Perfect global storm developing warns World Economic Forum
A major systemic financial failure. Extreme weather patterns. A water supply crisis. Food shortages. Weapons of mass destruction. Stark income disparity. Cyber attacks. Those are just a few of the major risks to the global economy this year, according to a report released this week by the World Economic Forum.
With nations already coping with rising economic strains while staring in face of increasing environmental concerns, the WEF report says the world could soon find itself in the eye of the perfect global storm.
Like a super storm, two major systems are on a collision course, the report said. The interplay between the stresses on the economic and environmental systems will present unprecedented challenges to global and national resilience.
The world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges, warned the WEF, which each year hosts a massive get-together of world leaders, decision makers and activists at the Swiss mountain resort in Davos.
The foundations Global Risks 2013 report, based on a survey of more than 1,000 experts from industry government, academia and civil society, is of particular interest to the insurance industry and will be the subject of special sessions at that annual meeting scheduled for January 23-27.
The experts, who were asked to rate the top 50 global risks, suggested the risks most likely to materialise were growing wealth gaps, followed by unsustainable government debt and rising greenhouse gas emissions.
The risks they believed would have the greatest impact if they were to happen were major systematic financial failure, followed by a major water supply crisis and chronic fiscal imbalances.
The list of global risks are essentially a health warning regarding our most critical systems, said WEF managing director Lee Howell, who edited the report.
National resilience to global risks needs to be a priority so that critical systems continue to function despite a major disturbance, he added.
The report concluded that crises and austerity measures are severely testing the global economic system. At the same time, it stressed the world is facing rising global temperatures and more extreme weather like catastrophic fires in Australia, flooding in China and Hurricane Sandy, which slammed into the East Coast of the US in late October.
Following the extreme weather of 2012, respondents to the survey said rising greenhouse gases were the third most acute global risk, while failure of climate change adaptation was seen as the environmental risk with the most knock-on effects for the next decade.
With the growing cost of events like Superstorm Sandy, huge threats to island nations and coastal communities, and no resolution to greenhouse gas emissions, the writing is on the wall, said Axel Lehmann, chief risk officer at Zurich Insurance Group. It is time to act.
But the acute social and economic difficulties, the report says, are making countries around the world more reluctant to address more long-term threats like climate change, while natural disasters wreak serious havoc on many economies.
The top 50 global risks the WEF lists, several that are of most immediate concern to the insurance industry, in addition to catastrophes, include ageing populations, emerging health risks and so-called digital wildfires.
While in many ways a force for good, the democratisation of information can also have volatile and unpredictable consequences, the report cautioned.
One example sited was the September riots provoked by the crudely made anti-Islam film The Innocence of Muslims.
As the medias traditional role as gatekeeper is eroded, the world needs to find ways to put out such blazes, the WEF said.
Police seek witnesses after attack
Proceeds of crime forfeited
Hamilton Re strikes deal with Sompo Canopius
Students launch Bermuda captive
Harbour Nights is back
Take Our Poll