The World Economic Forum Global Risks 2015 report, released at a press conference in London yesterday, singled out potential “interstate conflict with regional consequences” as the number one global risk in terms of likelihood, and the fourth most serious risk in terms of impact. Water crises were ranked highest in terms of impact.
The report is split into two sections, labeled “Risks” and “Trends”, which it defines as follows: – A global risk is ”an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the next 10 years.” The report lists 28 of these risks.
– A trend is defined as “a long-term pattern that is currently taking place and that could amplify global risks and/or alter the relationship between them.” There are 13 trends discussed in the report.
The annual report – this is the 10th edition – features an assessment by experts on the top global risks in terms of likelihood and potential impact over the coming 10 years. Following the heightened risk of renewed interstate conflict in terms of likelihood are: “extreme weather events (2), failure of national governance systems (3), state collapse or crisis (4) and high structural unemployment or underemployment (5).”
After potential water crises the global risks in terms of impact are: 2) Rapid and massive spread of infectious diseases (societal risk); 3) Weapons of mass destruction (geopolitical risk); 4) Interstate conflict with regional consequences (geopolitical risk), and 5) Failure of climate-change adaptation (environmental risk).
“Twenty-five years after the fall of the Berlin Wall, the world again faces the risk of major conflict between states,” said Margareta Drzeniek-Hanouz, Lead Economist – World Economic Forum. She added, however, that “today the means to wage such conflict, whether through cyberattack, competition for resources or sanctions and other economic tools, is broader than ever. Addressing all these possible triggers and seeking to return the world to a path of partnership, rather than competition, should be a priority for leaders as we enter 2015.”
The panel stressed that the risks are in most cases interconnected and thus have to be addressed in multiple ways. The report points out that the “interconnections between geopolitics and economics are intensifying because states are making greater use of economic tools, from regional integration and trade treaties to protectionist policies and cross-border investments, to establish relative geopolitical power. This threatens to undermine the logic of global economic cooperation and potentially the entire international rule-based system.”
One of the prime examples of the interconnectivity is the increasing urbanization of the world’s population. Axel P. Lehmann, Chief Risk Officer at Zurich Insurance Group pointed out that today around 50 percent of people live in cities, but by 2025 this will increases to 2/3, and reach 70 percent by 2050.
To mitigate the effects of urbanization the report considers how best to build sufficient resilience to mitigate the challenges associated with managing the world’s rapid and historical transition from predominantly rural to urban living. “Without doubt, urbanization has increased social well-being. But when cities develop too rapidly, their vulnerability increases: pandemics; breakdowns of or attacks on power, water or transport systems; and the effects of climate change are all major threats,” Lehmann said.
The report also addressed the rapid pace of innovation in emerging technologies, which includes discoveries in every field from “synthetic biology to artificial intelligence,” which also have “far-reaching societal, economic and ethical implications. Developing regulatory environments that are adaptive enough to safeguard their rapid development and allow their benefits to be reaped, while preventing their misuse and any unforeseen negative consequences is a critical challenge for leaders.
John Drzik, President of Global Risk and Specialties at Marsh, said: “Innovation is critical to global prosperity, but also creates new risks. We must anticipate the issues that will arise from emerging technologies, and develop the safeguards and governance to prevent avoidable disasters.”
Espen Barth Eide, Managing Director and Member of the Managing Board of the World Economic Forum, pointed out that the public’s “trust in government is breaking down” with the emergence of populist and anti-immigration parties in Europe, which “reduces governments’ collective ability to deal with crisis situations.” Unfortunately, this is occurring at a time when “more co-operation between nations and more understanding between countries” should be a priority.
Next week in the Swiss resort of Davos the world’s movers and shakers from governments, businesses and academia will meet in what is certainly the world’s supreme networking event and discuss possible ways of addressing some of these risks and trends before they get worse. They won’t solve all the world’s potential crises in a week, but at least they may be able to find ways to mitigate the threats posed by some of them.
