Tough times ahead, say concerned experts in risk survey

Pauline Gross
January 21, 2018

WEF stated this in its Global Risks Report 2018, that was released wednesday.

Based on the opinions of nearly 1,000 global experts and decision-makers, the top 5 global risks in 2018 in terms of likelihood are extreme weather events, natural disasters, cyber attacks, data fraud or theft, and failure of climate-change mitigation and adaptation.

Overall, 59 per cent of the respondents pointed to increased level of risks this year, the WEF said while hoping that a positive economic outlook would give leaders the opportunity to tackle systemic fragility affecting societies, economies, global relations and the environment. The pessimistic outlook is partly caused by a deteriorating geopolitical landscape, with 93% of the respondents expecting political and economic confrontations between major powers to worsen in 2018.

"Many of the risks are systemic in nature", said Margareta Drzeniek Hanouz, head of economic progress at the WEF. Other top risks include environmental risks, in particular extreme weather events (for the second year running), natural disasters and failure of climate change mitigation and adaption.

According to the report, extreme weather events were seen as the single most prominent risk.

Unlike previous editions of the Global Risks Report, economic stresses feature less, as the world recovers from the 2008 crash and GDP growth rates slowly improve. Even so, inequality is ranked third among the underlying risk drivers, and the most frequently cited interconnection of risks is that between adverse consequences of technological advances and high structural unemployment or under-employment.

"A widening economic recovery presents us with an opportunity that we can not afford to squander, to tackle the fractures that we have allowed to weaken the world's institutions, societies and environment".

"Cyber-attacks are increasing and have become a global concern as many systems and devices that run critical infrastructure and decision making are now connected through the worldwide web".

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Klaus Schwab, the forum's founder, said one big issue will be "the future of global cooperation related to trade, environment, the fight against terrorism, tax systems, competitiveness".

"Geopolitical friction is contributing to a surge in the scale and sophistication of cyberattacks", said John Drzik, president of global risk and digital at insurance broker Marsh, referring to simmering conflicts from Ukraine to North Korea. Unfortunately, these technology advancements also bring major concerns concerning cyber dependency, cyber risks, and threats.

Therefore, there is a need for greater investment in cyber-risk management, he added, suggesting "we are still under resourced in the amount of effort put into trying to mitigate this risk". I think about the proliferation of interconnected devices-there's now today 8.4 billion of those out there, so already greater than the global population of 7.6 billion, and projected to grow to 20 billion in 2020, so that just widens the attack surface for companies to potential attacks.

The Global Risks Report highlighted the top ten risks in terms of their potential impact, with weapons of mass destruction heading the list.

"Unfortunately, we now observe a "too-little-too-late" response by governments and organisations to key trends such as climate change".

The Global Risks Report 2018 has been developed with the invaluable support throughout the past year of the World Economic Forum's Global Risks Advisory Board.

For example, while many businesses were able to open immediately after the hurricanes and wildfires a year ago, their customers often were displaced, which led to a loss of business income that was not covered by traditional business interruption insurance because there was no damage to the policyholders' properties, he said.

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