What are the global risks in this decade?

• Global Risks 2011 (6th edition) is World Economic Forum’s effort to analyze global risk landscape in the coming decade.

– derived from risk perception survey of 580 global leaders and decision makers to identify/assess risk interconnections, with inputs from WEF risk research, workshops and experts.

• Provides a high level overview of 37 global risks, and how they are interconnected.

Introduction

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How are global risks interconnected?

Cross-cutting risksExacerbate other risks and inhibit

response capacity.

Introduction | 1 risk map

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Nexus of risksDistinct cluster with strong

interconnections.

OutliersHigh levels of uncertainty . Risk

attributes slowly become more visible, but can move rapidly to centre of risk landscape under ripe conditions.

Risks to watchStrongly varying expert views on

likelihood and impact, but may surprise or overwhelm.

2 cross-cutting risks exacerbate other risks, and inhibit effective response.

Economic disparity - one of the most important risks this decade, and most underestimated in terms of impact.

Disparity between and within nations leading to social fragmentation, undermining national solidarity with drop in traditional/institutional trust, which is replaced by fluid ‘tribes/diasporas’.

Global governance failures result in paralysis in addressing global challenges.Will governance muddle along? Fall into a vacuum as ‘G20, G2 but G-zero’ ? Replaced in part

by new agile structures? e.g. non-state actors. Or we move backwards to discard coordinated global governance completely?

Introduction | 1 risk map | 2 cross-cutting

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Cluster #1 – Macro-economic imbalances

3 negative and non-exclusive scenarios

• Frequent fiscal-banking crises in developed economies.

• Hot money results in asset bubbles in emerging economies, increasing currency pressures.

• Stagflation of advanced economies, while emerging economies battle inflation.

Introduction | 1 risk map| 2 cross-cutting | 3 nexus

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Cluster #2 – Illegal economy imbalances

Contagion to other risks

• Illicit trade is hard to quantify, perhaps 7-10% of global economy and growing.

• Nexus heavily influences other risks: fragile states with spillover effects in geopolitical conflict and terrorism.

Introduction | 1 risk map| 2 cross-cutting | 3 nexus

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Positive feedback loop between economic

disparity and cluster.

Growing governance failures create space for illicit activities,

undermining governance in return.

Cluster #3 – Food-energy-water

Feeding the next billion.

• ~ 1 billion more people by 2020.

• 50% increase in food demand by 2030.

• 30% increase in water demand by 2030.

• 40% increase in energy demand by 2030, exacerbating climate change.

Introduction | 1 risk map| 2 cross-cutting | 3 nexus

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4 outliers that could move to the center of risk

Introduction | 1 risk Maps | 2 cross-cutting | 3 nexus | 4 outliers

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Least cited risk of the set, likely systematically underestimated

Survey respondents and experts differ widely over likelihood of Marine territory disputes and decline of fish stocks

Unintended consequences of synthetic biology, nanotechnology and genetic engineering

An actual slowdown will lead to social and political instability across the whole region

5 trends to keep watch on

Cyber Security

•Cyber theft, espionage, war, terrorism is evolving quickly but not well understood.

Demographics

•Ageing populations in advanced economics add to fiscal stress.

•Emerging economies that do not create jobs to tap on demographic dividend face angry youth.

Resource Security

•Extreme commodity & energy price volatility

• ‘Soft’ production limits vs ‘hard’ natural limits

De-globalization

•Economic nationalism + anti-immigration sentiments

•Throwing sand into the gears of global trade e.g. marginal restrictions placed on movements of goods.

Weapons of Mass Destruction

•CBRN risks•Nuclear

proliferation• Illegal acquisitions

Introduction | 1 risks map | 2 cross-cutting | 3 nexus | 4 outliers | 5 to watch

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