In the News (from Reuters): “The global economy could withstand widespread disruption from a natural disaster or attack by militants for only a week as governments and businesses are not sufficiently prepared to deal with unexpected events, a report by a respected think-tank said.
“Events such as the 2010 volcanic ash cloud, which grounded flights in Europe, Japan’s earthquake and tsunami and Thailand’s floods last year, have showed that key sectors and businesses can be severely affected if disruption to production or transport goes on for more than a week.
“‘One week seems to be the maximum tolerance of the ‘just-in-time’ global economy,’ said the report by Chatham House, the London-based policy institute for international affairs.
“The current fragile state of the world’s economy leaves it particularly vulnerable to unforeseen shocks. Up to 30 percent of developed countries’ gross domestic product could be directly threatened by crises, especially in the manufacturing and tourism sectors, according to the think-tank.
“It is estimated that the 2003 outbreak of severe acute respiratory syndrome (SARS) in Asia cost businesses $60 billion, or about 2 percent of east Asian GDP, the report said.
“After the Japanese tsunami and nuclear crisis in March last year, global industrial production declined by 1.1 percent the following month, according to the World Bank.
“The 2010 volcanic ash cloud cost the European Union 5-10 billion euros and pushed some airlines and travel companies to the verge of bankruptcy.
“Costs can escalate quickly when transport or major production hubs are disrupted for more than a few days, which can in turn threaten food and water supplies and energy and communication networks, the report said.
“In the event of prolonged disruption, some businesses would be forced to cut investment and jobs or consider closing down, leading to a permanent reduction in countries’ growth.
“In general, governments and businesses are under-prepared to respond to high-impact, unpredictable events, with worst-case scenarios rarely factored into their contingency plans.
“It particularly highlighted social media networks as a useful ‘one-stop shop’ for information in the event of a crisis. In the London riots last year, social networks such as Twitter proved invaluable for many people to track the rioters’ movements across the UK capital and take precautions.”
My Comment: These examples of universal dependence and fragility in the global interconnection lead us to the need to get close enough to be able to replace each other if necessary.