VUCA - We live in a complex world which may lead to metacrisis

 from Art Berman @aeberman12

While rare events have low probability, the risk may be high given the strong impact on returns. This is especially case for systemic events that will affect many assets or impact many asset classes.  To think about large systemic risks, an investor should start with the key assumption that the world is complex system where a shock in one part of the system will spillover to other portions of the global economy. Crises occur because markets are connected, and they become more connected if there is a singular event that will change overall market expectations. An increase in global risk will impact all markets. A large shock can work through one market and then cause asset allocation adjustments to a portfolio.

Our greatest risks are not a single crisis in a specific market sector but a meta-crisis that crosses over to other parts of the global system. Our concern should be with meta-crises where a dislocation in, for example, geopolitics will impact the energy markets which will then affect supply chains, which will contribute to a global slowdown which will then impact society expectations which can then shock the environment. We have been lucky in that large geopolitical crises in Ukraine or the Middle East have not yet spilled over to other portions of the global system. 

The current global economy has shown significant resilience. Attacks on shipping in the Red Sea has disrupted traffic but it has not been felt yet in global trend numbers. Sanctions have been placed on Russian energy, yet trade routes have been quickly adjusted. Perhaps we are not giving the resilience of global economy enough respect, yet the threat to a meta-crisis is real.