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Climate failure & social crisis dominate global concerns: WEF

11th January 2022 - Author: Matt Sheehan

A new report by the World Economic Forum (WEF) has identified climate failure as the foremost long-term global risk, with societal divides, livelihood crises and mental health deterioration dominating the shorter-term landscape.

The WEF’s Global Risks Report 2022 also found that most experts believe a global economic recovery will be volatile and uneven over the next three years.

This could widen the global income gap and result in further tensions both within and across borders, the report warns.

Such tensions risk worsening the pandemic’s cascading impacts and complicating the coordination needed to tackle common challenges including strengthening climate action, enhancing digital safety, restoring livelihoods and societal cohesion, and managing competition.

Overall, only 16% of respondents to the WEF survey felt positive and optimistic about the outlook for the world, and just 11% believe the global recovery will accelerate.

Most respondents instead expect the next three years to be characterized by either consistent volatility and multiple surprises or fractured trajectories that will separate relative winners and losers.

To resolve these systemic issues, the WEF recommends that global leaders must adopt a coordinated multistakeholder response, even as room for cooperation narrows.

In 2021, responses to public health crises resulted in both successes and failures, largely based on the readiness of governments to adjust and modify response strategies according to changing circumstances, as well as their ability to maintain societal trust through principled decisions and effective communication.

For governments, analysts see balancing costs, regulating for resilience, and adjusting data-sharing arrangements to ensure sharper crisis management are key to galvanizing stronger interaction between public and private sectors.

And for businesses, the WEF urges better national-level preparedness to help leverage opportunities in areas such as supply chains, codes of conduct within their industry, and inclusion of a resilience dimension into workforce benefit offerings.

“Health and economic disruptions are compounding social cleavages,” said Saadia Zahidi, Managing Director, World Economic Forum.

“This is creating tensions at a time when collaboration within societies and among the international community will be fundamental to ensure a more even and rapid global recovery,” Zahidi explained. “Global leaders must come together and adopt a coordinated multistakeholder approach to tackle unrelenting global challenges and build resilience ahead of the next crisis.”

Carolina Klint, Risk Management Leader, Continental Europe, Marsh, also commented: “As companies recover from the pandemic, they are rightly sharpening their focus on organizational resilience and ESG credentials. With cyber threats now growing faster than our ability to eradicate them permanently, it is clear that neither resilience nor governance are possible without credible and sophisticated cyber risk management plans.”

“Similarly, organizations need to start understanding their space risks, particularly the risk to satellites on which we have become increasingly reliant, given the rise in geopolitical ambitions and tensions.”

Peter Giger, Group Chief Risk Officer, Zurich Insurance Group, added: “The climate crisis remains the biggest long-term threat facing humanity. Failure to act on climate change could shrink global GDP by one-sixth and the commitments taken at COP26 are still not enough to achieve the 1.5 C goal. It is not too late for governments and businesses to act on the risks they face and to drive an innovative, determined and inclusive transition that protects economies and people.”

The Global Risks Report 2022 has been developed in collaboration with Marsh McLennan, SK Group and Zurich Insurance Group, and academic advisers at the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).

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