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Special Briefing - World Economic Forum Global Risks Analysis 2020

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The World Economic Forum’s (WEF) Global Risk Analysis 2020 report identifies current issues of global concern and assesses the probability (risk by likelihood) of related significant events occurring over the subsequent 10 years, as well as the potential effects (risk by impact) of the events. The report is released each year ahead of the WEF‘s Annual Meeting in Davos, Switzerland.

This years’ report is based on answers to a survey completed by approximately 800 of the WEF’s community of experts and decision makers and more than 200 members of the Global Shapers Community—a group of young entrepreneurs and leaders that were included for the first time this year.

The 2020 report ranks climate change and four related environmental issues as the top five risks in terms of likelihood over the next 10 years. This marks the first time in the history of the survey that one category of risks has filled all five of the top spots. These issues have previously held several spots in the top five, but it is notable that this year, “biodiversity loss” and “human-made environmental disasters” replaced “data fraud and theft” and “cyberattacks” in the top five most likely risks.

Three of the greatest risks by impact also involve the environment, with “failure of climate change mitigation and adaption” ranking as the number one risk by impact and the number two risk by likelihood; “biodiversity loss” ranking as the number three risk by impact and number four by likelihood; and “extreme weather” as the number four risk by impact.

The report highlights the United Nations’ warning that countries are not doing enough to address these concerns, particularly regarding meeting their commitments under the Paris Agreement on climate change. The last five years have been the warmest on record, and global temperatures are increasing at a rate that, if maintained, will see global temperatures rise over three degrees Celsius by the end of the century.

The 2019 Global Risk Report warned that a gradual economic deceleration had begun. This deceleration intensified by the third quarter of 2019, as six of the seven top global economies experienced a deceleration. These six economies represent over half of all global production. These trends explain why respondents ranked “slowdown in a major economy” as the ninth most likely risk in the 2020 survey.

The risk of global economic stagnation continued to rise in 2019, as trade barriers and nationalist economic policies threaten the global economy. A trade dispute between the United States and China persisted through much of 2019, with each nation placing tariffs on goods produced in the other. This dispute raised concerns of a growing rift between the world’s two largest economies. The signing of the Sino-American trade deal in January 2020 will help to calm some economic anxiety, but threats to level tariffs against other nations remain and could harm economic relations and the broader global economy.

The report assesses that the use of trade as a weapon will have far-reaching consequences for relations among nations. Protectionist trade policies—along with threats of an imposition of tariffs—have exacerbated geopolitical tensions among allies and opponents alike. These tensions make collective action on issues of concern, including climate change and economic stimulus, much more difficult and weaken the international order.

Income inequality emerged as a major cause of unrest globally during 2019. This was an underlying factor in protests in Chile, Lebanon, Hong Kong, and Iraq, although corruption or the rise in price of goods and services may have served as proximate catalysts for the protests. The Organization for Economic Cooperation and Development (OECD) has reported that income inequality in OECD member nations is the highest it has been in the past half century. Inequality hinders investment, and its presence in these nations, along with the related protests, have greatly reduced investment and harmed national economies. Protests in these countries have caused billions of dollars of losses for local businesses and significantly reduced national economic growth.

Cyberattacks and data theft and fraud continue their long-standing presence among the top 10 risks in 2020. The ever-increasing prevalence of technology in all fields provides immense opportunities for advancement in communication, automation, medicine, and numerous other fields. The development of new technologies, including artificial intelligence, quantum computing, and cloud computing, will provide new ways to address a number of issues and improve the efficiency of many activities.  However, this reliance on technology also facilitates nefarious cyber activity with far reaching implications as internet-enabled devices from refrigerators to alarm clocks provide a wide range of targets.

Threats from cyberattacks against critical infrastructure, organized cybercrime, and the availability of sophisticated cyber tools on the Dark web combine to cost businesses and governments enormous sums in implementing defences and dealing with breaches. Cooperation between businesses and governments to promote cybersecurity will remain crucial to limiting the impact of cyberattacks.