The World Economic Forum’s Global Risks Report 2020 has forecasted a year of increased domestic and international divisions in the midst of an economic slowdown.
It indicated that geopolitical turbulence is propelling us towards an “unsettled” unilateral world of great power rivalries at a time when business and government leaders must focus urgently on working together to tackle shared risks.
The report compiled data and analysis from a survey of more than 750 global experts and decision-makers who were asked by the World Economic Forum to rank their biggest concerns in terms of both likelihood and impact.
In the shorter term, 78 per cent of respondents indicated they expect “economic confrontations” and “domestic political polarisation” to rise in the year ahead.
According to the World Economic Forum, this would prove catastrophic – particularly for urgent challenges such as the climate crisis, biodiversity loss and record species decline – and it was noted by respondents, who catapulted environmental issues to the top in a list of the top five global risks in terms of likelihood.
The World Economic Forum noted that it’s the first time that decision-makers and experts have listed their top five global risks as all environmental.
The top five risks – by likelihood – over the next 10 years are:
1. Extreme weather events (floods, storms etc) – with major damage to property, infrastructure and loss of human life
2. Failure of climate-change mitigation and adaptation by governments and businesses
3. Human-made environmental damage and disasters – inclusive of environmental crimes such as oil spills and radioactive contamination
4. Major biodiversity loss and ecosystem collapses, whether terrestrial or marine – with these leading to irreversible consequences for humankind and industry as a result of severely depleted resources
5. Major natural disasters – such as earthquakes, tsunamis, volcanic eruptions and geomagnetic storms
A list of the top five risks – by severity of impact – was also compiled:
1. Failure of climate change mitigation and adaptation
2. Weapons of mass destruction
3. Major biodiversity loss and ecosystem collapse
4. Extreme weather events
5. Water crises
Commenting on the findings, World Economic Forum president Borge Brende observed a context where “the political landscape is polarised, sea levels are rising and climate fires are burning”.
He considered 2020 to be the year where “world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation, not just for short-term benefit but for tackling our deep-rooted risks”.
The report was undertaken in partnership with Marsh & McLennan, with the insights group’s chairman acknowledging “there is mounting pressure on companies from investors, regulators, customers and employees to demonstrate their resilience to rising climate volatility”.
“High-profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges,” he added.
The report pointed to a need for policymakers to match targets for protecting the earth with ones for boosting economies.
It also called out to companies to avoid the risks of potentially disastrous future losses by adjusting to science-based targets.
The report comes as the world’s largest fund manager has announced its exit from thermal coal investments as it looks towards sustainability as standard.
