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Mapping The World's Greatest Risks (According To Davos)

"War" is back on the minds of the world's richest men (and women). The Global Risks Landscape, a map of the most likely and impactful global risks, puts forward that, 25 years after the fall of the Berlin Wall, “interstate conflict” is once again a foremost concern. As The World Economic Forum notes, these multiple cross-cutting challenges can threaten social stability, perceived to be the issue most interconnected with other risks in 2015, and additionally aggravated by the legacy of the global economic crisis in the form of strained public finances and persistent unemployment. The central theme of profound social instability highlights an important paradox that has been smouldering since the crisis but surfaces prominently in this year’s report. Global risks transcend borders and spheres of influence and require stakeholders to work together, yet these risks also threaten to undermine the trust and collaboration needed to adapt to the challenges of the new global context. Rather ominously, The WEF concludes, the world is, however, insufficiently prepared for an increasingly complex risk environment.

 

"Interstate Conflict" is both the most likely and has the biggest impact of all Global Risks...

As the chart below shows, economic risks largely dominated from 2007 to 2014, with the risk of an asset-price collapse heading the list in the run-up to the financial crisis, giving way to concerns about the more immediate but slow-burning consequences of constrained fiscal finances, a major systemic financial failure in the immediate post-crisis years, and income disparity.

This year features a radical departure from the past decade; for the first time in the report’s history, economic risks feature only marginally in the top five.

In the 25th year after the fall of the Berlin Wall, geopolitical risks are back on the agenda. The dispute over Crimea in March 2014 serves as a forceful reminder of the consequences of interstate conflicts with regional consequences that seemed long forgotten and unfathomable, as further explored in this report. Similarly, together with other events in 2014, such as the prominent rise of the Islamic State, it has brought state collapse and the failure of national governance back into public consciousness. At the same time, health-related risks, such as pandemics – last considered impactful in 2008 – have made it back into the unglamorous top, following the unprecedented spread of Ebola.

 

 

But while "war" remains the biggest global risk, "fiscal crises" dominate the highest concerns for CEOs doing business around the world (signaling at least to us that so much more of the world is now entirely dependent on the government teat).

 

 

And as some regions have prepared for problems and 'risk managed' scenarios, the following shows which risks remain the least prepared for...

 

And what the world's leaders think...

Our self-perception as homines economici or rational beings has faltered in the aftermath of the financial crisis, whose effects are still unfolding socially, as persistent unemployment, ever-rising inequality, unmanaged migration flows and ideological polarization are among the factors stretching societies dangerously close to the breaking point. Social fragility is even threatening geopolitical stability, as breakdowns in cooperation within states make relations between states more difficult.

 

And a quarter-century after the fall of the Berlin Wall, interstate conflict is once again one of the key risks in terms of likelihood and impact. Yet the means through which conflicts can be pursued are growing more varied – from geo-economic tools, such as trade sanctions, to cyber attacks on critical infrastructure, to the potential for a new arms race in lethal autonomous weapons systems.

 

We are not powerless in the face of these concerns. As highlighted previously, multistakeholder collaboration and global governance are key to building resilience and mitigating risks.

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Back to embracing Lagarde's multilateral new world order

 

Source: WEF