Deteriorating international relations are hindering the world’s ability to foster collective action and tackle the most serious global risks, according to the World Economic Forum (WEF).
The Forum’s Global Risks Report 2019 said that international cooperation looks set to worsen further over the coming year, with experts identifying rising geopolitical and geo-economic tensions as the most urgent risks in 2019.
The WEF also highlighted environmental degradation as the most pressing long-term global risk and cyber threats as among the most significant potential blind spots.
Of the 1,000 experts and decision makers surveyed by the WEF, 88% said they are expecting further erosion of multilateral trading rules and agreements in 2019.
85% of respondents also predicted an increased risk of “political confrontations between major powers” this year, which will further restrict international cooperative efforts.
“With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation,” said Børge Brende, President of the WEF.
“We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us towards,” he continued. “What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”
Cyber attacks continue to be ranked among the most pressing global risks, having been identified by the WEF as the biggest threat to European business last month, but environmental risks continue to dominate concerns in the long-term.
“2018 was sadly a year of historic wildfires, continued heavy flooding and increasing greenhouse gas emissions,” said Alison Martin, Group Chief Risk Officer at Zurich Insurance Group, who collaborated with the WEF on the Global Risks Report.
“It is no surprise that in 2019, environmental risks once again dominate the list of major concerns. So, too, does the growing likelihood of environmental policy failure or a lack of timely policy implementation,” she continued.
“To effectively respond to climate change requires a significant increase in infrastructure to adapt to this new environment and transition to a low-carbon economy. By 2040, the investment gap in global infrastructure is forecast to reach $18 trillion against a projected requirement of $97 trillion. Against this backdrop, we strongly recommend that businesses develop a climate resilience adaptation strategy and act on it now.”
The WEF identified the top five global risks in terms of likelihood as extreme weather events (e.g. floods, storms, etc.); failure of climate-change mitigation and adaptation; major natural disasters (e.g. earthquake, tsunami, volcanic eruption, geomagnetic storms); massive incident of data fraud/theft; and large-scale cyberattacks.
By comparison, the top five risks in terms of impact were weapons of mass destruction; failure of climate-change mitigation and adaptation; extreme weather events, water crises; and major natural disasters.
John Drzik, President of Global Risk and Digital at Marsh, who also collaborated on the report, commented: “Persistent underfunding of critical infrastructure worldwide is hampering economic progress, leaving businesses and communities more vulnerable both to cyberattacks and natural catastrophes, and failing to make the most of technological innovation.
“Allocating resources to infrastructure investment, in part through new incentives for public-private partnerships, is vital for building and strengthening the physical foundations and digital networks that will enable societies to grow and thrive.”