The top global risks facing the world in 2021 and beyond

02 February 2021 Consultancy.uk 5 min. read
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Infectious diseases, livelihood crises and extreme weather events are the top clear and present dangers facing the world today. A new World Economic Forum report in collaboration with Marsh McLennan, SK Group and Zurich International explores the world’s risk profile. 

The analysis is based on a survey of more than 800 people across the globe, who were asked to pinpoint factors that could become a critical threat now and in the future. The backdrop is Covid-19, and the goal is to take a closer look on how it has rocked the world.

“The 2021 report reflects the depth and disparity of the pandemic’s impact, explores how critical global challenges have been exacerbated and reshaped, and highlights the need to address these risks in a more collaborative way,” explained Carolina Flint, Managing Director & Risk Management Leader at Marsh.

The top global risks facing the world in 2021 and beyond

For a nuanced overview, the researchers broke the global risk profile down into three distinct timelines. ‘Clear & present dangers’ refer to threats that could hit home within the next two years. ‘Knock-on effects’ will ensue in the medium term between three and five years from now. Then there are ‘existential threats’ – fundamental issues that could manifest in the next five to ten years. 

The clear & present dangers very much reflect the key events of 2020. For instance, the threat from infectious disease was font and centre – cited by nearly 60% of survey respondents. With job losses abound, livelihood crises were labeled a current threat by 55%, while extreme weather events were the third biggest threat – presumably relating to bushfires and floods.

With business IT infrastructure stretched across personal and home networks, cyber security has also made its way up the immediate threat profile. Of note in the top five immediate risks is digital inequality – where socio-economic disparities are worsened as expensive technology becomes the key to business and personal survival.

“A widening digital gap can worsen societal fractures and undermine prospects for an inclusive recovery,” explained Daniel Glaser, President & CEO at Marsh McLennan. Indeed, a bigger socio-economic gap could be a severe threat to social cohesion in the future – a top concern for 40% of respondents.

In similar vein, many brows are furrowed by the prospect of youth disillusionment – stemming from a lost young generation that has now faced two economic crises and icy job markets as a result. These youth stand to lose out on economic opportunities for one, while also facing mental health challenges. Economic stagnation is also a chief risk, while perennial threats from terrorism and environmental damage persist in the backdrop.

The top global risks facing the world in 2021 and beyondThese are near term concerns. In the medium term, the threat profile takes on a more economic and financial avatar. Many are worried about asset bubble bursts, price instability, commodity shocks and debt crises – all of which are both products and harbingers of a protracted economic crisis.

Technology is also a medium term worry. Digital adoption leapfrogged several years in a matter of months during the pandemic, and many are worried that the IT infrastructure is simply not equipped for such a boom in volumes. A breakdown of this infrastructure is a top concern, as is a breakdown of its security. 

Outside of these factors, the medium term is rife with concerns about international relations. Inter state conflicts, fractured trade relations and resource geopolitisation – all of which were key themes unfolding even before the pandemic – are prone to return again amid a weak and internalised global economy.

Geopolitical worries persist through the long term as well. Weapons of mass destruction are the top concern in the next five to ten years, while the collapse of states and multilateralism are also dreaded prospects. Half of the survey respondents also expressed concern around the rapid advancement of technology – and its implications over a long term horizon on jobs and security.

The top global risks facing the world in 2021 and beyondThen there are a host of environmental risks, which most expect to manifest over the five to ten year horizon. These include loss of biodiversity, natural resource crises, and the failure of concerted climate action. Some fear that the current trends of health and environmental crises might even spur a backlash against science in the future – a pattern that is already emerging in some sections of society.

“Climate change—to which no one is immune—continues to be a catastrophic risk. Although lockdowns worldwide caused global emissions to fall in the first half of 2020, evidence from the 2008–2009 Financial Crisis warns that emissions could bounce back. A shift towards greener economies cannot be delayed until the shocks of the pandemic subside,” noted Glaser.

Indeed, action is the need of the hour to navigate this growing risk landscape, each part of which is real and devastating in its own right. Glaser highlights that collaborative efforts could take the world in the right direction, and mitigate some of these challenges.

“With governments still deliberating how to pivot away from emergency to recovery, and with companies anticipating a changed business landscape, there are opportunities to invest in smart, clean and inclusive growth that will improve productivity and delivery of sustainable agendas.”