2009 will be a year of learning the lessons of the financial crisis; a year where its reach in terms of time and scope becomes more evident; a year that calls for a new financial architecture to be shaped. At the same time, it will be a year that will test the resolve and willingness of world leaders to collaborate and take action to move beyond this crisis. The global risks landscape is a crowded one and the window of opportunity we have to address some of the largest challenges of our time is narrow.
Global Risks 2009 looks at the risks, economic and other, that could emerge as the financial crisis continues to unfold. The report considers the implications of a sudden drop in China's growth to 6% or below; deteriorating fiscal positions; and further asset price falls. Given the vulnerable state of the global economy, and as deleveraging continues across the financial system, further shocks could have severe and far-reaching consequences. The degree to which the world has lost confidence in its institutions and systems is serious. Without confidence we could face a protracted and potentially calamitous, downward spiral. Governments, central banks and regulators must avert this but must also avoid inadvertently sowing the seeds of future crises. They need to restore confidence at all levels; to consumers and house-owners, to investors, and in and among financial institutions. This crisis exposed the weaknesses of governance systems. Good governance and leadership will help rebuild confidence, enable alignment across regions and industries, and encourage collaboration.
With world attention focused on the immediate economic challenges, this report also warns against losing sight of longer term risks. Now is the time for leaders to look ahead. Risks related to climate change, unresolved resource issues and potentially more defensive and protectionist stances by states could lead to a conflation of these global risks with significant societal and economic costs. Again, better governance at corporate, country and global level is necessary to provide the frameworks for stable international relations, and for states and corporations to create greater certainty and trust. Successful mitigation of global risks will only be possible once confidence in global governance institutions is restored, starting by ensuring that they are adapted to today's challenges and revising their mandate and powers accordingly. They must be able to function in a proactive and coordinated fashion, fostering cooperation across all regions, industries and stakeholder groups.
Global Risks 2009 builds on the insight and experience of the Forum's unparalleled network of political and business leaders, experts and academics. We are grateful for the continued commitment of our partners on this report: Citigroup, Marsh & McLennan Companies (MMC), Swiss Re, The Wharton School Risk Center and Zurich Financial Services. This report takes a long-term approach to risk, looking ten years ahead, while not forgetting that decision-makers must respond to the crisis today with the consequences that carries for their countries and enterprises. Above all, Global Risks 2009 provides a framework for leaders to think about risk and how the risks that they face in the short term in their region and business link to the longer term risks, with global implications. While the mitigation of the risks considered here will demand leadership, commitment and resources across all stakeholder groups, they may also yield opportunities and strengthen the ties between different parts of the world. 2008 has proven the extent to which the world is subject to global risks; let 2009 be the year where the world finds a common agenda to begin mitigating their impact.
Founder and Executive Chairman
World Economic Forum