World leaders have gathered in Davos, Switzerland to discuss the global risks facing the world in 2013, chief among them is collapse of the economic system and the spread of weapons of mass destruction. X-factors include what would happen if extraterrestrial life were revealed and the use of weather control technology.
The nature of global risks is constantly changing. Thirty years ago, chlorofluoro-carbons (CFCs) were seen as a planetary risk, while threat from a massive cyber attack was treated by many as science fiction. In the same period, the proliferation of nuclear weapons occupied the minds of scientists and politicians, while the proliferation of orbital debris did not. We see a similar story with asbestos then and carbon nanotubes today, and the list goes on.
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With new information, the perceptions and realities of risks change, and often in unforeseen directions. Consider that in some circles the threat from greenhouse gas emissions made nuclear energy seem less hazardous than fossil fuels over the long run. Yet the nuclear catastrophe in Fukushima not only changed public perceptions in Japan but also energy policy, almost overnight, in some parts of Europe.
The World Economic Forum is now in its eighth year of publishing the Global Risks report. The purpose of the current edition is twofold. First, it aims to show how experts from around the world, from different backgrounds, currently perceive the risks that the world is likely to face over the next decade. To capture these opinions, a survey was carried out, interviews were conducted with specialists in different fields, and a series of workshops and conference sessions were held with expert groups to interpret the research findings and to work out the three risk cases developed in the report. Second, with this report the World Economic Forum aims to continue to raise awareness about global risks, to stimulate thinking about how risks can be factored into strategy development, and to challenge global leaders to improve how they approach global risks.
Annual Survey – Assessing Global Risks
The Global Risks Perception Survey was conducted in September 2012. More than 1,000 experts responded to evaluate 50 global risks from five categories – economic, environmental, geopolitical, societal and technological. For each global risk, survey respondents were asked, “On a scale from 1 to 5, how likely is this risk to occur over the next 10 years?” and “If it were to occur, how big would you rate the impact of this risk?” The aggregated responses to these two questions are depicted in the Global Risks Landscape scatterplot in Figure 2.
Figure 2: Global Risks Landscape 2013
The evaluation of the 50 risks also focused on their linkages, given their interdependent nature. Survey respondents were asked to nominate pairs of risks that they believe to be strongly connected. They were also asked to nominate a “Centre of Gravity” – the systemically most important risk for each of the five categories of global risks. Putting all paired connections together results in a network diagram presented in Figure 37 in Section 4 – Survey Findings.
The survey data was also analyzed to examine how the background of the respondents affects their perceptions. Are the views of people based in Europe similar to those in Asia? Do younger people perceive the world differently from older people? And how does specialist knowledge in a field affect how risks are perceived? These questions are explored in Section 4 of this report.
The Cases – Making Sense of Complex Systems
The 50 global risks in this report are interdependent and correlated with each other. The permutations of two, three, four or more risks are too many for the human mind to comprehend. Therefore, an analysis of the network of connections has been undertaken to highlight some interesting constellations of global risks seen in Figure 3.
In Section 2, these constellations of global risks are presented as three important cases for leaders: “Testing Economic and Environmental Resilience” on the challenges of responding to climate change, “Digital Wildfires in a Hyperconnected World” on misinformation spreading via the Internet, and “The Dangers of Hubris on Human Health” on the existential threat posed by antibiotic-resistant bacteria.
Each case was inspired by the findings from an initial network analysis and further developed through extensive research into current trends, potential causal effects, levels of awareness and possible solutions. Unlike traditional scenario methodologies, the risk cases do not attempt to develop a full range of all possible outcomes. They are instead an exercise in sense-making as well as a collective attempt to develop a compelling narrative around risks that warrant urgent attention and action by global leaders. Readers are encouraged to refine these cases further and to develop their own scenarios based on the data presented. iv iv
X Factors from Nature – Looking Even Further Ahead
The section on X Factors invites the reader to consider emerging concerns that are not yet on the radar of decision-makers. If the 50 global risks represent “known knowns”, then these X factors could be considered as “known unknowns”. They were co-developed with the editors of Nature and benefit from their contributors’ deep knowledge of cutting-edge scientific research that has not yet crossed over into mainstream discourse.
X Factors from Nature
Developed in partnership with the editors of Nature, a leading science journal, the chapter on “X Factors” looks beyond the landscape of 50 global risks to alert decision-makers to five emerging game-changers:
Runaway climate change: Is it possible that we have already passed a point of no return and that Earth’s atmosphere is tipping rapidly into an inhospitable state?
Significant cognitive enhancement: Ethical dilemmas akin to doping in sports could start to extend into daily working life; an arms race in the neural “enhancement” of combat troops could also ensue.
Rogue deployment of geoengineering: Technology is now being developed to manipulate the climate; a state or private individual could use it unilaterally.
Costs of living longer: Medical advances are prolonging life, but long-term palliative care is expensive. Covering the costs associated with old age could be a struggle.
Discovery of alien life: Proof of life elsewhere in the universe could have profound psychological implications for human belief systems.
