According to the World Economic Forum (WEF), environmental risks are again forecast to dominate the risk landscape over the next 10 years, both in terms of impact and likelihood.
The WEF’s 2021 Global Risks Report also warned that societal fractures, uncertainty and anxiety will make it increasingly difficult to achieve the coordination needed to address the planet’s continued degradation.
Last year, the consequences of ignoring long-term risks were made evident by the global COVID-19 pandemic, which has widened long-standing health, economic and digital disparities, as well as claiming millions of lives.
The WEF says that these developments may further impede the global cooperation needed to address long-term challenges such as environmental degradation.
“In 2020, the risk of a global pandemic became reality, something this report has been highlighting since 2006. We know how difficult it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognize that ignoring them doesn’t make them less likely to happen,” said Saadia Zahidi, Managing Director at the World Economic Forum.
As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet. To help meet this challenge, next week’s event, The Davos Agenda, will mobilize global leaders to shape the principles, policies and partnerships needed in this new context.”
“Economic and societal fallout from COVID-19 will profoundly impact the way organizations interact with clients and colleagues long after any vaccine rollout. As businesses transform their workplaces, new vulnerabilities are emerging,” added Carolina Klint, Risk Management Leader, Continental Europe, Marsh.
Lee Hyung-hee, President, Social Value Committee, SK Group, also commented: “The pandemic in 2020 was a stress-test that shook the foundations of economies and societies worldwide. Rebuilding resilience to systemic shocks will require significant funding, international cooperation and greater social cohesion. Resilience will also hinge on the continued growth in connectivity worldwide, as we know that economies that digitized early performed relatively better in 2020.”
Respondents to the Global Risks Report noted rated infectious diseases, employment crises, digital inequality and youth disillusionment as the most clear and present dangers over the next two years.
In the medium term (3-5 years, respondents believe the world will be threatened by knock-on economic and technological risks, which may take several years to materialize – such as asset bubble bursts, IT infrastructure breakdown, price instability and debt crises.
And finally, long-term (5-10 years) risks included existential threats such as weapons of mass destruction, state collapse, biodiversity loss and adverse technological advances
“The acceleration of the digital transformation promises large benefits, such as for example the creation of almost 100 million new jobs by 2025. At the same time however, digitalization may displace some 85 million jobs, and since 60% of adults still lack basic digital skills the risk is the deepening of existing inequalities,” said Peter Giger, Group Chief Risk Officer, Zurich Insurance Group.
“The biggest long-term risk remains a failure to act on climate change. There is no vaccine against climate risks, so post-pandemic recovery plans must focus on growth aligning with sustainability agendas to build back better.”
