Systemic risk and the polycrisis
A primer
This post is part of a living literature review on societal collapse. You can find an indexed archive here.
Imagine a row of dominoes where knocking over one piece triggers a cascade that topples them all. This is systemic risk - when a single failure can bring down an entire system. Now imagine several such cascade failures happening simultaneously at a global scale and making each other worse. This occurrence of heightened global systemic risk and its actualization is the global polycrisis we face today. Let’s explore these concepts that help us understand the complexity of modern global threats.
What is systemic risk?
I am relying here a lot on a recent systemic risk governance paper by Schweizer & Juhola (2024) which is about systemic risk governance, but also explains nicely what systemic risk is about. To understand what systemic risk might be, we first have to understand what a system is. The definitions here tend to be fuzzy, but generally everything is a system when you have a bunch of elements which interact with each other and which have a boundary to the rest of the world (1). The interaction between these elements is the most important part, as they create the complex behavior of the system which is difficult to impossible to derive from inspecting the elements in isolation. The scale is not important however. My body can be seen as a system, as can a company, the electrical grid or the banking sector. The important thing is that within the boundaries of the system, you have elements interacting with each other.
To understand the factors involved here, we also have to look at an additional paper here by Mark et al. (2023) who tried to lay out in a clear way the definition of polycrisis, but also touch upon many of the concepts which are important to understand systemic risk. More specifically, they talk about what a risk consists of. They see risk as the product of the potential of something to disrupt your system (the hazard), the vulnerability of your system to this hazard and if your system is exposed to them. The hazard that could disrupt your system can either build up gradually (e.g. the infrastructure of a country slowly getting worse, because needed investments aren’t being made) (2), which we call systemic stress or they can increase rapidly (e.g. when an earthquake disrupts many systems at once and so drastically and quickly heightens the risk of something going wrong).
Following from these explanations of what a system and what a risk is, a systemic risk is the potential for disruption of a single element in my overall system, that brings the whole system crashing down. This usually happens via feedback loops or risk cascades. This means you have a disruption that reinforces itself or damages more other elements in every time step. To make some examples:
Imagine a severe blockage in a major artery, such as the coronary artery, which supplies blood to the heart. This blockage could lead to a heart attack, causing the heart to pump less effectively. The reduced pumping efficiency impacts the delivery of oxygen and nutrients throughout the body, affecting vital organs like the brain, kidneys, and liver. These organs may begin to fail due to insufficient blood supply, leading to cascading failures across multiple systems in the body.
A systemic risk involving a company is the collapse of Lehman Brothers in 2008. As a major international financial services company, Lehman Brothers’ bankruptcy triggered a domino effect that led to a wider banking collapse and contributed significantly to the 2008 financial crisis.
Another example is the interaction of the electrical grid with telecommunication. Imagine you have a severe blackout due to a geomagnetic storm. After a few hours to days the telecommunication system breaks down. However, to restart the electrical grid you need telecommunication to coordinate and so the disruption gets much larger as the systems rely on each other.
Schweizer and Juhola identify three main properties which systemic risks usually have and which make them so difficult to deal with:
Complexity: When you have systems that consist of many elements and connections, like the electrical grid, it becomes very hard to determine what is going on, because there are so many feedback loops and unexpected interactions, that it is just too much to keep track of easily. Also, your system can have elements which change in their behaviour over time (in this case we call them complex adaptive systems), like the behavior of companies changing after the 2008 crisis after new regulations were made. Finally, systemic risk can spread from one system to another, like in the example of the electrical grid and telecommunication above. This is called a ripple effect.
Uncertainty: As systemic risks are so complex, it is often quite difficult to determine what is cause and what is effect. Also, as the elements in the system change, over time the system can react differently to the same input (this is called a regime shift). Taking all these difficulties together, we get deep uncertainty, which just means that things are so complicated that you cannot give meaningful forecasts anymore, as everybody disagrees what is even going on and what might be done about it.
