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.
|Year||Top risk by:|
|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:
Solutions will be discussed by world leaders and corporate bigwigs in Davos next week (phew!).