WEF: World needs to wake up to long-term risks

Governments and businesses need to do more to address the long-term risks that they face if they are to minimise the impact of major challenges ahead, according to the World Economic Forum’s 2021 Global Risks Report.

The organisation says that for the last 15 years, it has been warning the world about the danger of pandemics and that the wider costs of ignoring preparation and long-term risks in the case of the current pandemic will not be fully known for some time. It says the COVID-19 pandemic has not only claimed millions of lives, but it also widened long-standing health, economic and digital disparities, with billions of caregivers, workers and students – especially minorities who were disadvantaged before the pandemic – now at risk of missing pathways to the new and fairer societies that the recovery could unlock. According to the report, these developments may further impede the global cooperation needed to address long-term challenges such as environmental degradation.

When it comes to technology access and digital skills, the gap between the ‘haves’ and the ‘have nots’ risks widening and challenging social cohesion. This will particularly affect young people worldwide, as this group faces its second global crisis in a generation and could miss out altogether on opportunities in the next decade.

Financial, digital and reputational pressures resulting from COVID-19 also threaten to leave behind many companies and their workforces in the markets of the future. While these potential disparities could cause societal fragmentation for states, an increasingly tense and fragile geopolitical outlook will also hinder the global recovery if mid-sized powers lack a seat at the global table.

Once again, environmental risks also dominate the reports findings by impact and likelihood, looking ahead towards the next decade. Societal fractures, uncertainty and anxiety will make it more difficult to achieve the coordination needed to address the planet’s continued degradation.

Saadia Zahidi, managing director at the World Economic Forum, said: “In 2020, the risk of a global pandemic became reality, something this report has been highlighting since 2006. We know how difficult it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognize that ignoring them doesn’t make them less likely to happen.

“As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet. To help meet this challenge, next week’s event, The Davos Agenda, will mobilize global leaders to shape the principles, policies and partnerships needed in this new context,”

The report also reflects on the responses to COVID-19, drawing lessons designed to bolster global resilience. These lessons include formulating analytical frameworks, fostering risk champions, building trust through clear and consistent communication, and creating new forms of partnership. The key risks outlined in the report are accompanied by recommendations to help countries, businesses, and the international community to act, rather than react, in the face of cross-cutting risks. The report ends with an overview of “frontier risks” – nine high-impact, low-probability events drawn from expert foresight exercises – including geomagnetic disruption, accidental wars and exploitation of brain-machine interfaces.

Carolina Klint, risk management leader for continental Europe at Marsh, said: “Economic and societal fallout from COVID-19 will profoundly impact the way organisations interact with clients and colleagues long after any vaccine rollout. As businesses transform their workplaces, new vulnerabilities are emerging. Rapid digitalisation is exponentially increasing cyber exposures, supply chain disruption is radically altering business models, and a rise in serious health issues has accompanied employees’ shift to remote working. Every business will need to strengthen and constantly review their risk mitigation strategies if they are to improve their resilience to future shocks.”

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