Christine Lagarde, President of the ECB, discusses the evolution of risk measurement, the shift to uncertainty, and strategies for layered international cooperation amid technological and geopolitical fragmentation.
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 developing the modern concept of risk, originating from merchant cities like Venice, Genoa, and Florence, where observation and reason transformed the understanding of an opaque future.
Lagarde explained that the traditional risk framework relies on stable underlying structures, which are now shifting due to technological advances and geopolitical fragmentation, leading to genuine uncertainty.
She noted that recent disruptions, such as supply chain fragility, the Ukraine conflict, and rapid AI development, are transforming global economic dynamics and increasing outcomes’ unpredictability.
Lagarde emphasized that models should incorporate scenario analysis and look beyond recent data, drawing parallels with the 1920s, when technological innovation and international fragmentation interacted, culminating in the Great Depression.
She warned that AI’s dependence on global supply chains and data diversity makes it particularly vulnerable to fragmentation, which could erode its growth potential and technological benefits.
To address these challenges, she proposed a layered approach to international cooperation: reform of global institutions, deeper alliances, and minimum cooperation with rivals, including transparency and shared frameworks for critical supply chains and AI governance.
Lagarde concluded by recalling historical examples of risk-sharing, advocating for resilient, layered cooperation to maintain essential connections in a world of systemic uncertainty.
