Climate issues top list of global risks, survey finds

Climate-related concerns have moved to the forefront of the World Economic Forum’s annual Global Risks Report.

The 17th edition of reportpublished this week, surveyed 1,000 business, government and other leaders from around the world to find out what they see as the most pressing short- and long-term risks to their organizations and the world at large .

Failure to act on climate change ranked first on the list of the top ten global risks by severity over the next ten years (see below). Five of the items on the list, including the first three, relate to the environment.

Top 10 global risks by severity

(over the next 10 years)

  1. Failure of climate action
  2. Extreme weather conditions
  3. Loss of biodiversity
  4. Erosion of social cohesion
  5. Livelihood crises
  6. Infectious diseases
  7. Man-made environmental damage
  8. Natural resource crises
  9. Debt crisis
  10. Geoeconomic confrontation

Extreme weather conditions top the list of near-term risks over the next two years. Livelihood crises rank second on this list, followed by failed climate action.

Top 10 short-term global risks

(Over the next 0-2 years)

  1. Extreme weather conditions
  2. Livelihood crises
  3. Failure of climate action
  4. Erosion of social cohesion
  5. Infectious diseases
  6. Deterioration of mental health
  7. Cybersecurity failure
  8. Debt crisis
  9. Digital inequality
  10. Asset bubble bust

“Our planet is on fire and we have to deal with it,” said Borge Brende, president of the World Economic Forum, in a article published by the organization. “Risk reports show that the cost of inaction far exceeds the cost of action.”

A tangle of worries

Despite the rapid growth of environmental, social and governance (ESG) initiatives among businesses around the world, efforts to address climate change face significant challenges exacerbated by the COVID-19 pandemic and related economic fallout, which also threaten to further deepen social and economic inequalities. By 2024, advanced economies are expected to have produced GDP 0.9% higher than pre-pandemic expectations. In contrast, developing countries (excluding China) will see their GDP fall 5.5% below pre-pandemic projections, widening the global income gap, according to the report.

Global GDP is expected to be 2.3% lower in 2024 than it would have been without the pandemic, according to the report. The recent increase in COVID-19 cases, combined with inflation, rising commodity prices and debt problems, could hamper governments’ efforts to facilitate a sustainable recovery.

Other factors point to a growing gap in the recovery of economies globally. In some countries, high vaccination rates, successful digital transformations and opportunities for growth could produce a rapid return to pre-pandemic trends and possibly a more resilient long-term outlook. For many other countries, their economies may be held back by a lack of access to vaccines, continued strain on health systems, stagnating labor markets and widening digital divides.

Differing economic trajectories will make it harder for governments to reach agreements to cut carbon emissions to slow the pace of global warming, the report said.

An uneven recovery that threatens many livelihoods and further widens wealth gaps could accelerate the deterioration of mental health and the erosion of social cohesion in countries around the world. On top of that, the increased reliance on remote working and digital connections during the pandemic has led to an increase in cyberattacks which has been met with a cybersecurity response dampened by the need to focus on COVID-19 and related issues. economic.

This trend could lead to major cybersecurity failures by governments and large organizations. This, in turn, could damage trust in institutions and lead to geopolitical confrontations between states that fight cybercrime and those that sponsor it.

Space is another area at risk. The increasing number of satellites in orbit increases the risk of collisions with space debris, which could damage satellites and negatively affect critical services on Earth.

The tangled web of interconnected threats identified in the report is reflected in the responses to the question “What do you think about the outlook for the world?” Less than 16% of the 1,000 respondents said they felt positive or optimistic. On the other hand, more than 83% indicated that they were concerned or worried.

Recommendations for companies

While the threats are daunting, the Global Risks Report has identified four areas of opportunity for businesses to act.

  • Small businesses could follow the lead of large enterprises and thoroughly analyze their business interruption risks across supply chains, managed service providers, utilities, and customers. The goal is to mitigate the impact of bottlenecks and outages.
  • Companies of national importance should seek to capitalize on the willingness to work with each other demonstrated during the pandemic. More broadly written codes of conduct could define industry-wide best practices for any future crisis.
  • Large employers, learning from the lessons of workforce and community resilience over the past two years, could incorporate a resilience dimension into health and benefits offerings.
  • Large companies can become more active in addressing large-scale public policy challenges that affect their business. While public funds tend to drive resilience efforts, businesses have an opportunity to spur innovation in an effort to reduce blind spots and counter siled tendencies within government.

Climate of uncertainty

Despite the prevalence of intense near-term risks from the pandemic and related economic and societal issues, the World Economic Forum has underscored the need to act now to tackle climate change.

The group pointed to its 2006 Global Risks Report, which warned of potential pandemics and other health-related threats, saying a “deadly flu, its spread facilitated by global travel patterns and not contained by insufficient warning mechanisms, would present an acute threat”. Despite this warning, the world was unprepared when COVID-19 hit in 2020.

Public and private sector leaders face similar challenges in inspiring action to reduce carbon emissions and take other action to slow climate change.

“Humans are no good at the boiling frog scenario, which is climate change,” said Peter Giger, group risk director, Zurich Insurance Group, “they are much better at the fight or flight scenario, which was the pandemic”.

— To comment on this article or suggest an idea for another article, contact Jeff Drew at [email protected].

Teresa H. Sadler