Just released - World Economic Forum's Global Risk Report 2016
The Wharton Risk Management and Decision Processes Center announced Jan. 14 the release of the World Economic Forum's Global Risks Report 2016. The report, undertaken in conjunction with the Wharton Risk Management and Decision Processes Center of the University of Pennsylvania, reports opinions of 750 experts who assessed 29 global risks for impact and likelihood over a 10-year time horizon and is being released in advance of the Forum's annual meeting taking place next week in Davos.
- Chiefly, the report finds an increased likelihood of all risks: environmental, geopolitical, societal, economic and technological, looks set to shape the global agenda in the coming year.
- Failure of climate-change mitigation and adaptation is the number one global risk in terms of impact.
- Large-scale involuntary migration tops the list of risks in terms of likelihood and is the fastest rising in terms of both impact and likelihood.
- Cyberattacks are now considered the greatest risk to doing business in North America.
The report also devotes more emphasis on not just risks, but on possible solutions and examples of successful initiatives in the private, public and non-governmental sectors around the world. The business community, working with the public sector, has a critical role to play to improve global risk management. Erwann Michel-Kerjan, executive director of the Wharton Risk Management Center and member of the advisory board of the World Economic Forum Global Risks initiative notes, "We are getting better at anticipating future shocks. Our next task is to quickly build much more effective resilience capability. I believe that if designed and executed well, restructuring some of the $300 trillion global financial assets towards this new resilience investment agenda can be a game changer. Let's join forces to do that."
Environmental risks have come to prominence in the global risks landscape in 2016. In this regard Howard Kunreuther, co-director of the Wharton Management Risk Center and an academic advisor for GRR 2016, points out that "this year's Global Risks Report highlights the importance of the Paris Agreement on climate change as an historic turning point with the need for constructing implementable plans to significantly reduce carbon emissions. To encourage developing countries to invest in energy efficient technologies, low- or no-interest long-term loans could be provided through international organizations. Energy efficient technologies such as wind and solar are now cost-efficient relative to standard technologies so they are likely to be utilized by businesses and households."Â
"We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways. Mitigation measures against such risks are important, but adaptation is vital," said Margareta Drzeniek-Hanouz, head of the Global Competitiveness and Risks, World Economic Forum.
Technological crises have yet to impact economies or securities in a systemic way, but the risk still remains high, something that potentially may not have been fully priced by experts. A separate survey of business leaders assessing risks for doing business finds cyberattacks to be the top risk in no fewer than eight countries, including USA, Japan, Germany, Switzerland and Singapore. Cyberattacks feature among the top five risks in 27 economies, indicating the extent to which businesses in many countries have been impacted already by this rising threat.
The report has been developed with the support of Marsh & McLennan Companies and Zurich Insurance Group, other academic advisers (Oxford University's Martin School and the National University of Singapore) and the advisory board of the Global Risks Report 2016.
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