For the past 15 years, the World Economic Forum’s Global Risks Report has been warning the world about the dangers of pandemics. In 2020, we saw the effects of ignoring preparation and ignoring long-term risks.
The COVID-19 pandemic has not only claimed millions of lives, but it also widened long-standing health, economic and digital disparities. Billions of caregivers, workers and students - particularly minorities who were disadvantaged before the pandemic - are now at risk of missing pathways to the new and fairer societies that the recovery could unlock.
According to the Global Risks Report 2021, these developments may further impede the global cooperation needed to address long-term challenges such as environmental degradation.
Damage to social cohesion
When it comes to technology access and digital skills, the gap between the “haves” and the “have nots” risks widening and challenging social cohesion. This will particularly affect young people worldwide, as this group faces its second global crisis in a generation and could miss out altogether on opportunities in the next decade.
Financial, digital and reputational pressures resulting from COVID-19 also threaten to leave behind many companies and their workforces in the markets of the future. While these potential disparities could cause societal fragmentation for states, an increasingly tense and fragile geopolitical outlook will also hinder the global recovery if mid-sized powers lack a seat at the global table.
Once again, environmental risks dominate by impact and likelihood, looking ahead towards the next decade. Societal fractures, uncertainty and anxiety will make it more difficult to achieve the coordination needed to address the planet’s continued degradation.
Evaluating critical risks
For the first time, the report also rates risks according to when respondents perceive they will pose a critical threat to the world. Clear and present dangers (0-2 years) reveal concern about lives and livelihoods - among them infectious diseases, employment crises, digital inequality and youth disillusionment. In the medium-term (3-5 years), respondents believe the world will be threatened by knock-on economic and technological risks, which may take several years to materialise - such as asset bubble bursts, IT infrastructure breakdown, price instability and debt crises.
Existential threats (5-10 years) - weapons of mass destruction, state collapse, biodiversity loss and adverse technological advances - dominate long-term concerns.
“In 2020, the risk of a global pandemic became reality, something this report has been highlighting since 2006," said Saadia Zahidi, managing director at the World Economic Forum. "We know how difficult it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognize that ignoring them doesn’t make them less likely to happen. As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet. To help meet this challenge, The Davos Agenda will mobilise global leaders to shape the principles, policies and partnerships needed in this new context.”
The report also reflects on the responses to COVID-19, drawing lessons designed to bolster global resilience. These lessons include formulating analytical frameworks, fostering risk champions, building trust through clear and consistent communication, and creating new forms of partnership. The key risks outlined in the report are complemented with recommendations to help countries, businesses, and the international community to act, rather than react, in the face of cross-cutting risks.
The report closes with an overview of “frontier risks” - nine high-impact, low-probability events drawn from expert foresight exercises - including geomagnetic disruption, accidental wars and exploitation of brain-machine interfaces
“The acceleration of the digital transformation promises large benefits, such as for example the creation of almost 100 million new jobs by 2025," said Peter Giger, Group Chief Risk Officer, Zurich Insurance Group. "At the same time however, digitalization may displace some 85 million jobs, and since 60% of adults still lack basic digital skills the risk is the deepening of existing inequalities. The biggest long-term risk remains a failure to act on climate change. There is no vaccine against climate risks, so post-pandemic recovery plans must focus on growth aligning with sustainability agendas to build back better.”
“Economic and societal fallout from COVID-19 will profoundly impact the way organisations interact with clients and colleagues long after any vaccine rollout," commented Carolina Klint, risk management leader, Continental Europe at Marsh. "As businesses transform their workplaces, new vulnerabilities are emerging. Rapid digitalisation is exponentially increasing cyber exposures, supply chain disruption is radically altering business models, and a rise in serious health issues has accompanied employees’ shift to remote working. Every business will need to strengthen and constantly review their risk mitigation strategies if they are to improve their resilience to future shocks.”
“The pandemic in 2020 was a stress-test that shook the foundations of economies and societies worldwide," added Lee Hyung-hee, president, Social Value Committee at SK Group. "Rebuilding resilience to systemic shocks will require significant funding, international cooperation and greater social cohesion. Resilience will also hinge on the continued growth in connectivity worldwide, as we know that economies that digitized early performed relatively better in 2020. If the continued deployment of 5G and AI is to emerge as an engine of growth, however, we must urgently bridge digital divides and address ethical risks.”
The Global Risks Report 2021 was developed with the support of the World Economic Forum’s Global Risks Advisory Board. It also benefits from ongoing collaboration with its strategic partners Marsh McLennan, SK Group and Zurich Insurance Group and its academic advisers at the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).
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