World Economic Forum: Mounting Risks to Pose Challenge for a Decade

Not since the 1940s was there a year that began as ominously as 2016.

The World Economic Forum’s Global Risks Report 2016 says the likelihood of risks has grown – and because of the risks’ interconnectedness, they can offer challenges for the next decade.

The 11th edition of the annual report was released this week on the heels of World Economic Forum, and it formed the basis of a discussion panel on the second day of the Forum, available on video on WEF website. As stated in the video discussion, the risks present “increasing the magnitude of challenge for the next decade.”

The Report reviews 29 global risks ranging across – and among – environment, geopolitics, society, economics, and technology. It finds social instability coupled with unemployment and underemployment as the most interconnected issues.

“Risks are becoming more imminent and have wide-ranging impact; especially as tensions between countries affect businesses; unresolved, protracted crises have resulted in the largest number of refugees globally since World War II; terrorist attacks take an increasing toll on human lives and stifle economies; droughts occur in California and floods in South Asia; and rapid advances in technologies are coupled with ever-growing cyber fragilities and persistent unemployment and underemployment,” the report states.

Not surprisingly, the study sees large scale involuntary migration as the fastest rising risk in terms of likelihood and impact. That’s followed by extreme weather events, failure of climate change mitigation and adaptation, interstate conflicts with regional consequences, and major natural catastrophes.

However, the annual report says failure to mitigate climate change and adaptation tops the list in terms of impact, arguing that it can cause greater potential damage than mass destruction, water crisis, large scale of migration, and severe energy price shock.

And, of course, the report covers global warming: “Warming climate is likely to raise this year’s temperature to 1° Celsius above the pre-industrial era, 60 million people, equivalent to the world’s 24th largest country and largest number in history, are forcibly displaced, and crimes in cyberspace costs the global economy an estimated US$445 billion, higher than many economies’ national incomes.”

The report also analyzes international security as impacted by digitalization, or the “Fourth Industrial Revolution,” and climate change.

Digitization produces challenges and risks, fundamentally because it empowers citizens by its capabilities even as they feel disconnected from the way they are governed. “We still don’t know how it will effect economies, countries and people,” it says.

A collaboration between public and businesses is the most effective way to tackle these challenges, says the report, which is produced by Wharton Risk Management and Decision Processes Center of the University of Pennsylvania.

Want a quick overview? Check out this video.