First off, there are lots of global risks–37, by WEF’s count. Second, the world is “in no position to face major, new shocks.” That’s thanks to the financial crisis, which badly sapped economic resilience; “increasing geopolitical tensions and heightened social concerns;” and the fact that problems can spread and multiply rapidly in an ever more tightly connected world.
Two risks come in for special attention on account of their “high degrees of impact and interconnectedness” and their ability to “influence the evolution of many other global risks and inhibit our capacity to respond effectively to them.” They are:
1. Economic Disparities
Economic disparities threaten social and political stability as well as economic development, notes the report, and is strongly linked to a host of other problems, including corruption, demographic challenges, fragile states, chronic diseases, illicit trade, migration, food (in)security, terrorism and weapons of mass destruction. Within countries, disparities are also seen as a factor in social fragmentation.
2. Global Governance Failures
Risks are increasingly globalized and interconnected, but global governance capacities remain highly fragmented. Global governance failures create and exacerbate systemic global risks. Among those failures the report counts: UN climate change negotiations; the uncompleted Doha Development Round of trade negotiations; lack of progress on some of the Millennium Development Goals; the stalling of United Nations’ Security Council reform; and challenges to frameworks designed to prevent the proliferation of the capability of nuclear weapons. “There is a growing sense of paralysis in responding to global challenges,” the report says.
Beyond the big two, the report zeroes in on three important clusters of risks:
Macroeconomic imbalances: includes currency volatility, fiscal crises and asset price collapse arise from the tension between the increasing wealth and influence of emerging economies and high levels of debt in advanced economies.
Illegal economy: includes state fragility, illicit trade, organized crime and corruption. A networked world, governance failures and economic disparity create opportunities for such illegal activities to flourish.
Water-food-energy: A rapidly rising global population and growing prosperity are putting unsustainable pressures on resources. Demand for water, food and energy is expected to rise by 30-50% in the next two decades, and “shortages could cause social and political instability, geopolitical conflict and irreparable environmental damage.”
Read the full report here.
This article originally appeared on The Progressive Book Club.
Photo credit: Screenshot from World Economic Forum video.