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RISKY BUSINESS

The world is now more likely to be ravaged by environmental, not economic, catastrophes

Mass lightning bolts light up night skies by Daggett airport
Reuters/Gene Blevins
Scarier than a simple financial crisis.
By Joon Ian Wong
Published Last updated This article is more than 2 years old.

It’s not the economy, stupid. That’s the conclusion drawn from more than a decade of quantifying the biggest threats facing the world, as detailed in the World Economic Forum’s annual risk report.

Economic factors, like an oil price shock or a slowing Chinese economy, were frequently deemed the most likely risks to cause significant global upheaval before 2011. Back then, environmental issues like extreme weather events and natural disasters took a backseat. That has changed in the past six years, as worries about the environment outpace concerns about the markets in the minds of hundreds of luminaries surveyed every year by the WEF (the organization that runs the annual conference in Davos for the global elite).

The environment is now considered not just more likely to cause global disruption, but also more capable of generating the biggest impact.

To make things even bleaker, it’s not as if the economic risks have just magically melted away. It’s just that environmental problems are considered more urgent than before. “Economic risks are still present in the background,” said Margareta Drzeniek Hanouz of the WEF at a briefing in London. “But they have been overtaken by the need for action on the environmental side.”

The most likely risk for 2017 is “extreme weather events,” while the highest impact risk is the use of weapons of mass destruction. “These [enviromental risks] act like a force multiplier on the range of socio-economic and political risks the report highlights,” said Richard Samans, another WEF executive who also worked on the report.

Likelihood
Impact
2007
Breakdown of critical information infrastructure
Asset price collapse
2008
Asset price collapse
Asset price collapse
2009
Asset price collapse
Asset price collapse
2010
Asset price collapse
Asset price collapse
2011
Storms and cyclones
Fiscal crises
2012
Severe income disparity
Major systemic financial failure
2013
Severe income disparity
Major systemic financial failure
2014
Income disparity
Fiscal crises
2015
Interstate conflict with regional consequences
Water crises
2016
Large-scale involuntary migration
Failure of climate-change mitigation and adaptation
2017
Extreme weather events
Weapons of mass destruction
Source: World Economic Forum, Global Risks Report

Here’s what the global risk picture looks like over the past decade for all five categories considered in the report. First, by likelihood:

Second, by impact:

And lastly, all of this year’s risks on a matrix that combines both likelihood and impact:

World Economic Forum Global Risks Report 2017

Solutions will be discussed by world leaders and corporate bigwigs in Davos next week (phew!).

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