The authors consider several other emerging trends – economic, technological, demographic and developmental. Each will interact to produce new dynamics at a societal, state and intergovernmental level.
But what dynamics precisely? To answer this, the authors generate five scenarios for 2040 ranging from the rosiest, a Renaissance of Democracies, to a grim world of Tragedy and Mobilization.
Quick to claim they cannot predict the future, the authors portray vividly in the latter a global environmental catastrophe that sparks food shortages and a bottom-up revolution to repair the damage to the climate and combat social inequality – and the US, by the way, is no longer a dominant voice on the world stage.
A Murky Methodology
The report is undoubtedly useful to open our eyes to future possibilities. It fosters strategic conversation and serves a valuable diplomatic purpose. But in explaining how exactly they landed on certain scenarios the authors are fairly vague.
They describe a “unique undertaking” involving “numerous steps: examining and evaluating previous editions of Global Trends for lessons learned; research and discovery involving widespread consultations, data collection, and commissioned research; synthesizing, outlining, and drafting; and soliciting internal and external feedback to revise and sharpen the analysis.”
Indeed, quantifiable metrics appear frequently, and there is much engaging, qualitative narrative interspersed with facts. But one wonders how consistent such a methodology is.
To generate the scenarios, the authors asked three questions: How severe are the looming global challenges? How do states and nonstate actors engage in the world, including focus and type of engagement? Finally, what do states prioritize for the future?
But was there an algorithm they used to ensure that potential outcomes weren’t missed? Why were particular scenarios selected over others?
To these questions, the authors give less explanation. Indeed, the report would have been greatly improved with a concise methodology section detailing how precisely the generation process took place.
The Issue With Scenario Generation Today
One of the most pressing problems with risk management today and the forecasting industry as it stands is its lack of a mathematically driven, consistent scenario generation methodology to complement more qualitative methods of scenario planning. Sometimes at crucial moments, the primary method is simply BOGSAT (A Bunch of Guys/Girls Sitting Around a Table), a phrase coined by risk analyst Roger Cooke.
The problem with BOGSAT is that, when a scenario is imagined, no one has any idea where it sits on the spectrum of possible scenarios. They have absolutely no idea how good or bad it is or how likely it is. They are, simply put, taking a shot in the dark. This leads to inconsistency and allows human bias to influence the scenarios generated and selected.
Again, it is important to emphasize that the National Intelligence Council’s work is highly valuable, but it could have been complemented by a more mathematically driven scenario generation process.
What the forthcoming book Risk Thinking proposes is a method for algorithmic scenario generation that relies on structured expert judgement to create consistent, forward-looking scenarios that span the best and worst outcomes. By spanning the whole range of future states, possibilities that might never have been imagined by a group of thinkers will be brought to light – a critical asset for uncovering Black Swans and the extreme risks of a radically uncertain world. From there, risk thinkers can form their strategy by hedging the worst possible outcomes and optimising the chances of securing the best possible outcome.
Risk Thinking, Ron Dembo, Archway Publishing, will be published in Q2. Sign up on [email protected] for your free e copy, hardcopy or soft copy (price to be set by publishers), printed on demand.