Failure to mitigate climate change and other environmental risks pose the most serious global threats over the next 10 years, although the cost-of-living crisis – the biggest near-term threat – risks undermining efforts to address these challenges, according to the World Economic Forum’s Global Risks Report 2023, published Wednesday.
The report, based on responses from 1,200 global risk experts, policymakers and business leaders, said “failure to adapt to climate change” and “natural disasters and extreme weather events” rounded out the three most serious long-term risks.
The economic effects of covid-19 and the war in Ukraine have brought energy, inflation, food and security crises to the fore. These create consequential risks that will dominate over the next two years such as the risk of recession, growing debt distress, stubborn inflationary pressures and polarized societies enabled by disinformation and disinformation, the report said.
Interlinked risks and eroding resilience give rise to the risk of “polycrises”; where different crises interact and the total impact exceeds the sum of each part, the WEF said in the report.
“In this already toxic mix of known and rising global risks, a new shock event, from a new military conflict to a new virus, could become unmanageable. Climate and human development must therefore be at the heart of global leaders’ concerns to increase resilience to future shocks , says Saadia Zahidi, CEO of the WEF, in a statement.
The report has been produced in collaboration with Marsh & McLennan Cos. Inc. and Zurich Insurance Group Ltd.
Nine risks ranked in the top 10 across both the short and long term, including geoeconomic confrontation and the erosion of social cohesion and societal polarization, along with two new entrants to the top 10: widespread cybercrime and cyberinsecurity, and large-scale involuntary migration.
Biodiversity loss and ecosystem collapse ranks as one of the fastest-worsening global risks over the next decade, and six environmental risks are in the top 10 over the next decade, the report found.
Failure to mitigate climate change ranks as a serious problem in both the short and long term “but is the global risk for which we are considered least prepared,” the WEF said.
About 70% of respondents to the Global Risk Perceptions Survey rated existing measures to prevent or prepare for climate change as “ineffective” or “very ineffective,” according to the report.
“Recent events have revealed a gap between what is scientifically necessary and what is politically expedient,” the WEF said.
Geopolitical tensions and economic pressures have already limited — and in some cases reversed — progress in mitigating climate change, at least in the short term, the report found.
The report’s findings are a “call to action” for more advanced risk management techniques, given the “uncertainty and volatility of the world we live in today,” said Reid Sawyer, Chicago-based head of the emerging risk group at Marsh LLC.
Policyholder awareness of severe weather events has never been higher, but “there is a short-term trade-off as we face cost-of-living pressures, anticipating inflation and a potential recession,” and linking climate as a long-term crisis. Sawyer said.
While the federal government has passed laws and allocated money for infrastructure improvements, the cost of living and inflationary pressures mean that in the short term there may be less money available to build sustainably, said Robin A. Kemper, based in Lawrenceville, New Jersey. senior risk engineer at Zurich Resilience Solutions.
Hopefully, it’s a short-term trend that will reverse so that these interconnected risks can be addressed, Kemper said.