Ambiguity: This complexity and uncertainty lead you to the situation that the data and knowledge you have about your systemic risk allow several, conflicting interpretations.
Schweizer and Juhola also explain what you should consider, if you want to understand a specific systemic risk:
Understand the risk emitting part of your system. Not all elements in your system are equally dangerous to the stability of the system overall. Often you can identify key elements. These are often those where one system interacts with another system.
Figure out which institutions and organisations are involved in your systemic risk and which regulatory rules they follow. If you want to reduce systemic risk, you have to know who is even involved and what rules they adhere to.
Understand the debates around your specific systemic risk. As systemic risks are so complicated, people tend to disagree about what to do about them. Only if you roughly understand all the sides, you should proceed on tackling it.
Finally, Schweizer and Juhola talk about what you have to do to govern systemic risks well. This part of the paper feels a bit vague to me, so I won’t go into too much detail. But the main gist is that they argue that systemic risks are super complex, uncertain and ambiguous. Therefore, if you try to solve systemic risks alone or in a small (homogenous) group, you are extremely likely to fail, as you will overlook some important connections and facts. This means that systemic risk governance has to make sure to include a large number of stakeholders, so you even have a chance of understanding the dynamics you want to govern and what might be done to constrain them.
Recently, a discussion also started around global systemic risk (Centeno et al., 2015). Here the idea is that due to globalisation, we have created one single system, which therefore also has its own inherent systemic risk. Centeno and co-authors highlight this system is especially vulnerable, as it is a system of systems, extremely complex and governed by the profit incentives of capitalism. In a capitalist system you are paid for efficiency, not for resilience against seldomly occurring risks. While this might be less of a problem if you have a regional trade network of non essential goods, it can easily become a major crisis if you have a global trade network of essential goods. A classic example here is food. While in any given year many countries are better off in buying their food on the world market, as this allows you to have cheaper food, this puts you in a perilous position if the trade stops (e.g. due to export bans or extreme climate disruptions). In such a case, you suddenly cannot buy food anymore, but as you also stopped producing food, you now have a famine on your hands.
But Centeno et al. argue that this is not the only global systemic risk. They also highlight:
Finance: The global finance system means that economic disruption in one sector of a given country can lead to disruption in a completely different sector in another country. For example, the abovementioned collapse of Lehman brothers, contributed to the financial crisis of 2008, which in turn decreased food availability due to disruption of the global market.
Critical infrastructure: One recent example here is the blockage of the Suez Canal by the Ever Given transport ship. The ship blocked the canal and led to supply chain issues for months all around the world. Modern supply chains optimize for efficiency over resilience. Just-in-time manufacturing reduces costs but leaves little buffer against disruptions. When semiconductor production was disrupted during COVID-19, cascading effects hit industries worldwide.
Climate change: Climate change touches on pretty much every other topic globally and increases the risk there. Both abruptly due to more extreme weather events, but also chronically due more strain on all systems in a warmer world.
What is a polycrisis?
We now know that global systemic risk is the potential for disruption on a global scale, which is then realized because a single element in the system fails. The polycrisis is essentially the perfect storm we are experiencing right now of multiple global systemic risks being triggered at the same time, making each other worse and leading to a much more difficult response, as you have to put out so many fires at once.
Currently, there are two overlapping, but somewhat conflicting definitions in use. There is the definition coming more from the climate science/planetary boundary camp, which is laid out in detail in Lawrence et al. (2024) and the definition by the history camp, explained in Holder et al. (2024), as well as Mark et al. (2023) (which we also discussed above). Both camps are in agreement that we currently are in a polycrisis, that this is bad and that we should do something about it. They also agree that a polycrisis is about interacting systems on a large scale, which are under stress and are hit by shocks. The main thing where they disagree is how we should think about the term crisis. The climate science camp argues that we should use crisis in the sense that a potential risk has materialized, while the history camp would rather define crisis as a prolonged period of heightened risk where crucial decisions have to be made, independent from the fact if the potential risk has materialized or not. While there are some differences in how these scholars conceptualize crisis, both approaches emphasize the interaction of multiple systems under stress, with risks manifesting through both acute shocks and chronic pressures.
