WEF Global Risks Report 2020
The 15th edition of the World Economic Forum’s Global Risks Report 2020 is published as critical risks are manifesting. The global economy is facing an increased risk of stagnation, climate change is striking harder and more rapidly than expected, and fragmented cyberspace threatens the full potential of next-generation technologies — all while citizens worldwide protest political and economic conditions and voice concerns about systems that exacerbate inequality. The challenges before us demand immediate collective action, but fractures within the global community appear to only be widening. Stakeholders need to act quickly and with purpose within an unsettled global landscape.
For the first time the Global Risks Report is dominated by the environment, with climate-linked issues like extreme heat and ecosystems loss highlighted. Geoeconomic and political pressures are also top short-term concerns.
Following a year of floods and droughts, when fires ravaged Australia and the Amazon, and teenage climate activist Greta Thunberg was chosen as Time’s Person of the Year, it is perhaps little wonder that environmental issues dominate leaders’ concerns for the future. But the latest edition of the World Economic Forum’s Global Risks Report shows how loudly they are sounding the alarm. Established leaders and up-and-comers agree: climate change is the stand-out long-term risk the world faces.
The report, which identifies the top threats facing our world by likelihood and extent of impact, names failure to mitigate and adapt to climate change as the key concern for the Forum’s network of business leaders, NGOs, academics and others. The group places it as the number one risk by impact and number two by likelihood over the next 10 years. In fact, respondents to the Global Risks Perception Survey, which underpins the report, rank issues related to global warming – such as extreme weather and biodiversity loss – as the top five risks in terms of likelihood over the coming decade. This is the first time one category has occupied all of the top slots since the report was launched in 2006. Climate change is hitting harder and accelerating faster than many people predicted. And efforts to meet commitments to limit global warming are slipping, with countries veering off course.
Long term risk outlook by likelihood over the next decade
1. extreme weather
2. climate action failure
3. natural disaster
4. biodiversity loss
5. human-made environmental disasters
6. data fraud or theft
8. water crises
9. global governance failure
10. asset bubble
Top ten long term risks by impact
1. climate action failure
2. weapons of mass destruction
3. biodiversity loss
4. extreme weather
5. water crises
6. information infrastructure breakdown
7. natural disasters
9. human-made environmental disasters
10. infectious diseases
Short-term risk outlook in 2020
1. economic confrontations
2. domestic political polarization
3. extreme heat waves
4. destruction of natural ecosystems
5. cyberattacks: infrastructure
6. protectionism on trade/investment
7. populist and nativist agendas
8. cyberattacks: theft of money/data
9. recession in a major economy
10. uncontrolled fires
Gathering economic clouds
Growing downward pressure on the global economy, driven by fragile macroeconomic structures and financial inequality, is deemed the biggest short-term threat by the ‘multi-stakeholders’ questioned. The risk of stagnation is exacerbated as leaders increasingly follow nationalist policies. Over three-quarters of respondents think this darkening economic outlook and domestic political polarization are set to become more likely in the short term.
Trade tensions and geopolitical turbulence are also adding to the economic uncertainty – in particular the potential fallout from the United States and China’s trade stand-off. The two countries account for more than 40% of global GDP. They are also the world’s top two emitters of greenhouse gases. So the world’s economic performance and ability to address climate change is inextricably linked with theirs.
Risks in a digital world
Geopolitical and economic uncertainties are also driving concerns about digital technology: unequal access, a lack of governance, and more frequent and more damaging cyberattacks. The report highlights how long-mounting interconnected risks are starting to be felt. The synchronized slowdown of the global economy, the warmest temperatures on record and an increasingly unstable geopolitical environment are creating significant challenges. “It is sobering that in the face of this development, when the challenges before us demand immediate collective action, fractures within the global community appear to only be widening,” the report says.
Waiting for the fog of geopolitical and geoeconomic uncertainty to lift before taking action is not a viable option, and would mean missing crucial windows to address pressing issues, it continues. The good news is that, despite global divisions, some businesses are committed to looking beyond their balance sheets towards tackling the urgent issues that are looming.
Source: WEF, Charlotte Edmond, Senior Writer, Formative Content, 15 January 2020.
Last updated 15 January 2020