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184 Cha pte r Ni ne

and feedback loops among economic, environmental, and social indicators
(see Figure 9.5). T21’s graphical human interface enables modelers to perform
repeated iterations in order to explore the effects of key assumptions. Based
on a powerful and flexible approach called system dynamics, the T21 modeling
system has been applied over the last 20 years in dozens of countries around
the world. In July 2007, Millennium Institute released a T21-USA model that is
being used by lawmakers and advocacy groups to assess alternative national
energy policies.

Risk Analysis
The risk management paradigm, as discussed in Chapter 4, predates
the sustainability paradigm, but remains the basis for most environ-
mental, health, and safety laws and regulations, as well as standard
business practices. From a regulatory point of view, environmental
risk reduction serves the public good. From a business point of view,
it serves the interests of many stakeholders, including regulators,
customers, local communities, and, of course, shareholders. Environ-
mental risk management has been incorporated into the broader
practice of enterprise risk management, which provides an integrated
framework for examining all types of risks and opportunities faced
by the corporation [21].
The term “risk” may be defined as follows: a risk is the possibility
of an adverse outcome associated with an event or activity. There are gen-
erally two categories of environmental risk:

FIGURE 9.5 Structure and feedback loops of Threshold 21 system dynamics
model.