World Economic Forum Global Risks Report 2020

The latest Global Risks Report from the World Economic Forum forecasts a year of increased domestic and international divisions and economic slowdown.

Written on 22 January, 2020
Allyssa Hextell

The latest Global Risks Report from the World Economic Forum forecasts a year of increased domestic and international divisions and economic slowdown.

“The political landscape is polarised, sea levels are rising and climate fires are burning. This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation, not just for short-term benefit but for tackling our deep-rooted risks,” said Borge Brende, President of the World Economic Forum.

Over 750 global experts and decision-makers were asked to rank their biggest concerns in terms of likelihood and impact and 78 percent said they expect ‘economic confrontations’ and ‘domestic political polarization’ to rise in 2020.

The report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, points to a need for policy-makers to match targets for protecting the Earth with ones for boosting economies – and for companies to avoid the risks of potentially disastrous future losses by adjusting to science-based targets.

John Drzik, Chairman of Marsh & McLennan Insights, said: “There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility. Scientific advances mean that climate risks can now be modelled with greater accuracy and incorporated into risk management and business plans. High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges.”

For the first time in the survey’s 10-year outlook, the top five global risks in terms of likelihood are all environmental. The report sounds the alarm on:

  • Extreme weather events with major damage to property, infrastructure and loss of human life
  • Failure of climate-change mitigation and adaptation by governments and businesses.
  • Human-made environmental damage and disasters, including environmental crime, such as oil spills, and radioactive contamination.
  • Major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries.
  • Major natural disasters such as earthquakes, tsunamis, volcanic eruptions, and geomagnetic storms.

To younger generations, the state of the planet is even more alarming. The report highlights how risks are seen by those born after 1980. They ranked environmental risks higher than other respondents, in the short- and long- terms and they also believe that the impact from environmental risks by 2030 will be more catastrophic and more likely.

Peter Giger, Group Chief Risk Officer, Zurich Insurance Group warned of the urgent need to adapt faster to avoid the worst and irreversible impacts of climate change and to do more to protect the planet’s biodiversity:

“Biologically diverse ecosystems capture vast amounts of carbon and provide massive economic benefits that are estimated at $33 trillion per year – the equivalent to the GDP of the US and China combined. It’s critical that companies and policymakers move faster to transition to a low carbon economy and more sustainable business models. We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences. Transitionary risks are real, and everyone must play their part to mitigate them. It’s not just an economic imperative, it is simply the right thing to do,” he said.