Weapons of mass destruction, extreme weather events, natural disasters, failure of policies to mitigate and adapt to climate change and water crises these are the risks that could generate the most damage in the next 10 years according to global risk managers.
Leading economic indicators suggest the world is finally getting back on track after the global crisis erupted 10 years ago, but this optimistic picture masks continuing underlying concerns. Among the new challenges are the limited firepower of policies in the event of a new crisis, the disruptions caused by the intensification of automation and digitization models and an accumulation of mercantilist and protectionist pressures in a context of growing nationalist and populist politics.
These are some of the findings contained in the Executive Opinion Survey, the survey at the basis of the Global Risks report carried out every year by the World Economic Forum (in collaboration with Marsh & McLennan Companies and Zurich Insurance Plc) which it involved over 2017 executives in 12.400 countries in 136 offering a 10-year perspective of the highest impact and most likely risks.
The year just ended featured high impact hurricanes and extreme temperatures as well the first increase in CO2 emissions for four years it only increases the perception of environmental risks for risk managers around the world. In line with last year, environmental scenario risks dominate the ranking, with the impact that the use of weapons of mass destruction could have on top.
If three years ago economic and geopolitical risks such as unemployment, international conflicts and state crises
they occupied the first places in the classification, today they have completely disappeared giving way to natural and technological risks. Above all, the risks associated with the computer security, both in their prevalence and in their disruptive potential. Attacks against businesses have nearly doubled in five years, and incidents that once would have been considered extraordinary are becoming more common.
“Italian risk managers, like their peers across Europe, are concerned about the seemingly endless increase in uncertainty on a global scale,” he says Alessandro De Felice, president of Anra. “The Italian economy is one of the largest in Europe and depends to a large extent on international trade, so it is obvious that the constant announcement of trade barriers and protectionist measures by the leaders of the various countries make the scenario increasingly changing and complicated to deal with. In addition to this, we face enormous strategic challenges posed by the transformation of the economy caused by the rise of new technologies and fundamental ways of doing business that force us to radically rethink risk management in the company and to expand the field of knowledge” .
“If on the one hand – says De Felice – the correlation between high probability and high potential damage linked to environmental risk is evident, unsurprisingly, globally there is a mixture of technological and economic, as well as geopolitical and social, dangers. Risk managers today are faced with cross-cutting issues but often the insurance market still responds with rather standard offers that represent a relatively small part of the solutions needed to finance these enormous risks. All players in the sector must aim in the near future for risk transfer solutions that are relevant, at appropriate prices and that can ideally be included in the existing coverage and not treated as a separate product”.
In most areas of the world, executives highlighted that extreme weather events and weapons of mass destruction are still the greatest risks, with the growth of risks related to cyber-attacks and the risk of online fraud, in the third and fourth place in the ranking where up to 12 months before they didn't even appear. But trends differ markedly across regions of the world, particularly in North America and the European Union, where the crisis has hit hardest. Despite the rapid improvements recorded in Europe since 2013, in fact, the region remains particularly exposed to the problems of youth unemployment: on average, young people in Europe are much more likely to be unemployed than their counterparts either in North America or in emerging countries and this, particularly in Greece, Spain and Italy has led to the growth of socio-economic risks which are not represented by the global mean.
