Wef risk report2011


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Summary of the Risks in the next decade by World Economic Forum Risk Report 2011

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Wef risk report2011

  1. 1. Introduction What are the global risks in this decade? • Global Risks 2011 (6th edition) is World Economic Forum’s effort to analyze global risk landscape in the coming decade. – derived from risk perception survey of 580 global leaders and decision makers to identify/assess risk interconnections, with inputs from WEF risk research, workshops and experts. • Provides a high level overview of 37 global risks, and how they are interconnected. 1
  2. 2. Introduction | 1 risk map How are global risks interconnected? Cross-cutting risks 4 2 5 Exacerbate other risks and inhibit response capacity. 3 Nexus of risks 5 4 3 Distinct cluster with strong 2 2 interconnections. 5 5 4 Outliers 5 High levels of uncertainty . Risk attributes slowly become more 3 4 visible, but can move rapidly to centre of risk landscape under ripe conditions. 4 5 Risks to watch Strongly varying expert views on likelihood and impact, but may surprise or overwhelm. 2
  3. 3. Introduction | 1 risk map | 2 cross-cutting 2 cross-cutting risks exacerbate other risks, and inhibit effective response. Economic disparity - one of the most important risks this decade, and most underestimated in terms of impact. Disparity between and within nations leading to social fragmentation, undermining national solidarity with drop in traditional/institutional trust, which is replaced by fluid ‘tribes/diasporas’. Global governance failures result in paralysis in addressing global challenges. Will governance muddle along? Fall into a vacuum as ‘G20, G2 but G-zero’ ? Replaced in part by new agile structures? e.g. non-state actors. Or we move backwards to discard coordinated global governance completely? 3
  4. 4. Introduction | 1 risk map| 2 cross-cutting | 3 nexus Cluster #1 – Macro-economic imbalances 3 negative and non- exclusive scenarios • Frequent fiscal-banking crises in developed economies. • Hot money results in asset bubbles in emerging economies, increasing currency pressures. • Stagflation of advanced economies, while emerging economies battle inflation. 4
  5. 5. Introduction | 1 risk map| 2 cross-cutting | 3 nexus Cluster #2 – Illegal economy imbalances Growing governance failures create space for illicit activities, undermining governance in return. Contagion to other risks • Illicit trade is hard to quantify, perhaps 7-10% of global economy and growing. • Nexus heavily influences other risks: fragile states with spillover effects in geopolitical conflict and terrorism. Positive feedback loop between economic disparity and cluster. 5
  6. 6. Introduction | 1 risk map| 2 cross-cutting | 3 nexus Cluster #3 – Food-energy-water Feeding the next billion. • ~ 1 billion more people by 2020. • 50% increase in food demand by 2030. • 30% increase in water demand by 2030. • 40% increase in energy demand by 2030, exacerbating climate change. 6
  7. 7. Introduction | 1 risk Maps | 2 cross-cutting | 3 nexus | 4 outliers 4 outliers that could move to the center of risk An actual slowdown will lead to social and political instability across the whole region Unintended consequences of synthetic biology, nanotechnology and genetic engineering Survey respondents and experts differ widely over likelihood of Marine territory disputes and decline of fish stocks Least cited risk of the set, likely systematically underestimated 7
  8. 8. Introduction | 1 risks map | 2 cross-cutting | 3 nexus | 4 outliers | 5 to watch 5 trends to keep watch on Weapons of Mass Cyber Security Demographics Resource Security De-globalization Destruction• Cyber theft, • Ageing • Extreme • Economic • CBRN risks espionage, war, populations in commodity & nationalism + • Nuclear terrorism is advanced energy price anti-immigration proliferation evolving quickly economics add to volatility sentiments • Illegal acquisitions but not well fiscal stress. • ‘Soft’ production • Throwing sand understood. • Emerging limits vs ‘hard’ into the gears of economies that natural limits global trade e.g. do not create jobs marginal to tap on restrictions demographic placed on dividend face movements of angry youth. goods. 8