New Zealand’s big risks this year are natural catastrophes, extreme weather events and large cyber attacks, a new report suggests.
The World Economic Forum has put out its latest Global Risks Report for 2018.
The report – which every January shares the perspectives of global experts and decision-makers on the most significant risks that face the world – suggests we are struggling to keep up with the accelerating pace of change. It highlights numerous areas where we are pushing systems to the brink, from extinction-level rates of biodiversity loss to mounting concerns about the possibility of new wars.
The survey asked 1000 respondents for their views about the trajectory of risks in 2018.
Of those, 59% said risks were intensifying, compared to 7% pointing to declining risks.
A deteriorating geopolitical landscape is partly to blame for the pessimistic outlook in 2018, with 93% of respondents saying they expect political or economic confrontations between major powers to worsen and nearly 80% expecting an increase in risks associated with war involving major powers.
As in 2017, the environment was by far the greatest concern raised by risk expert respondents.
Among the 30 global risks the experts were asked to prioritize in terms of likelihood and impact, all five environmental risks – extreme weather; biodiversity loss and ecosystem collapse; major natural disasters; man-made environmental disasters; and failure of climate-change mitigation and adaptation – were ranked highly on both dimensions. Extreme weather events were seen as the single most prominent risk.
“A widening economic recovery presents us with an opportunity that we cannot afford to squander, to tackle the fractures that we have allowed to weaken the world’s institutions, societies and environment. We must take seriously the risk of a global systems breakdown. Together we have the resources and the new scientific and technological knowledge to prevent this. Above all, the challenge is to find the will and momentum to work together for a shared future,” said professor Klaus Schwab, founder and executive chairman of the World Economic Forum.
The report says cyber threats are growing in prominence, with large-scale cyberattacks now ranked third in terms of likelihood worldwide, while rising cyber-dependency is ranked as the second most significant driver shaping the global risks landscape over the next 10 years.
John Drzik, president of global risk and digital at Marsh said: “Geopolitical friction is contributing to a surge in the scale and sophistication of cyberattacks. At the same time cyber exposure is growing as firms are becoming more dependent on technology. While cyber risk management is improving, business and government need to invest far more in resilience efforts if we are to prevent the same bulging ‘protection’ gap between economic and insured losses that we see for natural catastrophes.”
Economic risks featured less prominently this year, prompting concern the improvement in global GDP growth rates may lead to complacency about persistent structural risks in the global economic and financial systems.
But inequality was ranked third among the underlying risk drivers, and the most frequently cited interconnection of risks was that between adverse consequences of technological advances and high structural unemployment or under-employment.
Future Shocks
The growing complexity and interconnectedness of global systems can lead to feedback loops, threshold effects and cascading disruptions. Sudden and dramatic breakdowns – future shocks – become more likely. This year’s Global Risks Report presented 10 short “what-if” scenarios, not as predictions but as food for thought to encourage world leaders to assess the potential future shocks that might rapidly and radically disrupt their worlds:
