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Climate threats top the list of long-term risks

Posted on 16th January 2020 at 12:45pm

Severe threats to climate account for all of the long term risks outlined in the World Economic Forum’s latest report. ‘Economic confrontations’ and ‘domestic polarisation’ are also recognised as significant short-term risks in 2020.

This infographic shows, in terms of impact, the top ten long-term risks to multi-stakeholders. Climate-related issues also dominated all of the top five risks in terms of likelihood. Credit: Global Risks Report 2020|World Economc Forum

The Global Risks Report, released on January 15, warns that geopolitical turbulence and the retreat from multilateralism threatens everyone’s ability to tackle shared, critical global risks. It also stresses that without urgent attention to repairing societal divisions and driving sustainable economic growth, leaders cannot systemically address threats such as the climate or biodiversity crises.

The report predicts a rise in economic and political polarisation this year, as collaboration between world leaders, businesses and policymakers is needed more than ever to stop severe threats to climate, environment, public health and technology systems. This points to a clear need for a multi-stakeholder approach to mitigating risk at a time when the world cannot wait for the fog of geopolitical disorder to lift, according to the WEF.

The report forecasts a year of increased domestic and international divisions and economic slowdown. Geopolitical turbulence is propelling the world towards an “unsettled” unilateral world of great power rivalries at a time when business and government leaders must focus urgently on working together to tackle shared risks, the report’s authors add.

Over 750 global experts and decision-makers were asked to rank their biggest concerns in terms of likelihood and impact and 78 per cent said they expect “economic confrontations” and “domestic political polarisation” to rise in 2020.

This would prove catastrophic, the authors say, particularly for addressing urgent challenges like the climate crisis, biodiversity loss and record species decline. The report points to a need for policymakers to match targets for protecting the Earth with ones for boosting economies – and for companies to avoid the risks of potentially disastrous future losses by adjusting to science-based targets.

From economic to environmental; climate now tops the risk agenda, while the economy disappears from the top five. Credit: Global Risks Report 2020|World Economc Forum

For the first time in the survey’s ten-year outlook, the top five global risks in terms of likelihood are all environmental. The report sounds the alarm on:

  • Extreme weather events with major damage to property, infrastructure and loss of human life;
  • Failure of climate-change mitigation and adaptation by governments and businesses;
  • human-made environmental damage and disasters, including environmental crime, such as oil spills, and radioactive contamination;
  • Major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industries; and
  • Major natural disasters such as earthquakes, tsunamis, volcanic eruptions, and geomagnetic storms

It adds that unless stakeholders adapt to “today’s epochal power-shift” and geopolitical turbulence – while still preparing for the future – time will run out to address some of the most pressing economic, environmental and technological challenges. This signals where action by business and policymakers is most needed.

“The political landscape is polarised, sea levels are rising and climate fires are burning. This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of co-operation, not just for short-term benefit but for tackling our deep-rooted risks,” said Borge Brende, President of the World Economic Forum.

The Global Risks Report is part of the Global Risks Initiative which brings stakeholders together to develop sustainable, integrated solutions to the world’s most pressing challenges.

Systems-level thinking is required to confront looming geopolitical and environmental risks, and threats that may otherwise fall under the radar. This year’s report focuses explicitly on impacts from rising inequality, gaps in technology governance, and health systems under pressure.

John Drzik, Chairman of Marsh & McLennan Insights, says: “There is mounting pressure on companies from investors, regulators, customers, and employees to demonstrate their resilience to rising climate volatility. Scientific advances mean that climate risks can now be modelled with greater accuracy and incorporated into risk management and business plans. High profile events, like recent wildfires in Australia and California, are adding pressure on companies to take action on climate risk at a time when they also face greater geopolitical and cyber risk challenges.”

To younger generations, the state of the planet is even more alarming. The report highlights how risks are seen by those born after 1980. They ranked environmental risks higher than other respondents, in both the short and long terms. Almost 90 per cent of these respondents believe “extreme heat waves”, “destruction of ecosystems” and “health impacted by pollution” will be aggravated in 2020; compared with 77 per cent, 76 per cent and 67 per cent respectively for other generations. They also believe that the impact from environmental risks by 2030 will be more catastrophic and more likely.

Human activity has already caused the loss of 83 per cent of all wild mammals and half of plants – which underpin our food and health systems. Peter Giger from Zurich Insurance Group warned of the urgent need to adapt faster to avoid the worst and irreversible impacts of climate change and to do more to protect the planet’s biodiversity.

“Biologically diverse ecosystems capture vast amounts of carbon and provide massive economic benefits that are estimated at $33 trillion per year – the equivalent to the GDP of the US and China combined. It’s critical that companies and policymakers move faster to transition to a low carbon economy and more sustainable business models.

“We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences. Transitionary risks are real, and everyone must play their part to mitigate them. It’s not just an economic imperative, it is simply the right thing to do,” he says.

Read the full report here and find out more about the Global Risks Initiative here

Thumbnail credit: yupiramos|123rf 

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