Lawrence et al. (2024) define polycrisis as “the causal entanglement of crises in multiple global systems in ways that significantly degrade humanity’s prospects”, but let’s unpack that step by step. With crisis they mean a sudden event which quickly causes a large amount of harm on a lot of people. They argue that what is so distinct about the current polycrisis is that we have so many crises at the time, which are also all interacting with each other.
They think we need such a new term, because in classical risk assessment you usually only focus on a single chain of events, like how a storm of a certain size would impact your country. And while we surely need this kind of risk assessment, it just doesn’t work for the global situation we find us in, because if you try to solve our global crises one by one, you will fail, as they feed into and interact with each other. If you don’t look at that interaction, you won’t be able to understand and thus solve them.
Lawrence et al. also try to establish a framework on what properties a polycrisis has:
Multiple causes: As many causes of the polycrisis happening in parallel it is often difficult to establish what caused what. They also interact with each other, which leads to emergent problems.
Non-linearity: Global systems don’t react in a linear fashion. This means that even a small disturbance can bring the whole thing down.
Hysteresis: Once a system in your society is pushed out of its stable state, it is often not easily reversible and you have to push much harder than the impact that removed the system from its stable state.
Boundary permeability: There is no clear boundary to the interacting crises, neither spatially (going from local to global) nor in the kind of system (natural, social, technological).
Black swan outcomes: The nature of such complex risk is that you have a very wide range of outcomes, some with extraordinarily large damage and it is quite hard to predict where you will end up.
Lawrence et al. argue that we are currently in a polycrisis and that things are getting worse. They think that the main crises of which the polycrisis consists are the aftereffects of the COVID-19 pandemic, economic problems, volatility in food and energy markets, geopolitical conflict, political instability and civil unrest due to economic insecurity, political polarization, declining institutional legitimacy, and the effects of climate change. All these factors interact with each other and make each other worse.
They also think that these crises have some main underlying causes. The Earth is leaving its holocene climate equilibrium as we keep emitting greenhouse gases, the global energy system is starting to shift away from fossil fuels, the geopolitical world is changing to a world not centered around American hegemony, the global economic systems is shifting away from the neoliberal regime to something new and we don’t know yet what and artificial intelligence disrupts the world with unknown consequences.
From my reading of the history camp, I would think that they agree with pretty much everything that Lawrence et al. lay out here, with the exception of how they use crisis of course, but Holder et al. (2024) also have something else to contribute to this discussion, which I found quite helpful to wrap my head around the idea of the polycrisis.
They argue that much of our confusion around the term polycrisis happens because we think that something either is or isn’t a polycrisis. Instead we should think of a polycrisis as a spectrum. A crisis is more a polycrisis if the spatial scale is larger, there are more systems involved and there is a longer and larger build up of stress in the systems. This means on the one side you would have a very localized crisis, in a single system with no systemic stress involved. An example of this could be a bridge that collapses due to an unexpected hazard, like an earthquake. The other side of this spectrum is the world we live in today. Due to globalization we have essentially connected every system with all other systems, the scale is global and as we have been building up systemic stresses in the form of overstepped planetary boundaries and rising inequality.
Is this our first polycrisis?
Both camps also agree that polycrises have happened in the past and will happen again after we are past this one. They can and have been solved.
One paper that explores these past polycrises more is Hoyer et al. (2023). They use the Seshat database and look at a variety of past polycrises to better understand how and why they happened. Hoyer et al. show how multiple factors affect how well societies handle polycrises. While institutional structure matters, they also emphasize how ecological conditions and social bonds between groups shape responses. For example, they highlight how societies often fail when elites block needed changes.
