This year’s Global Risks Report, published by the World Economic Forum in collaboration with leading global institutions including Zurich Insurance Group, introduces a new series, Future Shocks, which provides a new lens through which to view the increasingly complex world of global risks. This new section of the report focuses on the possible future shocks that could fundamentally disrupt or destabilize your world, and what can you do to prevent them.
For example, let’s look at fish stock shortages. On the surface, one might think they have nothing to do with your business. However looking deeper, a rapid collapse of fish stocks could be the result of AI - illegal AI drone fishing and this, in turn, could cause displacement of communities, cross-border political tensions and even fiscal pressures. So seemingly unrelated shocks are often intrinsically linked.
So what are these future shocks in a nutshell?
Grim reaping: Simultaneous breadbasket failures threaten sufficiency of global food supply.
A tangled web: Artificial intelligence “weeds” proliferate, choking off the performance of the internet.
The death of trade: Bilateral trade wars cascade and multilateral dispute resolution institutions are too weak to respond.
Democracy buckles: New wave of populism threatens the social order in one or more mature liberal democracies.
Precision extinction: AI-piloted drone ships wipe out large proportion of global fish stocks.
Into the abyss: A cascading series of economic/financial crises overwhelm political and policy responses.
Inequality ingested: Bioengineering and cognition-enhancing drugs widen the gulf between haves and have-nots.
War without rules: State-on-state cyber-attacks escalate unpredictably owing to a lack of agreed protocols.
Identity geopolitics: Self-determination around contested borders sparks regional conflict.
Westphalia 2.0: Regulatory, cybersecurity and protectionist concerns lead to the fragmentation of the internet.
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How can businesses respond to global risks?
The increased interconnectivity, complexity and potential impact of global risks are here to stay. In such a context, caring for business and our future means considering everything that could affect it. Companies need to look at those global risks that could have a direct or indirect impact on their business, and define a holistic approach to managing those risks.
Preparation and planning if key: managing the connectivity of risks is a recipe of success for the future of risk management. A future that is not only based on risk transfer, but also – and more and more – includes greater oversight of the strategic risks and risk management approaches that are integrated to address the risk connectivity, and that are backed up by top-quality data insights and intelligence. Responding to global risks needs to start at the highest level in companies. This means integrating risk management into the strategic planning process of the corporation.
For that, it is important to understand the triggers, trends and scenarios to look out for, and to prepare for the possible consequences.