MSN Fanboy on Sat, 17th Jan 2015 7:45 am
Anders Brevik should have targeted these morons, category A+++++ Traitors.
Rodster on Sat, 17th Jan 2015 7:54 am
“Water crises were ranked highest in terms of impact.”
Well duh !
Water will be the single most important resource going forward. Life cannot exist without it. China’s clean water supply is now down to 40% from all the toxic pollutants used in their mfg base.
Las Vegas is in a critical state where Lake Mead water levels are overly stressed from mismanagment and trying to keep LV functioning. Building a major city in the middle of a desert may not have been such a great idea. /s
In the not too distant future I see water having more value than gold. All the talk about desalinzation plants. Well that requires cheap energy to function and maintain.
Plantagenet on Sat, 17th Jan 2015 8:16 am
I was just in Gibralter. They get 100% of their water from desalinization
Technologically desalinization is a simple problem We can address it with existing technology
What will bring on wars and chaos in the future is the same foolishness that has produced wars in the past—-religion, ethnic hatred, nationalism etc
shortonoil on Sat, 17th Jan 2015 9:42 am
Interesting that they missed oil! Must be they believe in the Shale Revolution? Of course, one could hardly expect the world’s plutocrats to acknowledge that their days are numbered. Living in a world of hubris, artificially constructed security, and self made importance limits one’s view of reality. They will continue the charade; believing that they have a divine right to rule. That they are the masters of the universe; while ignoring the knock of destiny at their door.
ghung on Sat, 17th Jan 2015 9:46 am
Plant: “I was just in Gibralter. They get 100% of their water from desalinization…”
From Wikipedia:
“since 1953, Gibraltar has come to rely on the desalination of sea water, which now accounts for over 90% of the potable water supply. The running costs are high, however, as the energy required means that the cost of acquiring water through desalination is about three times higher than getting it from wells.”
They also use seawater for flushing their toilets, etc.:
“There are presently two separate public water systems in Gibraltar – one providing potable water and the other salt water for flushing toilets, firefighting, street cleaning and other sanitary purposes. The salt water system pumps nearly 4,000,000 cubic metres (140,000,000 cu ft) annually, about four times the volume of potable water.”
One wonders how this salt water waste is treated, and where it goes.
Gibraltar is tiny; only about 2.6 square miles, with a population of about 30,000, and a per capita GDP of £27,468 (more than double the world average). Not sure this is the best example of how the rest of the world can solve its water woes.
Plantagenet on Sat, 17th Jan 2015 9:58 am
Gibralter isn’t the only place getting water by desalinization Saudi arabia has a huge program as well
Getting water by desalinization isn’t cheap, but the technology is well developed an d easy to install
J-Gav on Sat, 17th Jan 2015 10:57 am
Short – You’re right, at least concerning oil not being in their top 5. But I’d be willing to bet it’s on their longer lists of 28 risks and 13 trends.
I’ve worked with (not ‘for’) several insurance companies and those guys tend to know where the risks are because their little asses depend on it. Their ranking may be off but I suspect they hit the biggies in the long version of the report.
J-Gav on Sat, 17th Jan 2015 11:03 am
Example: nuclear power plants. How many insurance companies bite on that tasty morsel? Exactly zero! Because the risk is off the charts. So who insures nuclear plants? You do! We do! Even if many people don’t know it …
ghung on Sat, 17th Jan 2015 11:18 am
Good point, J-Gav. Of course, we have our own insurance company vet in our doomerish corner; Gail the Actuary (Gail Tverberg). I’m sure some of the numbers coming across her desk led her down the rabbit hole of depletion/collapse of complex systems. Who better to assess risk than a professional risk assessor?
I also put engineers with experience designing/operating/assessing large complex systems higher on my list of those who tend to paint a clearer picture of where all of this is leading us. Both of these occupations are generally staffed with more pragmatic folks less reliant upon guess work and confirmation bias. Their jobs, and peoples’ lives, depend on it, not to mention their professional reputations.
Economists? Not so much.