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Coming to grips with polycrisis

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All disasters have business implications

Mother Earth is populated by perhaps the most intelligent creatures in the solar system – human beings. But the mess the world finds itself in today puts a big question mark on our wisdom. We are getting besieged by one catastrophe after another, knowing all too well that the disasters are of our own making. It is not that we have not been challenged by formidable threats earlier. But the way interlinked disasters or polycrises have threatened the planet over the last four decades demands serious introspection. A polycrisis can emerge because of economic and non-economic causes or a combination of both. Let’s see how this pans out. We know that the Covid pandemic devoured millions of lives across the world, not sparing even the most affluent and advanced countries. Even as the deadly virus seemed to be on its way out, it has once again flared up in China, the country of its origin. The already crippled global economy is trembling with fear as supply chains of several industrial products originate in giant Chinese factories. Unprecedented floods in Pakistan have caused massive devastation in the country which is now seeking succour from all sources including international financial institutions. Pakistan needs time and good governance to find its economic moorings. Beset by political instability and a feeble democratic firmament, this is a tough call for the country. Driven to desperation by rampant corruption in the ruling dispensation, severe inflation and acute shortage of essential goods, Sri Lankans staged agitations for nine months in 2022. Its president fled the nation; outraged crowds put his official residence on fire. The island nation’s economy lies in ruins. Widespread wildfires have inflicted incalculable damage in different countries across continents, vitiating the environment and ruining large tracts of agricultural land. The USA’s largest river, the Mississippi, is running dry. The water level of the river, which provides drinking water to 20 million people, is at its lowest level in a decade. Several other regions in the world’s richest country have fallen prey to an on-going mega drought. There is a debate about the cause but many experts blame climate change for calamity.

"Crises of all kinds have business implications. Managers need to cultivate a comprehensive and integrated understanding of global events. Polycrises occur because of multiple reasons. Therefore, solutions should also be multi-pronged."

In Europe, Russia’s so-called military operations against Ukraine began on February 24. The hostilities have escalated into a full-fledged war, raising a threat of Third World War. As a result, the world is facing a rise in prices of petroleum products and shortage of food grains, particularly wheat. Retaliating to the US and NATO (North Atlantic Treaty Organisation) support to Ukraine, Russia has choked its gas pipelines to Europe whose industries and cities are facing bleak times in the harsh winters. Inflation has worsened, recession is at the doorstep and business is suffering. Some of the issues enumerated above have adversely impacted foreign direct investment (FDI) commitments to Nepal. Countries are busy fending for themselves in this hour of crisis. China, the largest investor in Nepal so far, too has curtailed its FDI pledges. Federal and provincial elections were held in the country on November 20 but political parties have yet to come to terms with government formation. Political instability and our convoluted FDI rules have dissuaded potential investors from going ahead. Iran is facing a different crisis altogether. Its morality police cracked down on women who are opposing the compulsory Islamic dress code. The anti-hijab movement by women, girls and civil society have entered its third month. As per United Nations data, 300 agitators, including 40 children, have been killed and 14,000 have been arrested in the clergy-dominated oil-rich country. This will make it all the more difficult for Iran to shake off the sanctions imposed by the US and its allies any time soon. It is feared that instability in Iran may worsen in view of the clergy’s stranglehold over the regime. Business has received more than its share of knocks. The citizenry is feeling the pinch of a contracting economy. Add to this dire situation, regular missile launches by authoritarian North Korea across Japan. Its inter-continental ballistic missiles are capable of hitting the US mainland. North Korea has fired more than 50 missiles in October and November alone. This has provoked pacifist Japan to strengthen its political muscle. Though Japan is the world’s third largest economy, its resources are not infinite. Higher militarisation is bound to affect Japan’s economy and, as a consequence, the world economy and business. So, we have seen how crises in diverse domains and geographies interact and cause damage far more lethal than the sum of those crises if they occurred in isolation. Crises of all kinds have business implications. Managers need to cultivate a comprehensive and integrated understanding of global events. Polycrises occur because of multiple reasons. Therefore, solutions should also be multi-pronged. READ ALSO: