Too Big to Fail: Catastrophic Risk after the Deepwater Horizon Disaster

Our response to disasters is too often limited in extent and duration. Typically the onset of an emergency situation makes it possible to galvanize resources and provide immediate relief, whereas earlier proposals for preventive measures could not muster support. And then, with time, the sense of urgency to deal with the crisis fades, and it becomes more difficult to implement reforms that would reduce vulnerability to future catastrophe. As we continue to seek out the disaster’s culprits, it is worth attending to the bigger questions the event provokes.

The first decade of the twenty-first century was punctuated by a series of domestic and international emergencies, each of which challenged extant means of governmental intervention. To list a few of the most visible such events: the terrorist attacks of September 11, 2001, and the anthrax letters that followed; the 2004 tsunami that devastated huge areas of South and Southeast Asia; the flooding of New Orleans in the wake of Hurricane Katrina in 2005; the devastation of Port-au-Prince early in 2010; and ongoing calamities, such as the intensifying AIDS pandemic in the Global South, that continue to provoke calls for urgent intervention.

We have exceeded the capacities of many of the risk management practices developed in the industrial era.

Over the course of the nineteenth and twentieth centuries, governments played an increasing role in the management of collective risks—whether from natural disasters, outbreaks of infectious disease, or economic downturns. However, the increasing complexity and interdependence of systems for sustaining collective well-being have exceeded the capacities of many of the risk management practices initially developed in the industrial era. The challenge to risk management comes both from the difficulty of assessing the probability of unprecedented events within frameworks based on statistical calculation and from the temporal and spatial extent of the consequences of such events. In this context, governments face renewed uncertainty over the appropriate political and technical measures to mitigate the risk of disaster. As the sociologist Ulrich Beck has written, “We live in a world that has to make decisions concerning its future under the conditions of manufactured, self-inflicted insecurity.”1 How, then, should governments respond to this new type of insecurity?

Here we can return to the case of the financial meltdown: the deregulation of the financial industry is widely blamed for inciting the spiral of events that threatened the viability of the global financial system. While it remains to be seen precisely what this crisis will mean for the future role of government in managing catastrophic risk, one possibility is that the event will, retrospectively, be seen as the bookend on a period in which the “privatization of risk”—the effort to replace public institutions with market mechanisms, shifting the burden of risk to those without substantial private wealth—was a dominant policy ideal. What norms are now being proposed in the wake of the apparent failure of deregulation? If there is agreement that a lack of regulation was one cause of the crisis, what principles will guide the enactment of new regulatory measures?

As noted above, a prime target of the recent financial reform bill is a focus on systemic risk. The existence of such systemic risks, most experts and authorities now agree, demands measures above and beyond existing forms of regulation. In the vision of reformers, such regulation should provide critical systems with “resilience” against unexpected shocks. The salience of these terms—systemic risk as the target of regulation and resilience as its goal—can potentially be extended beyond the domain of finance into other arenas of risk, including energy production, large-scale natural disasters, pandemic disease, climate change, and humanitarian emergency.

Andrew Lakoff is associate professor of anthropology, sociology, and communication at the University of Southern California and the editor of Disaster and the Politics of Intervention (SSRC/Columbia University Press, 2010).

  1. 1. Ulrich Beck, World at Risk (Cambridge, UK: Polity Press, 2007), 8. []

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