The World Economic Forum (WEF) has highlighted climate action failure, growing social divides, heightened cyber-risks and uneven global recovery as the foremost risks the world will be facing in coming years.
Launching the ‘Global Risks 2022’ report on January 11, which was compiled in collaboration with professional services firms Marsh McLennan, SK Group and Zurich Insurance Group, WEF MD Saadia Zahidi said only one in ten people believed the global recovery would accelerate.
Most respondents instead expect the next three years to be characterised by either consistent volatility and multiple surprises or fractured trajectories that will separate relative winners and losers.
Zahidi highlighted that health and economic disruptions were compounding social cleavages.
“This is creating tensions at a time when collaboration within societies and among the international community will be fundamental to ensure a more even and rapid global recovery.
“Global leaders must come together and adopt a coordinated multi-stakeholder approach to tackle unrelenting global challenges and build resilience ahead of the next crisis,” Zahidi stated.
WEF president Børge Brende said the cost of inaction against climate change far exceeded the cost of action, but yet there was still a lack in “net zero” ways of thinking.
Standing in the way of immediate climate change mitigation were inflationary pressures, owing to the response to Covid-19 globally, and a looming debt crisis, which reduced fiscal ammunition among governments, he explained.
To deal effectively with climate and social challenges, more private and public sector collaboration was needed.
Brende noted that global problems required global solutions, but added that it was uncertain to what extent persistent geopolitical tension in an already fractured world would hinder the necessary action.
Given the rise in geopolitical ambitions and tensions, Marsh continental Europe risk management leader Carolina Klink deemed it fitting that companies were sharpening their focus on organisational resilience and environmental, social and governance credentials, as they recovered from the pandemic.
“With cyberthreats now growing faster than our ability to eradicate them permanently, it is clear that neither resilience nor governance are possible without credible and sophisticated cyber-risk management plans.
“Similarly, organisations need to start understanding their space risks, particularly the risk to satellites on which we have become increasingly reliant, given the rise in geopolitical tensions.”
Commenting on the publication of the ‘Global Risks 2022’ report, the Worldwide Fund for Nature International director-general Marco Lambertini commented that businesses and policymakers were finally waking up to the very real risks posed by both climate change and biodiversity loss.
He suggested that this “eco-awakening” be coupled with efforts to connect the dots between climate change, the destruction of nature and the current production and consumption model.
Lambertini pointed to the necessity of authorities and businesses moving away from responding to pandemics to preventing them by adopting a one health approach, which recognises that the health of people is closely tied to the health of animals and the natural environment.
“We are finally beginning to understand that only by securing a stable climate and healthy natural world will we be able to build a safer, more prosperous and equitable future for humanity. Now it’s time to commit and to act.”
The ‘Global Risks 2022’ report lists the top short-term risks, within the next two years, as being extreme weather, livelihood crises, climate action failure, social cohesion erosion, infectious diseases, mental health deterioration, cybersecurity failure, debt crises, digital inequality and an asset bubble burst.
The top medium-term risks, over the next two to five years, are listed as climate action failure, extreme weather, social cohesion erosion, livelihood crises, debt crises, human environmental damage, geo-economic confrontation, cybersecurity failure, biodiversity loss and an asset bubble burst.
The top long-term global risks, over the next five to ten years, are climate action failure, extreme weather, biodiversity loss, natural resource crises, human environmental damage, social cohesion erosion, involuntary migration, adverse technology advances, geo-economic confrontation and geopolitical resource contestation.
Zurich group chief risk officer Peter Giger noted that the climate crisis remained the biggest long-term threat facing humanity.
Failure to act on climate change could shrink global gross domestic product by one-sixth and the commitments taken at the COP26 climate change conference were still not enough to achieve the 1.5 ˚C goal.
“It is not too late for governments and businesses to act on the risks they face and to drive an innovative, determined and inclusive transition that protects economies and people.”