Crises happen all the time and usually societies are able to solve them. Only when you increase the vulnerability of your society or when you are unable to address the vulnerabilities of your society you start to have a real problem. Hoyer et al. argue that one of the main processes here is when the state gets captured by elites. Once power, wealth and social privilege are entrenched, collective actions become much more difficult, as those people who have the power to change things, are very much interested in keeping the status quo. To highlight this, they looked at a bunch of case studies:
Qing dynasty in China: In their early period, strong institutions - especially their granary system - helped them weather climate challenges from the Little Ice Age. However, similar environmental challenges in the 19th century contributed to the dynasty’s collapse, not because the threats were worse, but because social pressures had weakened state capacity. Overpopulation, a rigid bureaucracy creating frustrated elites, and corruption had eroded the institutions that previously provided resilience. This shows how environmental threats don’t exist in isolation - their impact depends heavily on social and political context.
Ottoman Empire: The Ottoman Empire in the 16th century demonstrates how societies can survive severe environmental and social pressures. During this period, the empire faced multiple challenges: the Little Ice Age brought cold temperatures and drought (including the worst drought in Ottoman history in the 1590s), while the Celâlî Rebellions created internal unrest as local elites competed for declining resources and positions. Combined with external wars, these pressures led to a polycrisis that killed half the population in some regions. Yet unlike many societies facing similar challenges, the Ottoman Empire survived. Their resilience stemmed from maintaining effective infrastructure and resource distribution systems, particularly water management. While the Qing dynasty’s similar systems later collapsed due to corruption, the Ottomans sustained theirs until conditions improved. This allowed them to maintain stability despite decades of stress, though at significant human cost in some regions. Their experience shows how societies can survive multiple overlapping crises if they maintain strong institutions and resource distribution systems.
Monte Albán in Mexico: The hilltop city of Monte Albán in Mexico shows how rising inequality, rather than environmental stress alone, can drive societal decline. For nearly 1000 years from 500 BCE, Monte Albán thrived despite its arid location by maintaining relatively equal social structures. This included distributed public spaces, similar-sized houses for elites and non-elites, and collective infrastructure projects. When Monte Albán declined around 800 CE, many blamed drought and warfare. However, recent evidence suggests a different story. While the region did face drought, nearby settlements actually grew as Monte Albán shrank. The timing coincided with growing inequality - elite houses became larger, ruler imagery more prominent, and public spaces less accessible. People “voted with their feet,” abandoning the city as social disparities widened. This pattern appears across pre-contact Mesoamerica - settlements with more equal, collective governance tended to better survive environmental challenges. The case demonstrates how environmental threats often become dangerous only when combined with social inequality.
Interaction of systemic risk with global catastrophic risk
Another topic which interacts with systemic risk and the polycrisis is global catastrophic risk. Arnscheidt et al. (2024) explored this in much detail, aiming to map out how events that would constitute a global catastrophe are made more likely by systemic contributions. The outcomes considered a global catastrophe are much larger than those usually considered in the polycrisis literature (think large asteroid impact instead of global financial crisis and geopolitical tension) Global catastrophic risk mitigation is just harder in a more unstable world. If countries are constantly trying to put out the fires of the polycrisis, they just have fewer resources left to do something about global catastrophic risk, which leaves our society more vulnerable. Arnscheidt et al., similarly to Hoyer et al., also highlight that one key thing here is the vulnerability of our society. A hazard is only a problem for you as long as you are vulnerable to it. Unfortunately, it seems that the global system we have built enables worse outcomes than in the past. We have more new and dangerous technologies, a lot of built-up vulnerabilities (like loss of social cohesion) and have a higher global connectedness which leaves us more vulnerable, even to crises which start far away. This can also be seen already today that “small” events like the blockage of the Suez Canal by the Ever Given, was an event that was felt globally, even though it was just a single ship, blocking just one of the many trade routes we have globally.
Another important factor that Arnscheidt et al. highlight is so-called latent risk. The idea is a risk that only becomes a problem once the conditions around it change. A classic example of this is stratospheric aerosol injections to reduce global warming. This introduces the risk of termination shock, which means the sudden warming if the aerosol injections would halt. This halt could also be involuntary due to global disruptions like war.
