Tag Archives: risk

cyberattacks and superflares

Need some new things to worry about? Look no further!

  1. a catastrophic cyberattack on the U.S. electric infrastructure

In this New York Times bestselling investigation, Ted Koppel reveals that a major cyberattack on America’s power grid is not only possible but likely, that it would be devastating, and that the United States is shockingly unprepared.
 
Imagine a blackout lasting not days, but weeks or months. Tens of millions of people over several states are affected. For those without access to a generator, there is no running water, no sewage, no refrigeration or light. Food and medical supplies are dwindling. Devices we rely on have gone dark. Banks no longer function, looting is widespread, and law and order are being tested as never before.

It isn’t just a scenario. A well-designed attack on just one of the nation’s three electric power grids could cripple much of our infrastructure—and in the age of cyberwarfare, a laptop has become the only necessary weapon. Several nations hostile to the United States could launch such an assault at any time. In fact, as a former chief scientist of the NSA reveals, China and Russia have already penetrated the grid. And a cybersecurity advisor to President Obama believes that independent actors—from “hacktivists” to terrorists—have the capability as well. “It’s not a question of if,” says Centcom Commander General Lloyd Austin, “it’s a question of when.”

2. in case people are not enough to worry about, the Sun could turn on us.

Astrophysicists have discovered a stellar “superflare” on a star observed by NASA’s Kepler space telescope with wave patterns similar to those that have been observed in the Sun’s solar flares. (Superflares are flares that are thousands of times more powerful than those ever recorded on the Sun, and are frequently observed on some stars.)

The scientists found the evidence in the star KIC9655129 in the Milky Way. They suggest there are similarities between the superflare on KIC9655129 and the Sun’s solar flares, so the underlying physics of the flares might be the same…

Typical solar flares can have energies equivalent to a 100 million megaton bombs, but a superflare on our Sun could release energy equivalent to a billion megaton bombs.

The Bank of England on Climate Change

The Bank of England believes in climate change.

“The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security.”

But he said because the cost would fall on future generations there was little impetus on the current one to fix it: “In other words, once climate change becomes a defining issue for financial stability, it may already be too late.”

value of levees

This study seems to have had trouble finding any measurable economic value of levees, which is interesting.

The value of levee protection to commercial properties

Ecological Economics

Volume 119, November 2015, Pages 181–188

Levees have historically been a dominant approach to riverine flood control in the United States. Recent investigations have found many levees around the country are in substandard condition, however, and some communities are moving to upgrade and repair their levee systems. Little empirical work has examined how increasing flood protection from levees is valued. We present estimates of the capitalization of upgraded levee protection into commercial property prices in St. Louis County, Missouri. By using controls for surrounding land cover and coarsened exact matching to ensure close distribution between treatment and control on surrounding land cover, we attempt to isolate the price effect of the levee from agglomeration effects that may also be operating. We find that commercial properties protected by a 500-year levee do not have a statistically significant price discount as compared with properties not in a floodplain. We find the selling price of properties with levee protection to be higher (although also insignificant in many specifications) than those in a floodplain without levee protection.

environmentalists and poor communication

Here a marketing person criticizes the communication strategies of scientists and environmentalists.

our side likes complexity. And in communications, only simplicity works. Our side doesn’t like simplicity because they view it as manipulative or not capturing the truth. Without simplicity, people don’t remember anything. Another thing: The research shows and common sense tells you that that this is a really tough, depressing issue to get your head around. So they really can’t do it unless they know what can be done about it. And we don’t put forward a clear solution. Go out on the street and ask people, “What can we do about climate change?” They won’t know. So we have to make this a lot simpler…

Public interest types, across the board — we think because we’ve said something, know something, or done something, that everybody else knows it. We don’t realize the bubble we live in.  It’s only when you’ve said something so many times that you’re utterly and completely sick of it that someone has even heard it. Marketers understand this. Scientists and people from the humanities less so — they get bored by it. “We already had our op-ed in the New York Times! The world knows!” But it takes so much more repetition than that.

I mean, as a country, even the intelligentsia has not fully realized that we are in a planetary emergency and we are running rapidly out of time.

Actually, I get criticized by my fellow engineers almost daily for oversimplifying complex issues and for repeating myself to the point of annoyance. It turns out, maybe I have some communication instincts after all!

Lloyds of London is worried about food

Lloyds of London says we should be worried about the food supply. And yes, they have insurance for that.

Global demand for food is on the rise, driven by unprecedented growth in the world’s population and widespread shifts in consumption patterns as countries develop. The Food and Agriculture Organization (FAO) projects that global agricultural production will need to more than double by 2050 to close the gap between food supply and demand. As this chronic pressure increases, the food system is becoming increasingly vulnerable to acute shocks…

Sudden disruptions to the supply chain could reduce the global food supply and trigger a spike in food prices, leading to substantial knock-on effects for businesses and societies. The food system’s existing vulnerability to systemic shocks is being exacerbated by factors such as climate change, water stress, ongoing globalisation, and heightening political instability…

A shock to the global food supply could trigger significant claims across multiple classes of insurance, including (but not limited to) terrorism and political violence, political risk, business interruption, marine and aviation, agriculture, environmental liability, and product
liability and recall. These losses could be compounded by the potential for a food system shock to last for many years; and the ability of insurers to pay claims quickly is expected to be an important factor in post-shock recovery. More broadly, the insurance industry may also be affected by impacts on investment income and the global regulatory and business environment.

