Current Global Risks
Written by Alfonso Elizondo
According to the Global Risks Report 2018, the global challenges of 2017 have increased and the experts’ expectation for the future is pessimistic. There are four areas of global risk where urgent action is required.
1.- Inequality and injustice.- Although they have decreased on the global level, internally they are becoming more pronounced in each country. The growing disparity in income and wealth has been identified as the third most important global risk, in addition to automation and digitalization as elements that disrupt the labor market and may contribute to greater inequality.
2.- Political tension at the national and international levels, especially in Asia and the Middle East. Geopolitical risks have grown due to the decline in commitment to a rules-based multipolar international order. This is in addition to identity politics and the personalization of power with Saudi Arabia, China, Turkey and Russia as the most likely catalysts.
3.- Environmental Risks.- The five risks of this type are seen as having a higher than average likeliood. These risks include meteorological phenomena, extreme temperatures, increasing loss of biodiversity, pollution of the soil, water and air, the failure of state controls, adaptation to the effects of climate change and the risks stemming from the transition to the future, both in number and in their disruptive potential. And another rising trend is the use of attacks on critical infrastructure and strategic industrial sectors, with the risk of a systemic shock that is radical and irreversible.
Currently, systemic risks are not isolated factors that can be easily controlled. Societies as well as ecosystems, economies and the global financial system are very complex and interconnected. So when a risk manifests itself in a complex system it can trigger a systemic collapse or an abrupt transition to a worse situation.
Although the economic indicators point to recovery from the global crisis of ten years ago, risks still persist. Among them are unsustainable asset prices, high levels of indebtedness, particular in China, and the continuing pressure on the global financial system. And among the new challenges are the disruptions caused by automation, digitalization and growing mercantilist and protectionist pressures.
The second section of the Global Risks Report notes that risks can materialize very quickly, which is why it predicts the emergence of a flood of unexpected and dramatic crises. The Report presents ten possible future shocks: the insufficiency of food, the adverse effects of ‘Artificial Intelligence’, Internet efficiency, trade wars, populism, the extinction of fish stocks by automated drones, a cascade of economic and financial crises, increase in inequality caused by bioengineering and drugs that enhance cognitive abilities, cyberattacks between states that intensify due to lack of protocols, identity geopolitics and the fragmentation of the Internet due to regulatory, cybersecurity and protectionist issues.
The Global Risks Report says that the world is in a new geopolitical phase that is not only multipolar, but also multiconceptual. This creates new risks and uncertainties, increasing military tensions, economic, disruptions in trade and ‘feedback loops’.
The four main trends that can cause problems over the short and medium term are: the intensification of strong-state politics, the erosion of global norms and the increasingly aggressive geo-economic agendas that lead to greater pressure on smaller countries.
This second section of the Global Risks Report also identifies three risks: antimicrobial resistance, youth unemployment and the phenomenon of digital disinformation.
Some experts express their view of the development of our understanding of risks. Roland Kupers analyzes resilience in complex systems and Michele Wucker, author of publications related to strategy, the global economy and crisis management, calls on independent organizations to pay more attention to their risk management processes and cognitive biases.
Addendum: Despite the in-depth analysis of the Global Risks Report, the global risks of the immediate future are totally unpredictable.