Venkat Venkatasubramanian, instructor in the Master of Science in Enterprise Risk Management program at Columbia University’s School of Professional Studies, spoke at a TEDx event to describe the importance of systems engineering in risk management.
Analyzing catastrophes and systemic failures like the global financial crisis and the Deepwater Horizon oil spill, Venkatasubramanian explained that there are “common underlying patterns which are signatures of fragilities.” In complex systems, the nature of interactions is highly nonlinear, so the “behavior of the system is much more than the sum of its parts,” which leads to “fragility and points of weakness that can lead to potential systemic failure.”
Venkatasubramanian noted that “in the past we’ve addressed complexity largely from a reductionist perspective: a top-down paradigm” that breaks down complex systems into simpler parts. However in the 21st century, according to the professor, the main scientific question will be “how do you get from parts to whole,” in reference to how consciousness arises from the biological mechanisms of the brain.
Reductionism can't help solve these types of problems, so Venkatasubramanian argues for an “integrated approach, with systems engineering as a key component” that studies how simpler parts get together to form complex systems. This “will be the dominant scientific paradigm of the 21st century...as we look at challenges such as global warming, or how complex systems fail catastrophically, and how to manage systemic risk in the future.”
Watch Venkatasubramanian’s full talk on systemic risk management.
