World Economic Forum Report: Global Risks are More Interconnected…and More Imminent

The Global Risks Report 2016, published by the World Economic Forum and its Global Competitiveness and Risks Team, draws attention to ways that global risks may evolve and interact in the next decade. The 11th edition of the report includes perspectives from nearly 750 experts regarding the impact and likelihood of prevalent global risks, including economic risk, environmental, geopolitical, societal and technological risks. The report examines the interconnections among risks and where global risks could impact society, from “(dis)empowered citizen” to climate change and food security, to the potential of pandemics. The 2016 report also looks at how the global security landscape could evolve. In highlights from a briefing about the Global Risk Report, Adrian Monck, Head of Public Engagement and Foundations at the World Economic Forum, says global risks are perceived to be more interconnected and more imminent. In addition, the risks many are most concerned about are considered “high likelihood” and “high impact.” John Drzik, President of Global Risk and Specialties at Marsh, says the center of interconnected risks is "growing social instability.” He notes that social unrest impacts other risks in the “economic and business sphere.” Mr. Drzik also comments on the disparity in the perception of “cyber risk” across geographies, and how that perception affects the purchase of cyber insurance. He likens cyber to an “arms race” between “security and the hackers”...an arms race that is not going away soon. Cecilia Reyes, Chief Risk Officer at Zurich Insurance Group, says the failure of governments and governance creates political risk for global companies like Zurich. Political conflict makes it hard to find globally coordinated solutions to climate change. Climate change impacts food crises and clean water supplies, which in turn exacerbates geopolitical risks. Hence a “negative feedback loop” is created. She points out that three of the top five risks in the Global Risk Report are environmental: extreme weather events, climate change and natural catastrophes, and that climate change is thought to be he risk most likely to shape global development. Ms. Reyes says the limited impact of mitigation efforts has led to the need to adapt to climate change through resilience methods. For a full copy of the 2016 Global Risks Report, visit the World Economic Forum website.