Biggest risks facing the world’s economies and industries in 2014

The World Economic Forum has released its Global Risks 2014 report, which assesses 31 global risks that have the potential to cause a significant negative impact across entire counties and industries if they were to take place. The risks are assessed over a 10-year period, measured in terms of their likelihood and impact, and are grouped under five classifications: economic, environmental, geopolitical, societal and technological.

Most likely global risks

• Income disparity (societal risk).
• Extreme weather events (environmental risk).
• Unemployment and underemployment (economic risk).
• Climate change (environmental risk).
• Cyberattacks (technological risk).

Most potentially damaging risks

• Fiscal crises (economic risk).
• Climate change (environmental risk).
• Water crises (environmental risk).
• Unemployment and underemployment (economic risk).
• Critical information infrastructure breakdown (technological risk).

“Each risk considered in this report holds the potential for failure on a global scale. However, it is their interconnected nature that makes their negative implication so pronounced as together they can have an augmented effect,” said Jennifer Blanke, Chief Economist at the World Forum. “It is vitally important that stakeholders work together to address and adapt to the presence of global risks in our world today.”

In addition to measuring the seriousness, likelihood and potential impact of these risks, the report addressed three specific cases: the increasing risk of ‘cybergeddon’, unemployment and geopolitical friction.

Increasing risk of ‘cybergeddon’

The report assesses the danger of the deepening reliance on the internet to carry out essential tasks and the mass expansion of devices that are connected to it. As a result, the risk of systematic failure, or ‘cybergeddon’, is greater than ever.

Unemployment

Reduced employment opportunities and the rising cost of education will seriously impact those coming of age in the next decade. Over 50% of young people in some developed markets are currently looking for work and informal employment is rising in developed regions where 90% of the world’s youth live. The report offers an insight into how technological and other measures can be implemented to mitigate some of this risk.

Geopolitical risks

The report identifies four key threats that could impact global stability in the next decade.

• Emerging market uncertainties: the world’s major emerging markets could become unstable as a result of social, political or economic pressure.
• Commercial and political frictions between countries: trade and investment could potentially become increasingly used as a proxy for geopolitical power.
• Proliferation of low-level conflict: caused by technological change and the reluctance of major powers to intervene, which could result in full-scale warfare.
• Slow progress on global challenges: persisting deadlock in global governance institutions could lead to failure to adequately address environmental and developmental challenges.

The Global Risk 2014 report was developed with contributions from Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Centre (University of Pennsylvania).

Read the full Global Risks 2014 report here.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldcement.com/europe-cis/17012014/biggest_risks_facing_the_worlds_economies_and_industries_in_2014_612/