Failure to mitigate and adapt to climate change is the global risk with the greatest potential impact in 2016. The risk ranked as most likely: large-scale involuntary migration. Both are major findings in a new World Economic Forum report that tallies the biggest worldwide risks in the months ahead.
Details can be found in the WEF’s Global Risks Report 2016, 11th edition, an annual release developed with strategic partners Marsh & McLennan Companies, Zurich Insurance Group. To gather the information, report authors asked 750 experts in business, academia, civil society and the public sector to assess 29 separate global risks for both impact and likelihood over the next decade.
While climate change has made the top five rankings in previous years of risks with the greatest impact, this is the first time it has landed in the number one slot. Cecilia Reyes, chief risk officer for Zurich, said that climate change matters more now because it is helping to make many other risks worse, particularly in the current global political environment.
“Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks,” Reyes said in prepared remarks. “Meanwhile geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders. These political conflicts are in turn making the challenge of climate change all the more insurmountable – reducing the potential for political co-operation, as well as diverting resource, innovation and time away from climate change resilience and prevention.”
Meanwhile, large-scale involuntary migration is creating huge problems globally, and particularly in Europe, said John Drzik, president, Global Risk and Specialties, Marsh.
“Events such as Europe’s refugee crisis and terrorist attacks have raised global political instability to its highest level since the Cold War,” Drzik said in prepared remarks. “This is widening the backdrop of uncertainty against which international firms will increasingly be forced to make their strategic decisions.”
Drzik added that “the need for business leaders to consider the implications of these risks on their firm’s footprint, reputation and supply chain has never been more pressing.”
The top 5 global risks in 2016 in terms of likelihood:
The top 5 global risks in 2016 in terms of impact:
Source: World Economic Forum