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The social construction of systemic risk: Towards an actionable framework for risk governance
The objective of this contributing paper is to highlight how systemic risk, as other risk categories, are socially constructed, and to identify guiding principles for systemic risk governance that could be actionable by and provide entry points for local and national governments, civil society and the private sector particularly in low- and middle-income countries (LMIC), in a way that is relevant to the achievement of the 2030 Agenda for Sustainable Development. This considers preparedness, response and resilience, but more importantly prospective and corrective risk control and reduction strategies and mechanisms. Only when systemic risk is framed in a way that is relevant to the political agendas of LMIC will it be possible to begin a dialogue for its governance.
The paper examines systemic risk within the context of the Sendai Framework for Disaster Risk Reduction (SFDRR) adopted in 2015. The concept of disaster, seen as a severe interruption of the routine functioning of a society, or economy, condenses the risk accumulated in a system or systems and is, therefore, appropriate to frame systemic risk. In particular, the SFDRR encompassed a broader range of hazard events than those previously considered to be components of risk or triggers of disaster , including physical (for examples, earthquakes, floods or drought), biological (for example, virus and other pathogens), technological (for example, a nuclear accident) and social and economic (for example, financial, crime, insolvency or price spikes) hazards.