The Pope vs. the Unabomber

Which of these quotes are from the pope’s encyclical, and which are from the Unabomber?Answers at the bottom.

I. The Industrial Revolution and its consequences have been a disaster for the human race. They have greatly increased the life-expectancy of those of us who live in “advanced” countries, but they have destabilized society, have made life unfulfilling, have subjected
human beings to indignities, have led to widespread psychological suffering (in the Third World to physical suffering as well) and have inflicted severe damage on the natural world. The continued development of technology will worsen the situation. It will certainly subject human beings to greater indignities and inflict greater damage on the natural world, it will probably lead to greater social disruption and psychological suffering, and it may lead to increased physical suffering even in “advanced” countries.

II. There is also the fact that people no longer seem to believe in a happy future; they no longer have blind trust in a better tomorrow based on the present state of the world and our technical abilities. There is a growing awareness that scientific and technological progress cannot be equated with the progress of humanity and history, a growing sense that the way to a better future lies elsewhere. This is not to reject the possibilities which technology continues to offer us. But humanity has changed profoundly, and the accumulation of constant novelties exalts a superficiality which pulls us in one direction. It becomes difficult to pause and recover depth in life. If architecture reflects the spirit of an age, our megastructures and drab apartment blocks express the spirit of globalized technology, where a constant flood of new products coexists with a tedious monotony. Let us refuse to resign ourselves to this, and continue to wonder about the purpose and meaning of everything. Otherwise we would simply legitimate the present situation and need new forms of escapism to help us endure the emptiness.

III. You can’t get rid of the “bad” parts of technology and retain only the “good” parts. Take modern medicine, for example. Progress in medical science depends on progress in chemistry, physics, biology, computer science and other fields. Advanced medical treatments require expensive, high-tech equipment that can be made available only by a technologically progressive, economically rich society. Clearly you can’t have much progress in medicine without the whole technological system and everything that goes with it.

IV. Yet it must also be recognized that nuclear energy, biotechnology, information technology, knowledge of our DNA, and many other abilities which we have acquired, have given us tremendous power. More precisely, they have given those with the knowledge, and especially the economic resources to use them, an impressive dominance over the whole of humanity and the entire world. Never has humanity had such power over itself, yet nothing ensures that it will be used wisely, particularly when we consider how it is currently being used. We need but think of the nuclear bombs dropped in the middle of the twentieth century, or the array of technology which Nazism, Communism and other totalitarian regimes have employed to kill millions of people, to say nothing of the increasingly deadly arsenal of weapons available for modern warfare. In whose hands does all this power lie, or will it eventually end up? It is extremely risky for a small part of humanity to have it…There is a tendency to believe that every increase in power means “an increase of ‘progress’ itself”, an advance in “security, usefulness, welfare and vigour; …an assimilation of new values into the stream of culture”,[83] as if reality, goodness and truth automatically flow from technological and economic power as such. The fact is that “contemporary man has not been trained to use power well”,[84] because our immense technological development has not been accompanied by a development in human responsibility, values and conscience. Each age tends to have only a meagre awareness of its own limitations. It is possible that we do not grasp the gravity of the challenges now before us. “The risk is growing day by day that man will not use his power as he should”; in effect, “power is never considered in terms of the responsibility of choice which is inherent in freedom” since its “only norms are taken from alleged necessity, from either utility or security”.[85] But human beings are not completely autonomous. Our freedom fades when it is handed over to the blind forces of the unconscious, of immediate needs, of self-interest, and of violence. In this sense, we stand naked and exposed in the face of our ever-increasing power, lacking the wherewithal to control it. We have certain superficial mechanisms, but we cannot claim to have a sound ethics, a culture and spirituality genuinely capable of setting limits and teaching clear-minded self-restraint.

Answer: I. The Unabomber. II. The Pope. III. The Unabomber. IV. The Pope

Okay, maybe that was sort of obvious. To be fair to the Pope, I picked a couple of the least crazy paragraphs from the Unabomber. This was just meant as a fun, light-hearted exercise. And no, I am not suggesting the Pope is the real Unabomber.

climate change impact reports

Here are a number of reports on climate change impacts on U.S. cities:

The common thread is that extreme weather is going to be more frequent and more damaging, and we need to be ready.

risk and investing

This blog is about looking at possible futures, not necessarily profiting from them. But of course, who doesn’t want to do that if they can? It’s not just about short-term profit, it’s about building a nest egg which is your personal resilience against whatever events the future holds. A nest egg is also about your personal choice to defer some happiness now for the possibility of greater happiness later.

This book looks promising to me. The author breaks risks into “inflation, deflation, confiscation, and devastation”. I haven’t read the book, but presumably he offers portfolio suggestions to deal with these risks.

Since I’m on personal finance today, here is a grab bag of other related topics and links.

One thing everyone can and should do right away is minimize how much the financial industry steals from us in the form of fees. Index funds are one way to do this. The case to go all-index is incredibly strong, but in case you don’t want to take my word for it, Vanguard makes the case every year. If you are the type to dig into numbers yourself, S&P has a free online data set here. Finally, this Economist column mentions a number of smaller startup companies that are providing some competition to the big banks and their ridiculous fees. Among them is TransferWise which says it allows people to transfer money abroad much cheaper than they have been able to in the past. I haven’t tried it yet.