The Dividend of Displacement: How Corporations Profit by Outsourcing Risk

Corporations today amass wealth not by absorbing risk, but by exporting it. Their growth model turns liability into external burden—shifting costs onto users, public systems, or future generations—while repackaging the residue as progress.

Externality as Architecture

Digital platforms are engineered to reward the sensational, the divisive, and the viral. Outrage propagates faster than nuance, not by accident but by structural design (Dembe and Boden, 2000). The fallout—misinformation, social polarization, degraded public discourse—never registers on balance sheets. Instead, these costs are borne by civic institutions and the wider public.

This is moral hazard at societal scale: when an entity can create risk without internalising its consequences, it is incentivised to escalate (Dembe and Boden, 2000). In a media environment tuned to engagement, the wager is virality. Noise spreads faster and cheaper than insight, and in the process ignorance becomes more profitable than knowledge.

Cases of Displaced Risk

Data breaches and cybersecurity
IBM’s Cost of a Data Breach Report found the global average cost of a breach in 2024 reached USD 4.88 million, up 10 per cent year-on-year (IBM, 2024). In 2025, 13 per cent of organisations reported breaches connected to AI systems, with 97 per cent lacking proper AI access controls (IBM, 2025).
Environmental externalities
The cycle of rapid hardware consumption creates growing volumes of e-waste and energy demand. Data centres now account for nearly 1–1.5 per cent of global electricity use and consume billions of litres of water for cooling annually (IEA, 2023).
Global supply chains
Research into firm-level networks shows that shocks to a single supplier can propagate rapidly across continents, creating systemic fragility (Diem et al., 2021; Chakraborty et al., 2021).
Academic industry capture
Universities, pressed by declining public funding, increasingly rely on industry partnerships. By 2023, nearly 40 per cent of Australian universities were running deficits, pushing them further into commercial models (Universities Australia, 2024). Studies show such linkages frame higher education narrowly in market terms (Li and Hardy, 2024). Tech transfer offices often run at losses, leaving taxpayers with risk while corporations acquire intellectual property at reduced cost (Abdalla and Abdalla, 2020).
Public infrastructure projects
The Queensland Health payroll system in Australia exemplifies corporate risk displacement. The failed 2010 IBM project mispaid or unpaid tens of thousands of staff and required an estimated AUD 1.2 billion to rectify (Queensland Government, 2013).

Case Studies

Facebook in Myanmar
In 2018, a UN report concluded that Facebook played a “determining role” in spreading hate speech that fuelled violence against the Rohingya minority (United Nations Human Rights Council, 2018).

Google’s Data Centres and Water Use
Google disclosed that its data centres consumed billions of litres of water annually for cooling, with facilities in the U.S. Midwest drawing heavily on municipal supplies during drought conditions (IEA, 2023).

Boeing and the 737 MAX
The Boeing 737 MAX crashes in 2018 and 2019 revealed how cost-cutting and regulatory capture externalised catastrophic risk. Two crashes caused 346 deaths, with losses later borne by passengers, regulators, and governments (Diem et al., 2021).

Institutions as Caught Vessels

Universities, once buffers of critique, increasingly mirror the corporations they serve. Funding shortfalls incentivise risk aversion, compliance, and alignment with industry demands. Governments likewise outsource core functions such as surveillance and algorithmic governance, hollowing their ability to enforce accountability.

In the United States, the erosion of democratic resilience reflects the same underlying structure. When institutions are optimised for compliance rather than dissent, the drift toward authoritarian outcomes is not aberration but threshold effect.

Why This Will Unravel

The dividend of displaced risk cannot compound indefinitely. Liabilities deferred into the future return as financial crises, environmental breakdowns, and institutional collapse. The short-term profits captured by elites are purchased at the expense of long-term stability.

What appears as innovation is often deferred catastrophe. Collapse is endogenous to the model itself. The open question is not if it arrives, but when—and how badly.

References

Abdalla, M. and Abdalla, M. (2020). The Grey Hoodie Project: Big Tobacco, Big Tech, and the threat on academic integrity. arXiv preprint.

Chakraborty, A., Reisch, T., Diem, C. and Thurner, S. (2021). ‘Inequality in economic shock exposures across the global firm-level supply network’. Nature Communications, 12, pp. 1–9.

Dembe, A.E. and Boden, L.I. (2000). ‘Moral hazard: A question of morality?’. New Solutions: A Journal of Environmental and Occupational Health Policy, 10(3), pp. 257–279.

Diem, C., Borsos, A., Reisch, T., Kertész, J. and Thurner, S. (2021). ‘Quantifying firm-level economic systemic risk from nation-wide supply networks’. Scientific Reports, 11, pp. 1–10.

IBM. (2024). Cost of a Data Breach Report. IBM Security.

IBM. (2025). Cost of a Data Breach Report. IBM Security.

International Energy Agency (IEA). (2023). Data Centres and Data Transmission Networks. IEA.

Li, F. and Hardy, I. (2024). ‘The “Problem” of University–Industry Linkages: Insights from Australia’. Higher Education Policy, 37(2), pp. 1–21.

Queensland Government. (2013). Queensland Health Payroll System Commission of Inquiry Report. Brisbane: State of Queensland.

United Nations Human Rights Council. (2018). Report of the Independent International Fact-Finding Mission on Myanmar. Geneva: UNHRC.

Universities Australia. (2024). Critical Challenges in Australia’s University Sector: Securing a Sustainable Future. Universities Australia.