Risk expert Richard Bookstaber warns of linked long term threats

In short: Risk expert Richard Bookstaber says several slow-building forces, including AI, are connected and could strain the economy over time.

What's going on

Richard Bookstaber, a long time risk management leader and chief risk officer at Fabric, is warning about what he calls “slow-motion risks.” These are problems that build over years instead of arriving as a sudden shock, like a market crash in a single week.

He points to climate change, demographic shifts (changes in population size and age), deglobalization (countries relying less on global trade), and artificial intelligence. He argues they can look like separate issues, but they interact like gears in the same machine. When one gear turns, it can force the others to move too.

Bookstaber’s example is deglobalization. If companies rebuild supply chains closer to home, they may need new factories and new logistics, which can raise costs. At the same time, climate pressures can push energy systems away from fossil fuels and put more stress on some regions. Demographic changes and wider use of AI can add more pressure on jobs, growth, and public budgets, depending on how fast these shifts happen.

He also flags nearer-term risks. He says credit is tightening for small businesses, which can slow hiring and spending. He warns that inflation staying high can limit what the US Federal Reserve can do, like trying to press the brake and the gas at the same time. He also notes that “high-yield” bond pricing (riskier company debt) may be too optimistic, which could mean investors are not charging enough for default risk.

What to watch

Bookstaber’s main message is about buildup. Watch for small, steady changes in borrowing, prices, and trade that can add up, even if there is no single headline event.

Source: NYTimes