Trial and error for the European Union

The Nobel judges’ decision to award this year’s Peace Prize to the European Union raised some eyebrows. While few would dispute the EU’s effectiveness in preventing the potential for conflict within its borders, the timing of the award was unfortunate, coming a few days before the trial of former Bosnian Serb leader Radovan Karadzic on charges of genocide resumed at The Hague.

The case, irrespective of verdict, is a stark reminder of the inaction displayed by the EU in dealing with the continent’s most serious and lethal war since 1945.

Some would argue that the EU’s impotence remains. Its handling of the current economic crisis is a case in point, with large parts of Europe gripped by protests and unrest that is driven, primarily, by dissent over problems with the single currency. In the past month alone, trouble has flared across Spain - where regional disintegration is threatened - and Greece, whose citizens greeted German chancellor Angela Merkel with echoes of another darker chapter in the continent’s modern history.

To evaluate the problem of modern Greece we should perhaps study one of the country’s ancient legends: the Gordian Knot, which was tied in an intricate way with no ends exposed. Alexander the Great applied his own logic to that particular puzzle, wielding his sword to cut it in two. It may well be that a similar approach is required over the Greece issue.

Germany leads the eurozone as best it can, but the difficulties it faces are revealed in this month’s Risk Innovation supplement. While risk managers there are stoic, a plan B could soon be required. The alternative is a continuation of the chaos and disorder that threatens to go out of control.

Chaos – seen from an academic perspective – is the theme of our cover story, on pages 32-36, as we launch a series of papers that consider theoretical possibilities for risk managers to consider in practical terms.

With the onset of winter soon in Europe, on pages 21-23 we analyse the potential implications of pursuing cheap energy sources, particularly fracking, where environmental dangers loom large. This threatens more headaches for companies already reeling from global compliance issues.

Product recall is another area fraught with potential for litigation. On 28-29, we explain how to deal with it. In the UK, some types of legal action could soon be settled through US-style plea bargaining, under government plans to introduce so-called deferred prosecution agreements. See pages 30-31. It seems lawyers could be busy for some time to come - and not only at The Hague.

Mike Jones, editor, StrategicRISK