Is the planet burning? It certainly seems to be on fire in the Summer of 2021. There are five significant global risks facing organisations and the world as we know it. The question is, do enough countries want to work together to tackle the dangers that threaten us all?
The World Economic Forum’s (WEF) Global Risks Report 2021 doesn’t make for cheerful reading. The global pandemic caused by COVID-19 had an immediate and disastrous effect on people, societies, economies, and organisations worldwide. The risks that companies and countries previously faced have now intensified. The big question is, can we save the world? Can good governance prevent global catastrophe?
Among the key risks discussed in the latest risk report are climate catastrophe, the growing divides between the affluent and the poor, the industrial and economic divisions in all societies, and how these interconnect.
Major crises are usually eliminated by social cohesion and global cooperation, so the pandemic has been a valuable lesson in preparing for future risks, the most concerning of which is global warming due to corporate activity.
If there is a silver lining, the global pandemic of 2020 gave us one crucial lesson: great things can be accomplished by intelligent people and democratic nations when they work together. As most countries try to rise from the ashes of the pandemic, such resilience needs to be nurtured.
A top-level summary of the report is linked below; you can download the full report here.
A shockwave like no other
As news spread of a virulent Sars-like virus emerging from China in January of 2020, Donald Trump was bragging to the American people. “We have it totally under control. It’s one person coming in from China, and we have it under control. It’s going to be just fine.”
What transpired over the next six months – as the new and vicious Coronavirus spread rapidly through the richest and poorest nations on earth – was unlike anything most people had ever experienced.
The last time the world’s population faced such an indiscriminate and seemingly unstoppable killer was during the 1918 flu pandemic, killing an estimated 50 million people worldwide.
By the summer of 2020, the world had changed forever. At least 495 million jobs had been lost worldwide. Billions of people had taken frightened refuge in enforced lockdowns.
However, this economic and social shockwave did not just restrict our freedoms; it significantly increased social and economic inequalities.
Poor people suffered the most, and they continue to suffer. The rich quoted Seamus Heaney on Instagram.
The human and economic costs associated with COVID-19 are almost beyond comprehension.
Social cohesion and global cooperation have been brutalised and weakened, and years of progress on reducing poverty and inequality have been lost.
When the ‘recovery’ comes, as history has shown, it will be unjust and full of inequalities. The poorest will be worst affected while the richest will prosper once again.
Economists use the term ‘K-shaped’ recovery, but the actual shape could be best described as a spiral – a destructive spiral – one that has the potential to cause greater miseries to the majority of people who struggle to survive on earth.
The question is – can the wealthiest nations cooperate and prevent the spiral from gaining speed?
Dire consequences and lost opportunities
Job losses, a widening digital divide and unstable social interactions could all have dire consequences and result in lost opportunities for most people on the planet.
The impending global economic crisis, the intensified social unrest, and gathering geopolitical tensions will result in several key, heightened threats to businesses and nations.
The WEF sees the next decade where the global risks associated with cyberattacks, weapons of mass destruction and, most notably, climate change will intensify.
Can good governance shape our collective future?
While the risk report reads more like a horror story than an economic outlook, the WEF attempts to offer a glimmer of hope.
“As a response to COVID-19, we have four governance options to promote an overall more resilient international community,” suggests the think tank. These four governance options are based on the critical lessons learned from COVID-19.
Intelligent, democratic nations need to lead the way for the rest of the world and:
- Develop holistic, systems-based frameworks for assessing risks;
- Invest in risk champions with high profiles to encourage international cooperation and national leadership;
- Combat misinformation and improve risk communications, and;
- Explore new forms of public-private partnerships devoted to risk preparation.
Can intelligent nations cooperate in this way?
The world is not in a good place. It wasn’t in a good position before the pandemic, and now it is very vulnerable. And what can history teach us about this? It’s not good. When wealthy nations are deeply divided and inequalities abound, dark forces try and take control. History easily shows us the risks. Can we learn from human history?
The WEF hopes so, but this risk report is also tinged with a certain abject realism.
Democracy’s moral decay and the unchecked brutality of autocratic regimes are combining to create an environment hostile to calls for better governance.
Democracy and pluralism are under attack.
A growing number of major-nation dictators are striving to crush the last vestiges of dissent within their country and spread their influence to new parts of the world.
