The latest edition of the World Economic Forum’s global risk report (The Global Risk Report 2022) offers some valuable and interesting insights into the current global risk perceptions and areas of concern. The key message is that “A divergent economic recovery from the crisis created by the pandemic risks deepening global divisions at a time when societies and the international community urgently need to collaborate to check COVID-19, heal its scars and address compounding global risks.”
The clear and present global challenges include “Supply chain disruptions, inflation, debt, labour market gaps, protectionism and educational disparities are moving the world economy into choppy waters that both rapidly and slowly recovering countries alike will need to navigate to restore social cohesion, boost employment and thrive. These difficulties are impeding the visibility of emerging challenges, which include climate transition disorder, increased cyber vulnerabilities, greater barriers to international mobility, and crowding and competition in space”. To meet these challenges, the world needs trust and cooperation within and between countries, lest the world shall continue to drift apart.
Risk Perception of global managers
Results of the Global Risks Perception Survey, that underpins the report, highlight the following key sentiment indicators:
· Most respondents see social risks in the form of “social cohesion erosion”, “livelihood crises” and “mental health deterioration” continue to worsen.
· Frighteningly, “only 16% of respondents feel 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.”
· The societal and environmental risks are seen as the most concerning for the next five years.
· However, over a wider horizon of next 10 years, health of the planet dominates concerns; with “climate action failure”, “extreme weather”, and “biodiversity loss” ranking as the top three most severe risks. “Debt crises” and “geoeconomic confrontations” are seen as among the most severe risks over next 10 years.
· Technological risks—such as “digital inequality” and “cybersecurity failure”—are seen as the other critical short- and medium-term threats to the world.
· About the present risk mitigation methods and techniques, the global risk managers believe that “the current state of risk mitigation efforts fall short of the challenge in areas like “Artificial intelligence”, “space exploitation”, “cross-border cyber-attacks and misinformation” and “migration and refugees”. The present risk mitigation efforts are seen as effective in facing the established risks such as “trade facilitation”, “international crime” and “weapons of mass destruction”.
Climate Action Failure – top most long term risk
The failure in addressing the climate concerns is perceived as “the number one long-term threat to the world and the risk with potentially the most severe impacts over the next decade. It is highlighted that the “Climate change is already manifesting rapidly in the form of droughts, fires, floods, resource scarcity and species loss, among other impacts. In 2020, multiple cities around the world experienced extreme temperatures not seen for years—such as a record high of 42.7°C in Madrid and a 72-year low of -19°C in Dallas, and regions like the Arctic Circle have averaged summer temperatures 10°C higher than in prior years.
It is evident that “Governments, businesses and societies are facing increasing pressure to thwart the worst consequences. Yet a disorderly climate transition characterized by divergent trajectories worldwide and across sectors will further drive apart countries and bifurcate societies, creating barriers to cooperation.”
Cyberthreats emerging as prominent risk
As per the Report, “in 2020, malware and ransomware attacks increased by 358% and 435% respectively—and are outpacing societies’ ability to effectively prevent or respond to them. Lower barriers to entry for Cyberthreats actors, more aggressive attack methods, a dearth of cybersecurity professionals and patchwork governance mechanisms are all aggravating the risk.”
It is anticipated that “attacks on large and strategic systems will carry cascading physical consequences across societies, while prevention will inevitably entail higher costs. Intangible risks—such as disinformation, fraud and lack of digital safety—will also impact public trust in digital systems. Greater cyberthreats will also hamper cooperation between states if governments continue to follow unilateral paths to control risks. As attacks become more severe and broadly impactful, already-sharp tensions between governments impacted by cybercrime and governments complicit in their commission will rise as cybersecurity becomes another wedge for divergence—rather than cooperation—among nation-states.”
“Involuntary migration” poses a potent risk
Economic hardships, climate change and political instability in many countries is forcing a lot of people to migrate to safer places involuntarily. At the same time, effects of pandemic and other factors are resulting in increased economic protectionism and restrictive labor markets, creating higher barriers to entry for migrants. “These higher barriers to migration, and their spill-over effect on remittances—a critical lifeline for some developing countries—risk precluding a potential pathway to restoring livelihoods, maintaining political stability and closing income and labour gaps.”
In the most extreme cases, humanitarian crises will worsen since vulnerable groups have no choice but to embark on more dangerous journeys.
It is noteworthy that “the United States faced over 11 million unfilled jobs in general and the European Union had a deficit of 400,000 drivers just in the trucking industry.”
Space could be new war zone
The report mentions that ‘New commercial satellite market entrants are disrupting incumbents’ traditional influence over the global space commons in delivering satellite services, notably internet-related communications. A greater number and range of actors operating in space could generate frictions if space exploration and exploitation are not responsibly managed. With limited and outdated global governance in place to regulate space alongside diverging national-level policies, risks are intensifying.”
“One consequence of accelerated space activity is a higher risk of collisions that could lead to a proliferation of space debris and impact the orbits that host infrastructure for key systems on Earth, damage valuable space equipment or spark international tensions.”
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