Arnscheidt et al. also argue that our global risks have increased due to systemic changes we have introduced, like climate change, nuclear weapons or AI. These increase our vulnerability to many other risks as well. Highlighting these systemic contributions to the vulnerability is important, as often in global catastrophic risk research, hazards are framed as something that you cannot really do something about, like “oh, I guess somebody is just going to build AGI and there’s nothing we can do about that, we should just focus on alignment”. However, the increased risk from such hazards is not inevitable. We could have addressed arising hazards in the past politically, and we can still do so in many cases. For example, if we can find agreements that reduce global warming, climate change mitigation becomes much less important.
Polycrises can erode the social and institutional capacity needed to handle both global catastrophic risk in general, but especially the preventive measures needed to stop hazards from growing. Political polarization and declining trust in institutions make coordinated responses to global threats more difficult.
Conclusion
To summarize this: systemic risk is when a single element in your system is enough to disrupt the whole thing and a polycrisis is when several systemic risks turn into actual crises and interact with each other on a global scale.
Understanding systemic risk and polycrisis reveals both the fragility and resilience of our global systems. While a single failure can trigger cascading collapses, history shows that societies can build institutions and practices that help weather multiple crises happening at once. The challenge we face today is maintaining and strengthening these protective systems even as our world grows more interconnected and complex.
Thanks for reading! If you want to talk about this post or societal collapse in general, I’d be happy to have a chat. Just send me a mail to existential_crunch at posteo.de and we can schedule something.
Endnotes
(1) System boundaries are analytical tools rather than natural divisions. Climate impacts don’t stop at national borders, and financial crises spread through complex global networks.
(2) Looking at you Germany.
References
Arnscheidt, C. W., Beard, S. J., Hobson, T., Ingram, P., Kemp, L., Mani, L., Marcoci, A., Mbeva, K., hÉigeartaigh, S. Ó., Sandberg, A., Sundaram, L., & Wunderling, N. (2024). Systemic contributions to global catastrophic risk. OSF. https://doi.org/10.31235/osf.io/wcj9e
Centeno, M. A., Nag, M., Patterson, T. S., Shaver, A., & Windawi, A. J. (2015). The Emergence of Global Systemic Risk. Annual Review of Sociology, 41(1), 65–85. https://doi.org/10.1146/annurev-soc-073014-112317
Holder, S. L., Ainsworth, R., Aldrich, D., Bennett, J. S., Feinman, G., Mark, S., Orlandi, G., Preiser-Kapeller, J., Reddish, J., Schoonover, R., Turchin, P., & Hoyer, D. (2024). The Spectrum of (Poly)Crisis: Exploring polycrises of the past to better understand our current and future risks. OSF. https://doi.org/10.31235/osf.io/3bspg
Hoyer, D., Bennett, J. S., Reddish, J., Holder, S., Howard, R., Benam, M., Levine, J., Ludlow, F., Feinman, G., & Turchin, P. (2023). Navigating polycrisis: Long-run socio-cultural factors shape response to changing climate. Philosophical Transactions of the Royal Society B: Biological Sciences, 378(1889), 20220402. https://doi.org/10.1098/rstb.2022.0402
Lawrence, M., Homer-Dixon, T., Janzwood, S., Rockstöm, J., Renn, O., & Donges, J. F. (2024). Global polycrisis: The causal mechanisms of crisis entanglement. Global Sustainability, 7, e6. https://doi.org/10.1017/sus.2024.1
Mark, S., Holder, S., Hoyer, D., Schoonover, R., & Aldrich, D. P. (2023). Understanding Polycrisis: Definitions, Applications, and Responses (SSRN Scholarly Paper No. 4593383). Social Science Research Network. https://doi.org/10.2139/ssrn.4593383
Schweizer, P.-J., & Juhola, S. (2024). Navigating systemic risks: Governance of and for systemic risks. Global Sustainability, 7, e38. https://doi.org/10.1017/sus.2024.30
This is really good. I've had vague versions of these ideas in my mind, but you've articulated and clarified them really well.