Interview with Charles O’Malley, Senior Advisor, UNDP

Charles O’Malley is a Senior Advisor at the United Nations Development Programme. He offers a systemic perspective on how the pandemic could trigger a global change in our approach to governance and climate change.

‘Work together to mitigate systemic risks’

Our understanding of systemic risk has been changed by the pandemic.

Historically, systemic risk was seen as something that’s outside of your organisational control – so you take it as a given, not something that you can influence.

Covid has shown companies that strategy and forecasting needs to take systemic risk much more seriously. Financial and strategic models didn’t consider the possibility that parts of the economy were going to be shut down overnight. These sorts of scenarios are going to need to be taken seriously from now on.

But just as importantly, I hope that leaders of large organisations will begin to take more seriously the need to work together to mitigate systemic risks – and here I am thinking particularly about climate related risks and all of the knock-on risks on supply chains, business interruption and so on – all the way through to social and economic collapse.

If climate or biodiversity challenges don’t get fixed then everyone’s going down. So it’s in the interests of all major organisations to make sure these problems are treated with the urgency they deserve.

‘Government really does have a role to play’

Another learning from Covid is that government power can be exercised in quite radical ways. Whoever expected governments to suddenly start picking up the salaries of a vast slice of the private sector for a year and a half?

Hopefully this will lead to an improved understanding from companies that government really does have a role to play.

The default model has been the belief that markets are going to fix everything through self-regulation. Covid demonstrates the limitations of that thinking, specifically in relation to systemic risks.

Companies need to be advocating better and more ambitious political leadership. Instead of saying ‘let us self-regulate’, they should say, ‘we need better regulation to address the systemic risks’.

‘It’s about shifting the Overton window’

The scale of the government’s intervention in the economy would have been unthinkable before Covid.

Governments have been dragging their feet on climate and other environmental challenges for decades. But seeing how the government responded to Covid gave me a lot of optimism for our ability, eventually, to mobilise to address these challenges.

It was extraordinary to see a conservative Chancellor of the Exchequer picking up peoples’ salaries through the furlough scheme. Completely rewriting the economic rulebook overnight.

So it’s massively opened up the political space – the Overton window. This is the scope for acceptable political debate – what you can and can’t say within a political context. Most politics happen within this window.

If you really want political change – fundamental systemic transformational change – it’s all about shifting the Overton window.

Covid will have profound long-term effects on what’s possible to discuss. It will allow politicians to think more creatively and be less fearful of discussing radical solutions.

‘For radical change we need radical failure’

We need this radical policymaking – it’s the only way we’re going to survive as a species.

The nature of reality is that everything is connected, whether we look at it physically, biologically, or spiritually. Systems Thinking is all about this interconnectedness.

So break-down and break-through are not alternative paths. Things getting worse and things getting better are part of the same process.

For radical change we need radical failure. Because whenever things are apparently working fine the incentives for change simply aren’t there.

Most of the worlds’ problems are chronic. And making political arguments is always a lot harder with a chronic issue than a critical one. Covid has been a critical challenge. Unfortunately, for real change, we will probably have to wait until our chronic problems become seen to be critical ones – that’s only a matter of time.

But as a result of Covid, the acceptance of radically different policy solutions has definitely increased, and that makes me more optimistic.

‘More divergence between countries’

What’s interesting about Covid is that while we all experienced a similar shock, different economic and social policy choices were made in different countries. I’m curious to see how the effects of those choices are going to pan out over the next three to five years.

We will probably also see increasing divergence between countries in terms of how they approach their sustainability challenges. The centre of gravity in some is already much more progressive in their approach to sustainability, climate change and energy. Those countries who are still in denial are likely to pay a heavy price later on.

‘Everything’s radically interconnected’

When economic and social systems break down, there are multiple forces which push towards greater separation and division. But, at the same time, that kind of breakdown also creates another impetus, which is towards greater connection and collaboration. I think we have seen both of these forces with Covid.

The best way to tackle systemic challenges is through trying to harness collective intelligence, using approaches that are much more participatory, utilising co-creation, collaboration and collective innovation. It’s already happening within the private sector, but it’s less well adopted in the political space. Hopefully the experience of Covid will encourage more of these ways of working.

Ultimately our major environmental, social, economic and political problems aren’t understandable by any one individual. Because everything’s radically interconnected, you can never predict the outcome of any individual action or intervention. You have to try things and see what happens.

‘The rules are incredibly easy to rewrite’

Another lesson from Covid is that we need to culturally slow down. When you operate at high speed, you tend to be very reactive. It makes it very difficult to do anything different. You’re not pausing to learn.

And a lot of our behaviours are locked in place by institutional incentives. These reinforce certain forms of behaviour.

Covid forced a lot of the world’s workforce to slow down. Giving them more space and time for reflection. And it will shift their expectation as voters, in terms of what they might expect of government or see as possible.

The question now is how do we translate these personal insights into institutional change? It’s all about changing the rules of the game.

What we’ve seen through Covid, is that the rules are incredibly easy to rewrite – if you have the need and political will.

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