Global Risks Report 2023: We know what the risks are - here’s what experts say we can do about it
- This is the year of the polycrisis, where risks are more interdependent and reciprocally damaging than ever.
- The urgency of a cost of living crisis dominates 2023’s Global Risks Report, which is in danger of deprioritizing other risks.
- Experts at the World Economic Forum give their insights into how their sectors are seeking to manage risks, build resilience and use new opportunities to shore up defences in 2023.
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We’ve run out of words to describe what’s happening in the world today, so this edition of the Global Risks Report has used a new one: “polycrisis”. It’s a situation where different risks collide and their interdependency is acutely felt.
Integrated and immediate mitigation is more critical as we face some of the most difficult geoeconomic conditions in a generation, where we see a shift to a low-investment, low-growth, low-cooperation era, that is in danger of eroding resilience and accelerating the other risks we face.
Saadia Zahidi, Managing Director, World Economic Forum warns, “Climate and human development must be at the core of concerns of global leaders, even as they battle current crises. Cooperation is the only way forward.”
Complementing Global Risks practice, the World Economic Forum hosts platforms dedicated to action on the world's most pressing challenges - including mobilizing for the climate, managing and disseminating Fourth Industrial Revolution technologies, shaping the energy transition and shaping the future of health and healthcare.
These platforms, and the leaders, networks and organizations they host, apply the findings of this report in their efforts to tackle the world’s greatest challenges—managing risks, building resilience and using new opportunities.
We asked experts from across the World Economic Forum for their insights into how technology, circular economy innovation, resources and energy, climate adaptation and mitigation, cybersecurity and the health sector could shift paradigms to shore up defences and help turn things around for growth and resilience in 2023.
Here’s what they said.
Roberto Bocca, Member of the Executive Committee - Head of Energy, Materials and Infrastructure
Energy is a foundational block of the global economy, and as such, the crisis has forced us to fundamentally rethink the way in which we produce, deliver and – importantly – consume it. Tackling the status quo and delivering on all three dimensions of sustainability, security and affordability is, however, a daunting and highly complex task, underpinned by, and intertwined with, a multitude of challenges.
The big question that emerged during 2022 and will dominate 2023 is whether the short-term urgency to keep the lights on will adversely affect long-term sustainability goals. While evidence from recent months is mixed, the crisis has been a wake-up call on the urgency of reforming the energy system, and not only for sustainability reasons.
Balancing these multiple dimensions and ultimately achieving net zero by 2050 relies on rapid clean power generation deployment, energy efficiency improvements and extensive use of carbon dioxide removal measures. The clock is ticking and major changes are required immediately. Investment, transition and deployment on a large scale must take place by 2030 in a manner perhaps unparalleled by any other global transformation.
4th Industrial Revolution Technology
Sebastian Buckup, Head of Networks and Partnerships, C4IR
Technology in 2023 is set to bring increased connectivity, precision, and agility, particularly in the areas of green tech, adaptive AI and quantum computing. While regulation has historically lagged behind the pace of advancements in technology, particularly on data protection and privacy, governments are prioritizing the closing of this governance gap.
As states increasingly view their ability to harness technologies and data as integral to national security and sovereignty, however, they are turning to the adoption of localized approaches to regulation and governance, rather than taking a global view.
A heightened stakeholder focus on the dual crises of climate and the economy in 2023 requires greater public and private sector cooperation at the global level to first enable the interoperability and flow of data across borders and between companies to achieve sustainability targets and unlock economic opportunity, and second, to invest in digital trust as a means to fully harness the benefit from innovation and the global digital economy.
Doing so will require, among other things, the strengthening of public and private institutions against cyber-attacks to protect privacy. Rather than simply waiting for regulators to set the guardrails, businesses must move beyond compliance and engrain responsible and human-centred technology principles into their DNA to remain competitive, withstand disruption and build resilience.
Antonia Gawel, Head, Climate Change; Deputy Head, Centre for Nature & Climate
The energy and food crises that have exacerbated this year’s number one near term risk (cost of living) are fundamentally linked to having failed to mitigate and adapt to climate change.
Almost 3.6 billion people worldwide are dangerously exposed and vulnerable to climate impacts. The latest IPCC report made clear that these impacts will not be felt equally. Developing countries, despite their limited contribution to climate change, are shouldering the burden, but no country and no economy is immune from the climate crisis.
While technology and renewables offer solutions, these need to be scaled up. It requires a focus on tackling non-economic barriers like permitting and fast-tracking approvals. In emerging and developing markets, we also need to address the high cost of capital. We need to help pull the commercialization of emerging technology by drawing down the costs of these solutions through partnership and collaboration.
The Forum’s First Movers Coalition, in partnership with John Kerry, US Special Presidential Envoy for Climate, is working across more than 67 companies in seven industries (aluminum, aviation, cement and concrete, shipping, steel, trucking and carbon dioxide removal technologies) sending a $12 billion market signal to pull forward the critical low-carbon technologies of the future.
We need to support emerging innovators. UpLink is an example of a platform that is enabling system disruptors and start-ups to bring in new innovative solutions and technology that shifts paradigms.
These solutions need to be underpinned by public-private collaboration and policy to achieve scale. While the risk mitigation logic is there – the near-term economic costs still need to rebalance in some markets and sectors to drive immediate investments. Carbon pricing, but also collaboration along the value chains and with governments will be critical through leadership.
Overcoming mineral resource scarcity
Fernando Gomez, Head of Industry Communities, Energy, Materials and Infrastructure Platform
In the past decade, and in 2022 in particular, we have seen a growing interest in minerals as a critical enabler of the energy transition. While the industry is aware of the imbalance of supply and demand when it comes to minerals, little is known about the risks and implications of this imbalance. This means that, to mitigate the impact of scarcity, we will need to tackle these risks in an effective, innovative and certainly collaborative way. Because without these specific resources the transition is likely to become unfeasible and unlikely to accomplish.
