Our highly interconnected and increasingly complex world, with technological advancements at unprecedented levels, brings new and potentially disrupting risks to our global society. These 21st-century risks are associated with financial-economic instability, environmental changes, and technological breakdowns, such as: asset bubbles in major economies, the failure of climate-change mitigation and adaptation, or massive cyber-attacks. The common characteristic features of these 21st-century risks are their contagious amplification over time and space, i.e., across markets, regions, and networks; and their vast levels of uncertainty, being more pervasive than ever.
Funded by an NWO VICI grant, the 21-st Century Risks Institute aims at fundamentally advancing the modeling and measurement of 21st-century risks. It will address questions such as: (i) What is the right modern risk model to use in a given situation? (ii) What is the corresponding longer-run risk measurement? (iii) and How to evaluate the risk model’s model risk?
Project end-users comprise risk modelers at regulatory authorities, insurance and financial institutions, government agencies, and academics. Results include novel concepts and tools to evaluate the appropriateness of models for 21st-century risks; and innovative methods and techniques to assess and robustly measure modern risks over longer periods of time.