Technology, fragmentation, and the new uncertainty

Christine Lagarde, President of the European Central Bank, delivered the 2026 Annual Global Risk Lecture in Bologna, Italy, organized by Johns Hopkins University, in honor of Robert Mundell.

She highlighted Italy’s historical role in the development of risk concepts, from maritime trade to modern finance, and discussed how the approach of measuring risk is reaching its limits in a world of genuine uncertainty.

Lagarde explained that the stability of past systems allowed risk measurement, but recent shocks—such as supply chain fragility, geopolitical conflicts, and technological shifts—are transforming the global structure, moving into a new era of uncertainty.

She emphasized the importance of adapting models through scenario analysis and looking beyond recent data, drawing parallels with the 1920s, when technological innovation coincided with international fragmentation, leading to economic collapse.

Lagarde detailed how AI’s dependence on global trade, market scale, and diverse data makes fragmentation particularly damaging today, unlike in the past.

She proposed a layered approach to international cooperation: reform of existing institutions, deeper alliance cooperation, and minimum cooperation with rivals, including transparency and shared frameworks for managing risks.

Concluding, she recalled historical risk-sharing mechanisms like insurance and stressed that resilient, layered cooperation remains the most effective strategy to manage systemic uncertainty in a fragmented world.