WEF: Top risks facing the economy, society & humanity

As part of setting the tone for the event, the World Economic Forum (WEF) for the past ten years annually conducts research into the perceived highest impact risks facing the economy, society and humanity and their likelihood. This year the mass involuntary movement of people is seen as the highest risk in terms of likelihood, while failure of climate-change mitigation and adaption is regarded as the highest risk in terms of impact. These two risks, the study finds, are connected – with climate change expected to cause wide ranging impact on society, driving up further a range of risk factors.

In this year’s report, titled ‘The Global Risks Report 2016’, in strategic partnership with Marsh & McLennan Companies and Zurich Insurance Group, a total of 742 executives took part by rating their perception of 29 potential risks facing humanity and their local communities. The experts were predominantly male, with a broad age spectrum. 45% have a business background, 16% an academic background, while 16% work for an NGO. The survey considers the occurence of the risks over the coming ten years, with the ranking of risks based on a 1 - 7 scale (1 is “very unlikely” and “low” impact while 7  is “very likely” and “high” impact).

According to respondents the risk that would cause the greatest impact is the failure of climate-change mitigation and adaption with a score of around 5.8, followed by the use of weapons of mass destruction with a score of 5.5. A water crisis takes the number three spot with a score just under that of its weapons of mass destruction, while large-scale involuntary migration is perceived to have the number four greatest impact at around 5.4.

The likelihood scale presents both similarities and differences. Large-scale involuntary migration comes in at number one, with a score of 5.8, followed by extreme weather events with a score of 5.6. Failure of climate-change mitigation and adaptation takes the number three spot, with a score of 5.4. Interstate conflict and natural catastrophes round off the top five with a score of 5.3 each.

The most likely high-impact events are subsequently the failure of climate-change mitigation and adaptation, large scale involuntary migration and a water crisis – with the three risks, according to the analysis, linked to each other in the medium term. Weapons of mass destruction deployment, while high impact, is perceived to have a relatively low likelihood of taking place.
 

 The report also asked surveyed leaders and scientists to name the risks most likely to affect their home region in the coming ten years. Different regions show considerably different results. For Europe, with more than a million refugees provided sanctuary last year, the large-scale involuntary movement of people is the biggest perceived risk, followed by unemployment or underemployment and a fiscal crisis. The Middle East and North Africa face the risks of a water crisis as well as unemployment or underemployment. East Asia and the Pacific mainly face the dangers of catastrophic natural events, extreme weather events and the failure of national governments.

North America faces potential cyber-attacks, data fraud or theft and extreme weather events, while Latin America and the Caribbean sees risks from the failure of national governments, profound social instability and unemployment or underemployment.

The respondents were also asked to rank the biggest top five global risks of highest concern for the next 18 months and 10 years. For the 18 month time frame, large-scale involuntary migration comes in at number one, far ahead of all other risks, with a score of 52%. State collapse or crisis came in at number two with a score of 28%, followed by interstate conflict at 26%. Unemployment or underemployment too are seen as critical short term risks, with 26% of respondents picking the indicator. Failure of national governance comes in at number 5, with a score of 25%.

The perceived risks have, in the course of years in which the report has been released, seen considerable change. Last year, in terms of likelihood, interstate conflict with regional consequences was the number one contender, while income disparity was number one between 2014 and 2012. Following the financial crisis, asset collapse was seen as the most likely event between 2008 and 2010. Since 2011 environmental, social and geopolitical risks have taken the baton over from the large number of economic risks in the top five for the years previous.

In terms of the recent past and high impact events, climate change made itself known in the top five most impactful events in 2010 and has since been moving up and down in the top five – hitting the top for 2016. While economic concerns have been a major trend in recent years, the past two years has seen social and geopolitical risks highlighted as the most impactful.