Grasping the Global Risk Relationship

By Sherry Harowitz

Be honest. When the newscaster starts talking about clan rivalries in a remote part of the world, you tune out. If you’re browsing news online, you’re not likely to click on that story

Americans have learned to look beyond their borders a bit since 9-11 in recognition of the international nature of the terrorist threat, and the financial crisis has again highlighted the interconnectedness of systems around the world. Still, I’m not convinced that we truly grasp the breadth and depth of this risk relationship and its implications.

Last year’s prescient World Economic Forum global risk network report, issued before the full extent of the economic turmoil was clear, strove to drive home this point. It noted that nearly every business risk in today’s global economy is contingent on interrelated factors that span the planet and defy easy mitigation by any one company or country. As an example, it cited how global outsourcing to less developed markets has increased economic interconnectedness and made enterprise risk more difficult to manage

Outsourced business processes for multinationals are often in locations where governments are less able or less willing to help companies prevent or respond to problems. For example, moving manufacturing to China has left companies reputationally and economically vulnerable to problems, such as the lead in toys and contamination in food for pets and people.

If any more reminders of this global risk relationship were needed, consider the newest concern—the potential for homegrown terrorists in the immigrant Somali communities around the United States. At a congressional hearing on the issue, J. Philip Mudd, of the FBI, explained, “This is an example of globalization on a different front.

The problem has roots in Somalia’s descent into anarchy in the 1990s, which led tens of thousands of Somali refugees to flee to the United States. Jihad has become an issue as the radical al Shibaab, which has ties to al Qaeda, has used the Ethiopian invasion of Somalia as a rallying cry.

“We saw a change in the American community when the Ethiopians invaded,” said Mudd. “So global issues, issues in the horn of Africa, having an immediate impact, a ripple effect on communities in Columbus, Ohio; San Diego; and Minneapolis, it’s a real example of what globalization means,” he said.

While everyone agrees that the Somali community at large does not embrace a radical agenda, a member of that community, addressing the committee, warned against underestimating the problem, saying that the 20 kids known to have been radicalized are “the tip of the iceberg.

This new threat exemplifies how events that seem inconsequential and distant at first can have significant domestic ramifications. In this type of environment, it’s best to view the threat picture from the perspective of Google Earth—zooming in and out constantly as a reminder that global and local events are interlinked.



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