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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.
  • Joon Ian Wong
By Joon Ian Wong

Technology Reporter

Published Last updated on 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.

YearTop risk by:
LikelihoodImpact
2007Breakdown of critical information infrastructureAsset price collapse
2008Asset price collapseAsset price collapse
2009Asset price collapseAsset price collapse
2010Asset price collapseAsset price collapse
2011Storms and cyclonesFiscal crises
2012Severe income disparityMajor systemic financial failure
2013Severe income disparityMajor systemic financial failure
2014Income disparityFiscal crises
2015Interstate conflict with regional consequencesWater crises
2016Large-scale involuntary migrationFailure of climate-change mitigation and adaptation
2017Extreme weather eventsWeapons 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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