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10 FEBRUAR 2016
The risk rated most likely was large- scale involuntary migration, with last year’s top scorer – interstate conflict with regional consequences – giving way to the environmental risks of extreme weather events and the failure of climate change mitigation and adaptation and followed by major natural catastrophes.
Geopolitical concerns remain prominent in the minds of respondents to the Global Risks Perception Survey for the second year in a row. The Report therefore delves into the international security landscape and explores what drives this evolution and, in particular, how it could be affected by the Fourth Industrial Revolution and climate change. The three scenarios for possible futures developed in this context inform new ways of building resilience to security threats through public-private collaboration.
Global risks that remain serious because of their combined impact and likelihood involve some economic risks, including social crises in key economies and high structural unemployment and underemployment. These are complemented by cyberattacks and profound social instability. Their assessment reflects the potentially profound impact of the Fourth Industrial Revolution on the economy and society and emphasizes the need for safeguarding future benefits.
Respondents were also asked which risks were related and could give rise to cascading risks. Three emerged strongly: the potential for climate change to exacerbate water crises, with impacts including conflicts and more forced migration, calling for improved water governance to adapt to climate change and accommodate a growing population and economic development; the need to address the global refugee crisis, adding emphasis to policies that can build resilience in addition to responding to the immediate crisis; and the risks of failing to fully understand the risks around the Fourth Industrial Revolution and how this transition will impact countries, economies and people at a time of persistently sluggish growth.
Risks in Focus
Key to building resilience is the stability of societies. The first Risk in Focus therefore looks at the complex dynamics of societies in the age of digitization and discusses the phenomenon of the (dis)empowered citizen, which is a result of the interplay of varying dynamics: as technology empowers citizens to send information, connect with others and organize, those citizens feel disenfranchised by distant elites. It explores the risk of social instability if both governments and business embark on either repressive actions or non-action out of uncertainty about how to deal with a more informed, connected and demanding citizenry, which could lead to an escalating downward spiral of broken trust and harsher response on either side. The chapter also, however, explores the bene ts governments and business stand to gain by proactively looking for ways to engage with concerned citizens.
Food security risk in the context of climate change is the second Risk in Focus. Building upon the climate-water nexus discussed in Part 1, the chapter looks at how changing climate and weather patterns could jeopardize food security and agricultural production across geographies. The most climate- vulnerable countries often heavily depend on agricultural productivity to sustain economic growth and development. But the recent years have also shown the climate vulnerability of G-20 countries such as India, Russia and the United States – the breadbasket of the world – and other large industrial producers of agricultural commodities. The chapter discusses how climate change–resilient crops and supply chain networks, as well as financing and insurance schemes, can help mitigate the social, economic and environmental aspects of food security risks related to climate change.
Drawing lessons from the Ebola crisis, the third Risk in Focus discusses global disease outbreaks. It warns that population growth, rapid urbanization and increasing transnational flows of commodities, people and animals intensify the risk of infectious transmission across geographies while equally diminishing the ability to respond – all at a time of growing resistance of microorganisms to today’s most effective medicines. Preparedness and response measures range from the behavioural, such as fact-based communication and education campaigns, to the need to invest in diagnostic, drug and vaccine R&D and in its enabling environment, especially advancing a regulatory framework. It raises the imperative for public-private sector collaboration across areas such as data availability and analysis, a joint research agenda, regulatory frameworks, long-term financing and ways to promote responsible media engagement as part of effective crisis management communication.
For each Risk in Focus, examples are given of three practical mechanisms that can build resilience against the identified threats.
Risks to Doing Business
Private sector respondents to the World Economic Forum’s Executive Opinion Survey were asked to identify their risks of highest concern for doing business in the next 10 years. The responses, from 140 economies, reveal patterns of concern at country and regional levels that can usefully inform initiatives to engage the private sector in building resilience to global risks.
On a global scale, two economic risks – unemployment and underemployment and energy price shocks – are mentioned as the top risks of highest concern for doing business in half of the 140 economies. These are followed by the failure of national governance, social crises, asset bubbles and cyberattacks.
Economic risks predominate in responses from Europe, including social crises, unemployment, asset bubbles and energy prices – the latter also being the top concern in Canada – while executives in the United States are most concerned about cyber-related risks and attacks. Respondents from Central Asia and Russia worry about social crises and unemployment, along with the risks of unmanageable in inflation and interstate conflict. Environmental risks worry business leaders in East Asia and the Pacific, alongside energy prices, asset bubbles, and cyber attacks.
In South Asia concerns also include energy prices, together with fiscal crises, unemployment and failure of national governance – which is the top concern in Latin America and the Caribbean
– followed by energy prices shock and unemployment. Executives in the Middle East and North Africa likewise worry about energy prices, together with unemployment, terrorist attacks and interstate conflict. In Sub-Saharan Africa, the business community’s top concerns include unemployment, energy prices, the failure of national governance and the failure of critical infrastructure.