The warnings of the past decade are starting to manifest themselves in new, sometimes unexpected ways and harm people, institutions and economics – that stark warning is the starting point for the World Economic Forum’s latest Global Risks Report.
And as a result, it argues that it is now time to build resilience, rather than simply trying to avoid the problems.
In the short-term, it identifies large scale involuntary migration as the number one risk, followed by extreme weather events (second). Failure of climate change mitigation and adaptation is third, interstate conflict with regional consequences is fourth, and major natural catastrophes is fifth.
Clearly all these events have the potential to cause massive disruption to supply chains.
But the survey of some 750 experts homes in on environment issues as the most critical global risks over the next ten years. Water crises are top, followed by failure of climate change mitigation and adaptation. Extreme weather events come third, and food crises are fourth. And fifth is profound social instability.
“Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks. Meanwhile, geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders,” says Cecilia Reyes, chief risk officer at Zurich Insurance, one of the strategic partners in producing the report.
Ironically, technological risk such a cyber-attack and failure of critical information infrastructure, which has been considered a major issue in the past, has receded – relatively. Nevertheless, a separate survey of business leaders assessing risks for doing business finds cyber-attacks to be the top risk in eight countries, including the USA, Japan, Germany, Switzerland and Singapore.
The study look at some of the ways that resilience to all these risks can be increased. For example, it discusses how climate change–resilient crops and supply chain networks, as well as financing and insurance schemes, can help mitigate the social, economic and environmental aspects of food security risks related to climate change.
Nor surprisingly, the report argues that businesses, need to strengthen their resilience to these threats, and that there is a clear role for collaboration among public and private sector in achieving this.
In particular, it argues that businesses need to find new ways to partner with governments to address global risks. That could be the biggest challenge of all.