The World Economic Forum’s World Risk Report: Lessons and Perspective
Every year, the World Economic Forum meets in Davos, Switzerland to hold a discussion about global risks threatening the global economy. The Global Risks Report is published ahead of time to give attendees some time to digest findings of the Global Risk Network. It’s a complex study of the interconnectedness of hundreds of global risk factors. While the average person might think of risks, industries, and nations as isolated entities, the Report suggests otherwise. The Report views the world economy as an interconnected organism of many forces, from the man-made to the natural. The following video can help illustrate the enormous scope of true global risk.
For more information and videos about these phenomena, check out “The Bigger Picture”, a Youtube channel about Global Risk by ZURICH.
Many of the global risks identified in the 2017 report are familiar, but the Global Risk Network always identifies the ways in which these risks have increased or decreased in severity since the publishing of the previous year’s report. If you are interested in hearing about particular risk factors (Climate change, Political Unrest, Global Currency turmoil, etc.), the report and associated videos will be illuminating. For the purposes of this article, we’ll discuss the ways in which the Global Risk Network makes its determinations about global risk factors.
Global Scope- Global risks are labeled as such when unwelcome outcomes could have impact in at least two different continents and/or three world regions. These risk factors may be limited to a small geographical area, but their fallout could ripple over all portions of the world.
Cross Industry Relevancy- Much like the way a single, localized risk could affect regions throughout the world, a global risk must affect at least three industries in order to be considered by the Global Risk Network.
Economic Impact- Relevant risk factors must have the potential to impact the world economy with a loss of $10 Billion or more.
Public Impact- Major global risks can cause significant human suffering, sufficient to trigger strong public and political pressure and response.
Uncertainty- A true global risk must present uncertain outcomes over a period of ten years, as well as potential negative outcomes that meet the above criteria.
Multiple Stakeholders- A complex global risk worthy of consideration by the Forum would require the cooperation of multiple global entities (business, political, cultural, etc.) in order to mitigate damages. The entities that would spring into action are Stakeholders.
Using these criteria, the Forum identifies many dozens of Global Risk Factors, any of which could negatively impact the world order if they lost control. It is an attempt to view the world as a giant economic engine, one which, if properly maintained, can produce the greatest possible good for the greatest number of people. Though this dream of a risk-based model for global prosperity has yet to be realized, proper understanding of the world’s interconnected components is an important step in understanding real global risk. Check out the Forum’s findings for 2017 to learn more about global risks already in motion.