All Clear: A New Signaling Technology for the Advanced Bioeconomy

Today, Digest AI is announcing that its new tool for predicting economic shock events — those that imperil or foster bioeconomy projects — has passed two major backtests, and will now commence its real-time beta-test.

The Hybrid Hazard Index successfully “signaled” the shocks of the Global Financial Crisis and the COVID‑19 economic panic far earlier than traditional tools like the VIX.

• For COVID‑19: The Index gave its systemic stress signal in late December 2019 – early January 2020, 11–12 weeks before the VIX volatility index spiked.
• For the Global Financial Crisis: It signaled systemic stress in early 2007, more than a year before Bear Stearns collapsed and 18 months ahead of Lehman’s fall.

That kind of lead time gives market participants a critical advantage — time to hedge, restructure, or reprice risk before the crowd catches on.

Crises can’t be prevented. But they can be seen coming.

And in the advanced bioeconomy — where projects stretch across cycles and face constant threats from interest‑rate spikes, policy shifts, debt crunches, and supply chain disruptions — seeing trouble first can make the difference between opportunity and disaster.

Why Lead Time Matters: A COVID Case Study

In March 2020, airline stocks lost more than 60% of their value in weeks. By the time the VIX screamed, it was too late to hedge or reposition.

The Hybrid Hazard Index? It flashed its systemic risk warning 11 weeks earlier.

That provided nearly three months for airlines, lessors, and financiers to hedge fuel exposure, renegotiate credit lines, or reduce equity risk — billions of dollars in avoidable losses for those who had the signal.

And it wasn’t just airlines. The same pattern played out in hospitality, energy, and industrial supply chains. Those with early warning could protect capital — or even position for opportunity.

Why This Matters for the Advanced Bioeconomy

Bioeconomy projects don’t live in neat financial cycles. They stretch through multiple phases — from construction to commissioning to commercialization — exposing them to everything the market throws at them:

• Debt crunches: Credit tightening that suddenly reshapes project financing.
• Policy swings: Shifting incentives, tax credits, or regulatory demands.
• Interest‑rate shocks: Rising rates that erode project economics.
• Supply chain failures: Disruptions that delay timelines and burn precious capital.

Time kills projects. The faster you see the potholes, the faster you can steer around them.

What Makes This Tool Different

For decades, risk tools like the VIX have relied on linear inputs and outputs — simple functions designed to measure market anxiety in real time. They work, but they’re reactive. It’s like getting a tsunami warning when the wave is already crossing the shoreline.

The Hybrid Hazard Index takes a different path. It blends tools from advanced mathematics — fractal analysis, differential geometry, and market microstructure — into a single forward‑looking signal.

Here’s the high‑level view:

1. Narrative Geometry: Seeing the Shape of Risk

Markets are driven by stories: news, policies, earnings calls, macroeconomic chatter.

We model this information flow as a narrative manifold — a network of themes and ideas — and use Ricci flow, a tool from differential geometry, to track how narratives tighten into coherent frames (bubbles forming) or fragment under stress (bubbles popping).

When narratives converge too quickly — think “housing always goes up” in 2007 or “pandemic won’t reach us” in early 2020 — the market becomes brittle. That’s when risk surges.

2. Fractal Complexity: Measuring the Market’s Roughness

Healthy markets live in a “jagged middle” — complex enough to absorb shocks but coherent enough to persist.

We use fractal analysis to measure when this roughness vanishes (beliefs over‑align, making markets fragile) or spikes uncontrollably (chaotic collapse). It’s a quantitative way of spotting when markets are either over‑compressed or unraveling.

3. Market Memory: When Noise Becomes a Trend

Markets, like people, have memory. Using Hurst exponents, we measure when behavior shifts from random noise to persistent trending — a hallmark of panic, exuberance, or self‑reinforcing speculation.

This lens captures when market moves become sticky — a sign that fear or greed has taken over.

4. GTESI Persistence: A New Way to Think About Stability

At the core is a persistence ratio, built on the General Theory of Evolutionary Systems & Information (GTESI).

It measures the balance between how fast narratives grow, rotate, and tighten versus how well the real world (policy, liquidity, fundamentals) adapts.

When narrative speed outruns structural adaptation, collapse risk surges.

These layers come together in a single Hybrid Hazard Index — color‑coded for risk, with clear thresholds for when bubbles are forming or on the verge of collapse.

The Sandcastle: Making the Abstract Intuitive

Imagine a sandcastle at the edge of the tide. The castle (market structures: positions, ledgers, rules) and the tide (capital and sentiment) are made of the same stuff — beliefs — but in different proportions. When the castle and tide are in sync, the structure holds. When they fall out of alignment — too brittle, too saturated — the castle collapses.

That’s what the Hybrid Hazard Index measures: the hidden forces that bring structure and sentiment out of sync before they visibly fail.

From Analysis to Action

Information only matters if you can act on it.

For Project Owners and Operators:

• Hedge early. Lock in fuel costs or interest rates before the panic spreads.
• Adjust capital flows. Delay or accelerate spend when risk builds.
• Communicate proactively. Get ahead of crisis narratives before they lock in.

For Financiers:

• Spot contagion early. See credit, liquidity, and sectoral risks months before they cascade.
• Rebalance portfolios. Exit exposures or seize undervalued opportunities.

Digest AI: Powering Real‑Time Foresight

This tool is built on Digest AI, which enables us to run a formidable array of higher‑math functions — fractal calculations, narrative geometry, and market memory — in real time.

It’s the first in a series of GTESI‑powered Digest AI tools designed to help financial systems, corporations, and governments adapt before they break.

What’s Next

The Hybrid Hazard Index has been validated on known crises. The next step: going live.

• Sweeping real‑time news flows in sectors like energy and cleantech.
• Merging narrative geometry with market stress signals.
• Delivering forward‑looking hazard scores — not after the fact, but before the next collapse takes shape.

This isn’t just for quants or academics. If you build, own, operate, finance, or regulate, this Digest AI tool will matter to you.

The Hybrid Hazard Index will be available for selected beta users ahead of its public release at ABLC Next 2025 in San Francisco, October 22‑24, 2025.