Resilience – Preparing for Future Shocks
This year’s Special Report examines the increasingly important issue of building national resilience to global risks. It introduces qualitative and quantitative indicators to assess overall national resilience to global risks by looking at five national-level subsystems (economic, environmental, governance, infrastructure and social) through the lens of five components: robustness, redundancy, resourcefulness, response and recovery. The aim is to develop a future diagnostic report to enable decision-makers to track progress in building national resilience and possibly identify where further investments are needed. The interim study will be published this summer, and we invite readers to review the proposed framework and to share ideas and suggestions with the Risk Response Network.v
The World Economic Forum’s Global Risks 2013 report is developed from an annual survey of more than 1,000 experts from industry, government, academia and civil society who were asked to review a landscape of 50 global risks.
The global risk that respondents rated most likely to manifest over the next 10 years is severe income disparity, while the risk rated as having the highest impact if it were to manifest is major systemic financial failure. There are also two risks appearing in the top five of both impact and likelihood –chronic fiscal imbalances and water supply crisis (see Figure 4).
Figure 4: Top Five Risks by Likelihood and Impact
Unforeseen consequences of life science technologies was the biggest mover among global risks when assessing likelihood, while unforeseen negative consequences of regulation moved the most on the impact scale when comparing the result with last year’s (see Figure 5).
Three Risk Cases
The report introduces three risk cases, based on an analysis of survey results, consultation with experts and further research. Each case represents an interesting constellation of global risks and explores their impact at the global and national levels. The three risk cases are:
Testing Economic and Environmental Resilience
Continued stress on the global economic system is positioned to absorb the attention of leaders for the foreseeable future. Meanwhile, the Earth’s environmental system is simultaneously coming under increasing stress. Future simultaneous shocks to both systems could trigger the “perfect global storm”, with potentially insurmountable consequences. On the economic front, global resilience is being tested by bold monetary and austere fiscal policies. On the environmental front, the Earth’s resilience is being tested by rising global temperatures and extreme weather events that are likely to become more frequent and severe. A sudden and massive collapse on one front is certain to doom the other’s chance of developing an effective, long-term solution. Given the likelihood of future financial crises and natural catastrophes, are there ways to build resilience in our economic and environmental systems at the same time?
Digital Wildfires in a Hyperconnected World
In 1938, thousands of Americans confused a radio adaptation of the H.G. Wells novel The War of the Worlds with an official news broadcast and panicked, in the belief that the United States had been invaded by Martians. Is it possible that the Internet could be the source of a comparable wave of panic, but with severe geopolitical consequences? Social media allows information to spread around the world at breakneck speed in an open system where norms and rules are starting to emerge but have not yet been defined.
While the benefits of our hyperconnected communication systems are undisputed, they could potentially enable the viral spread of information that is either intentionally or unintentionally misleading or provocative. Imagine a real-world example of shouting “fire!” in a crowded theatre. In a virtual equivalent, damage can be done by rapid spread of misinformation even when correct information follows quickly. Are there ways for generators and consumers of social media to develop an ethos of responsibility and healthy scepticism to mitigate the risk of digital wildfires?
The Dangers of Hubris on Human Health
Health is a critical system that is constantly being challenged, be it by emerging pandemics or chronic illnesses. Scientific discoveries and emerging technologies allow us to face such challenges, but the medical successes of the past century may also be creating a false sense of security. Arguably, one of the most effective and common means to protect human life – the use of antibacterial and antimicrobial compounds (antibiotics) – may no longer be readily available in the near future. Every dose of antibiotics creates selective evolutionary pressures, as some bacteria survive to pass on the genetic mutations that enabled them to do so.
Until now, new antibiotics have been developed to replace older, increasingly ineffective ones. However, human innovation may no longer be outpacing bacterial mutation. None of the new drugs currently in the development pipeline may be effective against certain new mutations of killer bacteria that could turn into a pandemic. Are there ways to stimulate the development of new antibiotics as well as align incentives to prevent their overuse, or are we in danger of returning to a pre-antibiotic era in which a scratch could be potentially fatal?
Special Report: National Resilience to Global Risks
This year’s Special Report examines the difficult issue of how a country should prepare for a global risk that is seemingly beyond its control or influence. One possible approach rests with “systems thinking” and applying the concept of resilience to countries. The report introduces five components of resilience – robustness, redundancy, resourcefulness, response and recovery – that can be applied to five country subsystems: the economic, environmental, governance, infrastructure and social. The result is a diagnostic tool for decision-makers to assess and monitor national resilience to global risks.
The Global Risks report is the flagship research publication of the World Economic Forum’s Risk Response Network, which provides an independent platform for stakeholders to explore ways to collaborate on building resilience to global risks. Further information can be found at www.weforum.org/risk
The Evolving Risk Landscape
How do the top risks as identified by the annual Global Risks Perception Survey change over time? Figure 6 shows how this list changed over the past seven years. The average ratings of the risks have changed slightly, as described in detail in Section 4 of the report, but the relative ranking of the risks according to their impact or their likelihood is less affected. Interestingly, the diffusion of weapons of mass destruction has moved into the top five risks in terms of impact.ii
Figure 6: Top Five Global Risks in Terms of Impact and Likelihood, 2007-2013