View source for Complex problem

''Modelling - relationships - non-linear - contrasted with complicated.''

Contrasted with merely complicated problems, complex problems are inherently enormously more difficult to analyse and manage.

Complex systems and problems consist of both:

*A large number of interacting elements; and
*Non-linear and unpredictable relationships between the interacting elements, making the system impossible to model reliably using traditional techniques.


For example, climate change is generally considered to be a complex problem (and not merely a complicated one).


:<span style="color:#4B0082">'''''Example - Shortcomings of climate change model include linear estimation'''''</span>

:"A shortcoming of our model build so far is that some economic impacts are linearly estimated: non-linearities are not adequately captured.

:...  it’s not possible to estimate non-linear relationships between temperature increases and economic activity for most channels, especially for temperature increases that have not been observed yet.

:We use multiplicative factors of 5 and 10 to simulate the increasing severity of outcomes from nonlinearities. 

:Importantly, the framework does not consider tipping points, events such as the partial disintegration of ice sheets, biosphere collapses or permafrost loss, that pose a threat of abrupt and irreversible climate change... 

:... other research suggests that if tipping points do happen, there could be an x8 increase in climate change associated economic damages."

:''Swiss Re Institute - The economics of climate change: no action not an option - April 2021''


== See also ==
*[[Agency problem]]
* [[Climate change]]
*[[Complex ]]
* [[Linear]]
* [[Model]]
* [[Non-linear]]
* [[Procyclical]]
* [[Tipping point]]
*[[Wicked problem]]

[[Category:Financial_products_and_markets]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_reporting]]
[[Category:Risk_frameworks]]
[[Category:The_business_context]]