World leaders to address virtual forum after Davos gathering postponed

Daniel Fowler
January 21, 2021

The novel coronavirus crisis has revealed the "catastrophic effects" of ignoring long-term risks, and the knock-on effect could be felt economically and politically for years to come, the World Economic Forum's latest risk report said.

Climate change continues to be a "catastrophic risk", the report says, even as global cooperation weakens, and it warns that a shift towards greener economies can not be delayed until the shocks of the pandemic subside.

When it comes to the time-horizon within which these risks will become a critical threat to the world, the most imminent threats - those that are most likely in the next two years - include employment and livelihood crises, widespread youth disillusionment, digital inequality, economic stagnation, human-made environmental damage, erosion of societal cohesion and terrorist attacks.

In the five to 10 year horizon, environmental risks such as biodiversity loss, natural resource crises and climate action failure dominate; alongside weapons of mass destruction, adverse effects of technology and collapse of states or multilateral institutions. We know how hard it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognize that ignoring them doesn't make them less likely to happen.

The World Economic Forum has given up on holding its annual meeting in Davos, Switzerland.

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Terming the climate crisis as one of the most impactful risks, the WEF report cautions that although lockdowns worldwide caused global emissions to fall in the first half of 2020, evidence from the 2008-2009 financial crisis warns that emissions could bounce back. "The biggest long-term risk remains a failure to act on climate change".

Peter Giger, chief risk officer at Zurich Insurance, remained optimistic about rebuilding after the pandemic. "Rapid digitalization is exponentially increasing cyber exposures, supply chain disruption is radically altering business models, and a rise in serious health issues has accompanied employees' shift to remote working", said Carolina Klint, Risk Management Leader, Continental Europe, Marsh.

"Only 28 economies are expected to have grown in 2020". "If the continued deployment of 5G and AI is to emerge as an engine of growth, however, we must urgently bridge digital divides and address ethical risks".

The report was compiled together with insurance companies Zurich and Marsh & McLennan and South Korea's SK Group.

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