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World Economic Forum Global Risks Report – review

April 3, 2019

In January, the WEF published its annual Global Risk Report.  This report describes the results of a survey of the perception of risks amongst nearly 1,000 decision makers across all sectors, as well as analysis of their own.  Perceptions of risk are naturally set in the context of prevailing events, though respondents were also asked to consider risk on a 10-year horizon.

The underlying worldview of WEF may also have had an impact on results. The current trend of “taking back control” was positioned as a threat to global governance (assumed to be an inherently good thing), rather than the democratic, creative force some might view it to be.

Macroeconomic risks and geo-political risks are also seen as current concerns. However, over a ten-year horizon, extreme weather and climate-change policy failures are seen as the gravest threats.

Respondents were asked to rate risks by impact and likelihood. Unsurprisingly, “weapons of mass destruction” had the highest impact, but this was followed by three environmental risks – “failure of climate change mitigation and adaptation”, “extreme weather events”, and “natural disasters” plus “water crises”, which had been classified as “Societal”.

Fortunately, “weapons of mass destruction” was not scored highly on the likelihood scale! The three environmental risks were top, followed by two technological risks – “data fraud or theft” and “cyber-attacks”.

The top right corner of the chart combining the two factors looks like this: 

WEF blog

There are also some intriguing charts showing risk-trend inter-connections.

The report also shows how these perceptions have changed in the years since the first report in 2009. Coming as it did after the global economic crash, it’s perhaps not surprising that 4 of the top 5 by impact and 3 of the top 5 by likelihood then were Economic risks. Chronic disease also scored highly on both factors. Environmental risks started to be considered as important in 2011, but only in the last two years have they taken so many of the top places.

The analytical part of the report addresses four distinct themes:

Power and values: evolving risks in a multi-conceptual worldshows how a multi-polar world also has diverging norms and values. It identifies three disruptive trends: how to maintain a global consensus on ethically charged issues such as human rights; challenges to multilateralism and dispute-settlement mechanisms; and states’ increasingly frequent use of protectionist policies. These combine to make common global action more difficult – with climate change actions being a prime example.

Heads and hearts: the human side of global risks explores the widespread human costs in terms of psychological and emotional strain. People are becoming increasingly anxious, unhappy and lonely; anger is increasing and empathy appears to be in decline. A common theme is that psychological stress is related to a feeling of lack of control in the face of uncertainty. Mental illness is on the rise.

Going viral: the transformation of biological risks looks at the risks of devastating outbreaks of diseases such as Ebola, MERS, SARS, Zika, and yellow fever. Recent outbreaks (which are increasing) may not have had as much impact as had been feared, but the global approach to dealing with such diseases is not well-developed. Other trends such as urbanisation and migration combine to increase the risk. With the development of bio-engineering the risk of accidental – or even deliberate – release of dangerous pathogens increases.

Fight or flight: preparing for sea level rise. An estimated 800 million people in more than 570 coastal cities are vulnerable to a sea-level rise of 0.5 metres by 2050. This section looks at adaptation strategies being pursued, highlighting the growing prevalence of holistic approaches to flood resilience, including managed retreat.

The report also has a section on ten Future Shocks such as disruption to food supply and advanced biometric surveillance.  These are not predictions but “what-if” thought experiments. Some may be a bit “out there” but this sort of exercise is an extremely valuable and generally under-rated element of futures thinking.

The Report is a very well-researched document as you would expect, with hundreds of references and examples, and many impactful charts. It is a valuable resource for any foresight exercise.  Future Shocks (these and others) are well worth considering. Although the risk “perceptions” section has some potential biases as discussed, it is at least encouraging to see that climate change and other environmental risks are being recognised. But perhaps that is also just a current concern, to be eclipsed in time by something else – what might that be?

Written by Huw Williams, SAMI Principal

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

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