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

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. 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. 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. 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. 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. 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. 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. 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