The World Economic Forum (WEF) expects economic and political polarisation to rise this year as significant short-term risks to climate action and public health systems.
This while collaboration between world leaders, businesses and policymakers is necessary to stop severe threats to environmental, public health and technology systems.
“Without urgent action to repair societal divisions and driving sustainable economic growth, leaders cannot systemically address threats such as climate change or biodiversity crises.
“Globally, there is a need for a multi-stakeholder approach to mitigate risk, especially at a time when the world cannot wait for the fog of geopolitical disorder to lift,” the WEF states in its latest ‘Global Risks Report 2020’, published on Wednesday.
It adds that geopolitical turbulence is propelling the world towards an “unsettled” unilateral world of great power rivalries at a time when business and government leaders “must focus urgently” on working together to tackle shared risks.
Over 750 global experts and decision-makers were asked to rank their biggest concerns in terms of likelihood and impact and 78% said they expect “economic confrontations” and “domestic political polarisation” to rise this year.
Respondents identified the most likely risks over the next ten years to be extreme weather events, failure of climate change mitigation, major natural disasters and major biodiversity loss.
The WEF explains that because global risks are not isolated, the top most strongly connected global risks are indicated to be extreme weather events, coupled with failure of climate change mitigation; large-scale cyberattacks and a breakdown of critical information infrastructure; high structural unemployment and adverse consequences of technological advances; food crises and extreme weather events; and major biodiversity loss and failure of climate change mitigation.
The report points to a need for policymakers to match targets for protecting the Earth with ones for boosting economies – and for companies to avoid the risks of potentially disastrous future losses by adjusting to science-based targets.
“The political landscape is polarised, sea levels are rising and climate fires are burning. This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation, not just for short-term benefit but for tackling our deep-rooted risks,” says WEF president Borge Brende.
Systems-level thinking is required to confront looming geopolitical and environmental risks, and threats that may otherwise fall under the radar. This year’s report focuses explicitly on impacts from rising inequality, gaps in technology governance and health systems under pressure.
“There is mounting pressure on companies from investors, regulators, customers and employees to demonstrate their resilience to rising climate volatility. Scientific advances mean that climate risks can now be modelled with greater accuracy and incorporated into risk management and business plans.
“High-profile events, like the recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber-risk challenges,” says Marsh & McLennan Insights (MMI) chairperson John Drzik.
MMI collaborated with the WEF on compiling the global risks report.
To younger generations, the state of the planet is even more alarming. The report highlights how risks are seen by those born after 1980. They ranked environmental risks higher than other respondents, in the short and long term.
Almost 90% of these respondents believe “extreme heat waves”, the “destruction of ecosystems” and “health impacted by pollution” will be aggravated this year; compared with 77%, 76% and 67%, respectively, for other generations. They also believe the impact from environmental risks by 2030 will be more catastrophic and more likely.
Human activity has already caused the loss of 83% of all wild mammals and half of plants – which underpin our food and health systems.
Zurich Insurance Group group risk officer Peter Giger warns of the urgent need to adapt faster to avoid the worst and irreversible impacts of climate change and to do more to protect the planet’s biodiversity.
“Biologically diverse ecosystems capture vast amounts of carbon and provide massive economic benefits that are estimated at $33-trillion a year – the equivalent to the gross domestic product of the US and China combined.
“We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences. Transitionary risks are real and everyone must play their part to mitigate them. It’s not just an economic imperative, it is simply the right thing to do,” Giger says.