Work together or fall apart, WEF warns

A major report published today has called for collaboration between world leaders, businesses and policymakers if threats to the climate, environment, public health and technology systems are to be tackled.

The World Economic Forum’s annual Global Risks Report points to growing economic and political polarisation as the most significant short-term risk, where increased divisions and economic slowdown are propelling the world towards an “unsettled unilateral world of great power rivalries”.

“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,” said WEF president, Borge Brende,

To draw its conclusions, the WEF asked over 750 subject matter experts and decision-makers about their greatest concerns in terms of likelihood and impact. And, for the first time in the survey’s 10-year outlook, the top five global risks in terms of likelihood are all environmental. These include:

• Extreme weather events with major damage to property, infrastructure and loss of human life;

• Failure of climate change mitigation and adaptation by governments and businesses;

• Human-made environmental damage and disasters, including environmental crime, such as oil spills, and radioactive contamination;

• Major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries; and

• Major natural disasters such as earthquakes, tsunamis, volcanic eruptions, and geomagnetic storms.

As expected, younger generations are the most alarmed by the state of the planet. Those born after 1980 ranked environmental risks higher than other respondents. Almost 90% of these respondents believe “extreme heat waves”, “destruction of ecosystems” and “health impacted by pollution” will be aggravated in 2020; compared with 77%, 76% and 67% respectively for other generations. They also believe that the impact from environmental risks by 2030 will be more catastrophic and more likely.

Group chief risk officer, Zurich Insurance Group, Peter Giger warned 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 per year – the equivalent to the GDP of the US and China combined. It’s critical that companies and policy-makers move faster to transition to a low carbon economy and more sustainable business models. 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,” he said.

Chairman of Marsh & McLennan Insights, John Drzik concluded: “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 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.”

Greatest risks (Source: World Economic Forum)

Top 5 risks by likelihood over next 10 years:

• Extreme weather events (eg. floods, storms)
• Failure of climate change mitigation and adaptation
• Major natural disasters (eg. earthquake, tsunami, volcanic eruption, geomagnetic storms)
• Major biodiversity loss and ecosystem collapse
• Human-made environmental damage and disasters

Top 5 risks by severity of impact over next 10 years:

• Failure of climate change mitigation and adaptation
• Weapons of mass destruction
• Major biodiversity loss and ecosystem collapse
• Extreme weather events (eg. floods, storms)
• Water crises

Most strongly connected global risks:

Global risks are not isolated, and so respondents were asked to assess the interconnections between pairs of global risks.

• Extreme weather events + failure of climate change mitigation and adaptation
• Large-scale cyber attacks + breakdown of critical information infrastructure and networks
• High structural unemployment or underemployment + adverse consequences of technological advances
• Major biodiversity loss and ecosystem collapse + failure of climate change mitigation and adaptation
• Food crises + extreme weather events

Short-term risks: percentage of respondents who believe a risk will increase in 2020:

• Economic confrontations = 78.5%
• Domestic political polarisation = 78.4%
• Extreme heat waves = 77.1%
• Destruction of natural resource ecosystems = 76.2%
• Cyber attacks: infrastructure = 76.1%

    Share Story:

Recent Stories

Are property insurers ready for timber
The Structural Timber Association is gearing up to help all stakeholders in the construction supply chain to fully appreciate the advantages of building in timber, how to deliver such projects and most importantly to understand and manage the risks.

The changing face of BC and WAR
The working environment has changed quite dramatically for many over the last six months. With social distancing and the rise of homeworking, it is not just how businesses operate that has changed, but also how they recover. In this podcast we discuss some of the challenges created by the quick shift to home working, why the office may not have seen its last days and how the current environment can impact the ability of a business to recover.