Today’s risks are much more interconnected than in the past. They are much more volatile and can disrupt markets throughout the world with almost instantaneous precision. Such risks can be difficult to anticipate and respond to, even for the most seasoned business leaders. We have identified 36 “global” risks, classified into four categories: economic, geopolitical, societal and environmental.
The Global Risks to the Business Environment paper details the prevailing consensus reached at our workshop discussions as to the ten risks most likely to have a major or extreme impact on business. These include:
- Instability in Iraq
- Terrorism
- Emerging fiscal crises
- Disruption in oil supplies
- Radical Islam
- Sudden decline in China’s growth
- Pandemics – infectious diseases
- Climate change
- Weapons of mass destruction (WMD)
- Unrestrained migration and related tensions
In a situation with a high degree of inter-connectedness, risk mapping or Connecting the “Dots” and Spotting the Patterns is essential. In an interconnected world, global risks should not be considered on a stand-alone basis; it is important to understand how they can trigger, amplify or buffer one another.
Seldom can global risks be addressed by a single business entity, industry or country, and many institutional mechanisms are proving fairly ineffectual as they struggle to cope with the challenge. There is also a large discrepancy between the immediate time horizon employed by most business and political leaders and the long-term approach required to tackle risks on a global scale. As a result, our capacity to address risk is jeopardized; a myopic tendency – or worse: denial – prevails.
Finally, of equal concern is the problem that some major risks are being passed on to those least able to solve them – or with least responsibility for creating them.
Global Risks to the Business Environment
This paper, the output of two workshops organized by the World Economic Forum in collaboration with Merrill Lynch, reviews major, global risks facing business leaders today,and examines how those risks differ from the challengesof the past.
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