An integrated algorithm for managing economic catastrophe risks: from exogenous shocks to endogenous vulnerabilities
DOI:
https://doi.org/10.5281/zenodo.19238558Keywords:
integrated risk management, economic disasters, systemic risk, resilience, vulnerability, trade fragmentation, economic risk managementAbstract
Contemporary economic disasters are increasingly shaped by the accumulation of endogenous risks rather than isolated exogenous shocks. While natural disasters, financial crises, and trade disruptions continue to act as triggers, their economic consequences are largely determined by pre-existing structural conditions that gradually develop and crack under pressure. This paper develops an integrated algorithm for managing economic disaster risks that conceptualizes disaster risk as a dynamic, systemic process. Starting from a four-layer framework – hazards, exposure, vulnerability, and resilience – the paper synthesizes insights from the disaster economics, systemic risk, and trade fragmentation literature to propose a transferable analytical framework applicable across economic domains. The framework explicitly includes temporal dynamics and governance quality as horizontal elements that shape the transmission, amplification, and mitigation of shocks. Instead of deterministic crisis prediction, the proposed algorithm enables systematic assessment and continuous monitoring of disaster risk by identifying slowly growing fault lines, interaction effects, and potential threshold points. The paper is conceived as a conceptual review and methodological synthesis, focusing on how integrated risk assessment can inform proactive economic risk management. It highlights how adaptive public policy instruments, technological capacities, diversification strategies, and institutional coordination function as buffers that reduce the likelihood and intensity of catastrophic outcomes. By shifting the analytical focus from reactive crisis management to structured forecasting and resilience-oriented policy design, the proposed framework contributes to current debates on economic stability in an increasingly fragmented global economy. The integrated algorithm provides a flexible basis for future empirical modeling and sector-specific applications, offering a common analytical language for assessing economic disaster risk across regions and sectors. Although developed in an economic context, the proposed algorithm is structurally transferable to other complex systems characterized by interactions of hazard, exposure, vulnerability, and adaptive capacity, thus representing a flexible basis for interdisciplinary risk assessment.
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