Meanwhile, many free-elected politicians limit their concerns to narrow interpretations of national interest.
Even though the WEF doesn’t point fingers at particular countries like China, India, Russia and the United States, it does warn against weapons of mass destruction, viruses, and cyber weapons.
Cyberwarfare has evolved as a top-level systemic threat to nations and organisations, with misinformation now the most potent attack tool.
Bringing down a server or stealing credit card details could be viewed as quaint in today’s world.
Having the ability to infect democratic elections and drive populations away from scientific advances is an entirely more dangerous power.
What are the most significant risks facing organisations in the next ten years?
Excessive weather, climate action failure, and human-led environmental damage are among the most significant risk factors in the next ten years, as are digital power concentration, digital inequality, and cybersecurity failure.
Long term, infectious diseases are the most significant impact risk for human civilisation, followed by failures of climate action and other environmental hazards, as well as weapons of mass destruction, livelihood crises, debt crises, and the breakdown of IT security infrastructure.
In the coming two years, the most imminent threats are employment and livelihood crises, widespread youth disillusionment, economic stagnation, environmental degradation, erosion of societal cohesion, and terrorist attacks.
Economic risks will be the dominant theme in the next three to five years, including asset bubbles, price instability, commodity shocks, and debt crises, followed by geopolitics, including interstate relations, conflict, and resource battles.
Over the next five to ten years, environmental risks such as biodiversity loss, natural resource crisis, and climate failure will be paramount, alongside weapons of mass destruction, adverse effects of technology and the collapse of states or multilateral institutions.
Is the planet burning? The five most significant risks to the world
Healthcare disparities, education gaps, financial instability and technology have caused the crisis to disproportionately impact specific groups and nations.
COVID-19 caused more than two million deaths (at the time of writing), and its economic and long-term health effects will continue to have devastating consequences.
Only 28 global economies are expected to have grown in 2020.
We can expect more deaths and losses of livelihoods to directly affect the risk of “social cohesion erosion”, another critical short-term risk identified by the WEF.
The five risk categories identified by the WEF, however, are all addressable. It will take enormous cooperation between nations that embrace democracy and understand the value of objective intelligence and sound science.
The five main risk categories may look inoffensive but could be deadly. They are:
Prolonged and systemic economic stagnation has devastating effects on society; even the rich will suffer. Due to inadequate healthcare, education, financial instability, and technology, certain groups and countries have been disproportionately affected by the crisis. Rich people and rich nations need to find creative ways to share the wealth. Otherwise, money may have no meaning as societies descend into bitter battles over resources and fundamental human rights.
People will never be immune to climate change, and it continues to be a catastrophic risk. In its global risk report, the WEF identified the most severe risk as “climate action failure”.
‘Youth disillusionment’ has been neglected by the global community, but it will ultimately pose a serious threat to the world in the short term.
Society’s hard-won gains could be wiped away if the current generation lacks adequate paths to future opportunities.
Today’s economic and political institutions will be in grave danger if the young lose their faith in them.
Some can work online; many can’t. The pandemic shone a bright and searing light on digital poverty. Digital divides can worsen social problems, hampering prospects of inclusive recovery.
Inclusion in the digital environment is threatened by rapidly growing digital dependency, rapid technological advancement, and suppressing knowledge and manipulation.
Across the world, gaps in technology regulation pose a threat to our collective future, along with a lack of technology skills.
The crisis has amplified the primary business risks emanating from industrial societies. A few examples are stagnation in the advanced economies and potential loss in emerging and developing markets.
The collapse of small businesses will lead to a wider gap between large and small companies and reduced market dynamism.
All this will aggravate inequality, making it harder to achieve long-term sustainable development.
What do we take away from this nightmare?
The picture of risk painted by the WEF shouldn’t come as a surprise to anyone with a passing interest in economics, history and sociology.
The world in 2021 is in grave danger. As Joe Biden said, it may no longer be on the cusp of a world ‘where fear and darkness prevail’.
Some see the WEF as a talking shop with little teeth. However, the work and the research it carries out attract certain powerful, democratic nations.
It is up to those who believe in the power of strong governance to take heed of what the WEF is revealing.
Good governance can be the difference between life and death, between a future worth fighting for or a past just worth mourning.