"In a more complex and tightly coupled economy, rather than absorbing shocks, the
economy can amplify and transmit them: we have seen this as the financial crisis has
evolved. We are now dependent upon many more interactions to maintain our welfare.
More complexity and connectivity means there are many more points where failure or
breakdown can occur. More interdependence between nodes means that the failure of one
node can cause cascading failure across many nodes.De-localisation means that there are
many more places and events that can transmit failure, and major structural stresses can
build at a global scale. There is less local resilience to failure, in that we cannot repair or
replace many critical elements from local resources. The rising speed of processes means
that failure for even a short time can, for example, overwhelm tiny inventories, causing
cascading failure along supply-chains. In addition,the high-speed spreading of such failure
if it were to spread at the speed of financial markets or inventories could outrun our ability
to bring it to a halt or even slow it down. So at first glance, rising complexity should lead to
increased systemic risk."
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