A strong global economic outlook provides a welcome opportunity for policymakers to address rising systemic risks such as climate change, geopolitical tensions, and cyber threats, suggests a new report from the not-for-profit World Economic Forum (WEF)
According to the Global Risks Report 2018, the rosy economic backdrop represents a “golden opportunity” for the world’s leaders to deal with the growing crop of risks that are facing the global economy and society.
The report presents the results of a recent WEF survey of 1,000 global experts, which finds that 59% expect heightened risks in the year ahead, and just 7% see risks diminishing.
“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,” saya professor Klaus Schwab, founder and executive chairman of the WEF, in a statement. “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.”
The greatest risk, according to the report, is the environment, including the increasing incidence of extreme weather events, natural disasters, biodiversity loss, and the failure to address climate change.
“Environmental risks, together with a growing vulnerability to other risks, are now seriously threatening the foundation of most of our commons,” says Alison Martin, group chief risk officer at Zurich Insurance Group, in as statement. “Unfortunately we currently observe a ‘too-little-too-late’ response by governments and organizations to key trends such as climate change. It’s not yet too late to shape a more resilient tomorrow, but we need to act with a stronger sense of urgency in order to avoid potential system collapse.”
Additionally, the survey finds growing concern about geopolitical risk, as 93% of respondents expect increasing political or economic confrontation between major powers, and nearly 80% foresee a rising risk of war. Cyber risk is also on the rise, the report notes.
Although overall concern about the risks facing the world are on the rise, economic risks are less prominent this year, the report says, “leading some experts to worry that the improvement in global GDP growth rates may lead to complacency about persistent structural risks in the global economic and financial systems.”