This chapter describes the ERM process.

The central idea of this chapter is value pluralism. This third possibility assumes that multiple co-existing economic systems, forms of economic growth, and models of human development will persist into the future. Within this pluralistic approach, I emphasize three interconnected goals: alleviating poverty, more fairly distributing prosperity, and enabling the pursuit and achievement of human capabilities. This possibility aims to mitigate the worst effects of capitalism, harvest the benefits of prosperity, and distribute wealth in ways that are meaningful to people’s lives. I argue that these three goals should be at the forefront of creating the world of tomorrow.

The United Nations and its bodies have ‘opened up’ to a broad range of non-state actors over the last three decades, including for-profit actors and their representatives. The shift is reflected in the UN’s sustainable development goals and the Global Compact, emphasizing public-private partnerships; in greater participation of corporations at treaty conferences; in trade group roles as observers at organizations; and in multi-stakeholder projects. Yet international organizations have generally not developed robust responses to legitimacy concerns about businesses becoming closely involved in lawmaking and governance projects. These concerns focus on interest group capture, entrenchment of western economic elites, creeping privatization, and erasure of public deliberation. Indeed, the participation of for-profit actors and their representatives has largely been a ‘silent revolution’: under-heralded and under-examined. This chapter argues that responses to for-profit roles in the work of international organizations tend to express one of two logics, not yet reconciled. The logic of ‘representation’ values public authority, interest representation, transparency, and accountability. The logic of ‘expedience’ values pragmatic problem-solving, efficiency, knowledge, and progress. Each has different priorities and blind spots, encompasses an array of theoretical approaches, and would push the international system in a different direction.

Lives are comprised of the stories we tell. At the beginning of this chapter, I argue for the importance of understanding how narratives not only mirror but also shape our understanding of ourselves and others. I draw on classic and contemporary research in social and cultural psychology to show how narratives are remembered and transformed over time and between people. I also discuss master narratives – dominant stories that help create shared understanding and cohesion in societies. I then introduce two dominant master narratives concerning economic development. The first highlights growing inequality and its detrimental impact on societies. The second emphasizes that, despite the vices of capitalism, economic growth has led to increased prosperity. I situate these narratives in the contemporary political and academic zeitgeist, where inequality dominates. I end the chapter by discussing the moral imperative to alleviate global poverty, create fairer societies, and pursue human capabilities as a guide for rethinking economic development.

I start this chapter by briefly describing three possibilities for the future of capitalism and economic inequality. The first is that the rich continue to get richer; the second is a polar opposite approach that seeks to create economic equality at all costs; and the third involves the possibility of multiple forms of capitalism. Each possibility is explored in the next three chapters. In the remainder of this chapter, I explain why it is important to chart possibilities: doing so helps us understand potential paths forward and can meaningfully guide us toward the forms most congruent with our wishes. This world-making approach to psychology draws on theorizing around the psychology of imagination, which I develop here. I also return to value pluralism to help frame our understanding of the three futures that comprise Part III.

This chapter sets the scene for comprehending the vices of capitalism. I discuss contemporary US politics and use these discussions as a springboard to explore moral psychology – particularly the psychology of fairness – and the theory of relative deprivation. Relative deprivation focuses our attention on the social comparisons people make, and whether, through making these comparisons, they feel treated fairly or unfairly. I trace the development of the theory from its original basis in sociology to its application throughout the social sciences, situating it within a globalized, interconnected, and technologically advanced world. Social comparisons are no longer made only with immediate others but also with imagined others across the globe, leading to varied appraisals of what is and is not fair. The consequences of these judgments are introduced at the end of the chapter.

Why do democracies backslide into dictatorships? Exploring this question is the central contribution of this chapter. I start by discussing how citizens in Colombia voted against the 2016 peace deal and how citizens in the United Kingdom voted to leave the European Union. Months later, Donald Trump was elected President of the United States for the first time. I take these events as a point of departure and then provide a model to explain the psychological appeal of populism. This focuses on the distinction between “them” and “us,” how this classic in-group/out-group dynamic intersects with the psychology of status hierarchies, and ultimately how people feel about their group’s position in relation to others. I then offer a broader psychological model – “the wonderland model” – to explain how democracies, such as the United States, can re-elect authoritarian leaders and then turn into dictatorships.

This chapter describes how to fit data to a distribution or a model, how to classify using data, and the issues of uncertainty and credibility.

This comprehensive yet accessible guide to enterprise risk management (ERM) for financial institutions contains all the tools needed to build and maintain an ERM framework. It discusses the internal and external contexts within which risk management must be carried out, and it covers a range of qualitative and quantitative techniques that can be used to identify, model and measure risks. This third edition has been thoroughly revised and updated to reflect new regulations and legislation. It includes additional detail on machine learning, a new section on vine copulas and significantly expanded information on sustainability. A range of new case studies includes Theranos and FTX.

Suitable as a course book or for self-study, this book forms part of the core reading for the Institute and Faculty of Actuaries’ examination in ERM.

This chapter describes the main stakeholders of financial institutions.

Decisions by international organizations typically neglect the interests of non-human animals. The chapter investigates whether and how animal interests can and should be brought to bear in the decision-making of IOs. It works through cognate concepts ranging from animal citizenship over animal representation to animal consideration and animal deliberation. The physical limits of human-animal communication foreclose responsiveness and accountability to the animals themselves. The chapter therefore prefers the term animal ‘consideration’ rather than animal ‘representation’. After this groundwork, the chapter briefly canvasses some proposals for bringing animal interests to bear in in democratic political processes. With due modifications, some schemes could be applied to the work of international organizations. These range from animal ombudspersons, strengthening the voice of pro-animal CSOs through compulsory notice-and-comment procedures and extended speaking rights in the organizations, mandatory animal welfare impact assessment, and more. All attempts for upstepping the existing rudimentary schemes in the direction of a better and stronger consideration of animal interests in human politics will require deep cultural and social change, to a large extent beyond the purview of the law.

This chapter describes the main types of financial institutions analysed in the book.