The worldwide coronavirus outbreak is alarming, but not surprising. Globalization creates systemic risks. As commerce, finance, travel, the internet, and other networks grow and interact, they become more complex and volatile.

Edward Lorenz, the father of chaos theory, has shown that a butterfly swinging its wings over Brazil can cause a tornado in Texas. An inherent result of the increasing integration and complexity of the global economy is that it also suffers from a “butterfly defect”.

Super distributors of globalization goods, such as major airports, are also super distributors of bad effects. The 2008 global financial crisis gave a dramatic example of how contagion could spread from the US to global markets overnight. This also applies to the rapid spread of cyber viruses.

When central banks opened monetary taps after the financial crisis, they solved the immediate problem, which was the lack of cash. Attempts to support the markets now, such as the surprising fall in the US Federal Reserve’s base interest rate by 50 basis points, will have less impact.

This is because markets remain flooded with excess liquidity. With record low interest rates, there is little scope for further reductions. In addition, the moderating effect of consistent interest rate reductions is evident in the low growth rates in Japan, Europe, and the USA. Much more could and should have been done by fiscal policy, but it would also be less effective now – and it could even be inflationary, as quarantines in workers, the closure of factories and disruption of supply chains due to the epidemic.

The retrospection of financial authorities seeking to prevent a recurrence of the recent crisis has come at the expense of building resilience against new threats such as pandemics.

For example, a regulatory policy largely ignores the risks of concentrating finance in a small number of places. Competitors’ headquarters are located in neighboring buildings. As a result, when a pandemic or other event leads to the closure of Wall Street (as in Hurricane Sandy and 9/11) or the City of London, the risk to the global economy increases.

The parallel between complacency that triggered the financial crisis and the lack of preparedness for a pandemic is striking. The rapid growth of profits and incomes in the decades before the financial crisis, and the short-term nature of other crises, have fueled the dangerous belief that the threat of a new Great Depression has been overcome. As a result, new systemic risks escalated.

In health, the increase in life expectancy and the success of preventing the recurrence of the devastating 1918 influenza pandemic, which infected about a third of the world’s population and killed 50 million people, created a false sense of security. But the world is now more interdependent. China is responsible for almost one-fifth of world GDP, an integral part of global supply chains, and tourists spend over 260 billion USD annually.

Globalization and the intensification of trade and travel within countries and beyond national borders have delivered billions of poverty but has also spread infectious diseases. The epicenter of Covid-19, Wuhan, is a typical middle Chinese city. In 30 years, its population has grown from 2 million to over 11 million people, with average incomes rising. As in other swell cities, poor hygiene and poor enforcement go hand in hand with the close coexistence of humans and animals, not far from airports, from which the virus can spread anywhere in 36 hours.

With increasing threats, governments are turning their backs on the international system. The World Health Organization is devoid of resources and authority, not least the fault of the US and other rich countries. In the meantime, Covid-19 has struck at a time when national public health systems are under tremendous strain, with their capacity undermined by austerity and privatization. The UK National Health Service has also been plagued by chronic staffing shortages exacerbated by the wrong immigration policy.

Pandemics, unlike other global risks, can occur anywhere. In the case of threats posed by financial systems, climate change, antibiotic resistance or cyberspace, several actors can reduce the risk. This is not the case in pandemics where the capacity for surveillance and intervention to isolate outbreaks is vital everywhere, especially in the poorest countries. Global efforts are needed to develop vaccines. Sharing information and resources is essential.

The high walls will not stop the pandemics or any global threat. Our integrated and complex systems are as powerful as their weakest units. Pandemics are the most serious threat to the world economy and our lives. We need to give them the attention and resources they deserve. What is being tested is our will to cooperate and the stake cannot be greater.