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World Economic Forum: Highlights from Global Risks Report 2016

An increased likelihood for all risks, from the environmental to society, the economy, geopolitics and technology, looks set to shape the global agenda in the coming year, the World Economic Forum’s Global Risks Report 2016 has found. 

In this year’s annual survey, almost 750 experts assessed 29 separate global risks for both impact and likelihood over a 10-year time horizon. The risk with the greatest potential impact in 2016 was found to be a failure of climate change mitigation and adaptation. This is the first time since the report was published in 2006 that an environmental risk has topped the ranking. This year, it was considered to have greater potential damage than weapons of mass destruction(2nd), water crises (3rd), large-scale involuntary migration (4th) and severe energy price shock (5th).

The number one risk in 2016 in terms of likelihood, meanwhile, is large-scale involuntary migration, followed by extreme weather events (2nd), failure of climate change mitigation and adaptation (3rd), interstate conflict with regional consequences (4th) and major natural catastrophes (5th).

Such a broad risk landscape is unprecedented in the 11 years the report has been measuring global risks. For the first time, four out of five categories – environmental, geopolitical, societal and economic – feature among the top five most impactful risks. The only category not to feature is technological risk, where the highest ranking risk is cyberattack, in 11th position in both likelihood and impact.

In addition to measuring their likelihood and potential impact, the Global Risks Report 2016 also examines the interconnections among the risks. Here, data suggests a convergence may be occurring, with a small number of key risks wielding great influence. All five of the most interconnected pairs of risks in 2016 accounted for more interconnections than in 2015. At the top end of the scale, 2016’s two most interconnected risks – profound social instability and structural unemployment or under-employment – account for 5% of all interconnections.

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International security in the spotlight
In addition to assessing the likelihood and potential impact of 29 global risks, the Global Risks Report 2016 takes an in-depth look at how the global security landscape could evolve in the future. The report features the outcomes of a year-long study to examine current trends and possible driving forces for the future of international security.

Through its analysis of the interconnections between risks, the 2016 report also explores three areas where global risks have the potential to impact society. These are the concept of the “(dis)empowered citizen”, the impact of climate change on food security, and the potential of pandemics to threaten social cohesion.

Risks for doing business
For the second year, the Global Risks Report also provides country-level data on how businesses perceive global risks in their countries. This year’s analysis uncovered patterns among both advanced and emerging economies. Unemployment and under-employment appears as the risk of highest concern for doing business in more than a fourth of the 140 economies covered, and is especially featured as the top risk in two regions, sub-Saharan Africa and the Middle East and North Africa. The only region where it does not feature in the top five is North America. Energy price shock is the next most widespread risk, featuring in the top five risks for doing business in 93 economies. Cyberattacks, mentioned above, feature among the top five risks in 27 economies, indicating the extent to which businesses in many countries have been impacted already by this rising threat.