All the scenarios presented in the Global Risks Report confirm that the demand will not be met according to the global need and there is now an alarming accordance on the risks of mineral shortages: from environmental pressure on ecosystems, backlash in adopting cleaner technologies, and reduced efforts for responsible mining, to the increased competition and tension among countries as each material grows scarce.
In 2023, the identified risks seem to start to materialize, but this should not be a limitation to act. As this challenge can only be met through a collaborative effort, industry leaders, international organizations and other stakeholders will come together to manage these risks.
Akshay Joshi, Head of Industry and Partnerships, Centre for Cybersecurity
Geopolitical and economic uncertainty around the world is exacerbating the threat of potentially catastrophic cyber attacks, increasing the risk for businesses across sectors.
In the past year, geopolitical risk roared back to the centre of world affairs, upending supply chains and disrupting major industries ranging from energy to food commodities. New technologies are also evolving quickly, and with these come new vulnerabilities, which attackers – some of whom have strong geopolitical motives – are often swift to exploit.
The risk of cyber-attack could include, for example, a crippling ransomware attack or a breach of sensitive consumer data — either of which would cause large-scale disruption and be costly reputationally and financially.
While progress has been made in bolstering cybersecurity awareness and preparation, there is more that businesses can do to increase resiliency, including improving cyber literacy, communication and information sharing.
The current focus on geopolitics and third-party risk offers an entry point for a wider conversation about cyber risk. The situation is improving, but not sufficiently swiftly for most organizations and businesses to be confident that they are equipped to address a major cyber event. Resilience and preparation should be at the centre of business strategy.
Fixing global health systems
Kelly McCain, Head, Healthcare Initiatives Shaping the Future of Health and Healthcare
The past three-years of the COVID-19 pandemic exposed vulnerabilities in health systems globally and highlighted the dangers of inequalities in care – not only in creating global risks for health but causing knock-on effects to geopolitical tensions and economic risks.
From the security impacts of mass migration to the shut-down of societies impacting people’s abilities to work, and health consequences of climate-related disasters, the past few years have demonstrated that health is tied to the stability and prosperity of countries.
And while the immediate impacts of COVID-19 have passed, countries will need to prepare for pandemics that we know are on the horizon, including non-communicable diseases, which account for more than seven out of 10 deaths globally, and the increase of drug-resistant infection of which could cost the global economy $100 trillion between now and 2050. These and more affect the ability of societies to thrive and engage.
Stakeholders globally must continue to prioritize health by ensuring equitable access to care as a core part of any national agenda, and focusing on the health of the planet to shore up against and avert future health risks.
Circular economy innovation
Kristin Hughes, Member of the Executive Committee – Director of Resource Circularity
Resource Circularity is a key enabler for tackling the current triple planetary crises on climate, biodiversity and pollution while simultaneously providing profitable and resilient business models for companies. Manufacturers design products so all materials can easily be reused with low to no waste therefore minimizing harm to the planet. Meanwhile, consumers are enabled to seamlessly reduce, reuse, repair or recycle their products, keeping them within the system. Raw materials, once scarce, are again abundant.
Within the circular paradigm shift we must not neglect the socio-political context. As demand grows, scarce and critical minerals like cobalt, graphite, lithium, and rare earth elements, are increasingly sought after. Recent geopolitical tensions have highlighted the need for sustainable, ethical and local green circular solutions, thus pushing us also to manage the risks and opportunities involved towards this transition. It is critical that we tread a careful line to ensure a new race for resources does not exacerbate current tensions, but instead alleviates them.
Various resources for different circular solutions will require their own unique strategies and considerations; resource circularity supports the world in redirecting away from the constant spectre of scarcity.
Mitigating these scarcity and political risks means companies and governments must undergo a complete paradigm shift and adopt circular operating and business models as the means to efficiency, resilience, sustainability and economic growth. The time to embrace a circular transformation at scale is now. Many companies, organizations and governments have begun to explore this systems-level change for business and society, but few have made strategic commitments and developed clear strategies.
We are calling on organizations to embark on this circularity journey with us to decrease pressure on resource scarcity, increase resilience of industries and drastically reduce the waste from current operating models.
Tania Strauss, Head, Strategy and Global Projects, Food Systems Initiative
In 2022, we faced the polycrises of food, energy and fertilizer shortages. In 2023, we cannot avoid food systems failures affecting everyone: more people will go hungry, livelihoods lost, and there’ll be spiking prices globally. Bold leadership actions must embrace complex and holistic solutions like climate change and food security together.
Multiple levers can collectively drive change in countries:
1. Transition to net-zero, nature-positive food
We must face this crisis with the certainty of multiple food crises to follow. Investing in healthy soils and innovation for decarbonizing food value-chains, will create carbon sinks, improve nutrient density, reduce food losses, and boost jobs and livelihoods of farmers, especially 500 million smallholders, who are on the frontlines of this crisis– but they need support to transition to climate-smart approaches through aligned incentives, radical policy measures, tailored risk models and credit services, supply chain procurement and market demand.
2. Invest in country-led food systems transformation
Countries are showing it’s worth the shared risk to back smart investment in food systems transformation. A forthcoming report identifies nine early mover countries that show what it takes to invest in food systems transformation. Each “early mover” country shows how multiple actors and concurrent levers such as enterprise development, technology innovation ecosystems, blended financing, de-risking partnerships, across public, private and social sectors, interact and coordinate to enable large-scale transformation over time. Collectively as a portfolio of learning and insights, they demonstrate the potential for these levers – if applied in tandem and with greater urgency – to accelerate country-led food systems transformation. Success now rests on every country taking action.