Understanding risks and preparing for them is the responsibility of the business person. Whether you own your own business or work for another company, the quality of your work and the outcome are affected by the existing risks. On a global scale, such risks become more vivid. In addition, a global perspective is a more effective and practical approach to problems that affect a large number of people from various nations and geographical locations. The Global Risk Perception Survey (GRPS) clarifies the latest perception of risks, the results of which are presented in the Global Risk Report 2021 by World Economic Forum.
Global Risk 2021
Among these risks, the ones with the highest impacts in the next ten years are: infectious diseases, climate action failure, weapons of mass destruction, livelihood crises, debt crises, and IT infrastructure breakdown. The Global Risk Report 2021 contains the results and analysis of a survey investigating the perception of risk in five main areas: economic, environmental, geopolitical, societal, and technology. Each of these sections are further investigated in subsections, further explaining the effects of the risks, the possibility of the risk being realized, and steps that are and can be taken to mitigate them.
Based on the result of the survey, the following ranking indicated the level of concern with regards to several most pressing global issues. The drivers of the bellow mentioned risks and the strength of causality have also been indicated in the report, and twenty drivers have been identified from the main five areas of concern mentioned previously, which affect more than one risk, some of which will be explained bellow.
- Climate Action Failure
- Infectious diseases
- Livelihood crises
- Social Cohesion Erosion
- Biodiversity Loss
- Debt Crises
- Prolonged stagnation
- Extreme Weather
- Human Environmental Damage
One of the most pressing issues is the crisis of employment and livelihood. 60% respondents identified infectious diseases and livelihood crises as top short term threats. Economic risks such as asset bubbles, price instability, commodity shocks, and debt crises are considered to severely affect employment and livelihood. While a few may benefit from these sudden changes, many will suffer seriously in the short and the long term. These issues are more likely to destructively affect underprivileged individuals and families in a short span of time.
Geopolitical risks are also considered to affect employment and livelihood since interstate relations and conflicts are becoming more complicated at this point of time. National and international policies have changed to serve inward rather than opting for a multilateral approach to problem solving. Nations face similar and yet different risks, the priority of which may be perceived differently from others. This change of perspective is leading to more rivalries than collaboration, while many still believe that a multilateral approach may be the best option under present circumstances.
Resource geopolitization can create difficulties for nations who experience scarcity in certain areas or depend on import from those have abundant resources. The problem becomes more serious and devastating, especially if certain resources that are vital to survival of people become scarce; in that case, some nations may have to face more adverse situations than others. It is obvious that these two issues, together, can make matters even worse, not to mention that only 28 economies are expected to have grown in 2020.
The pandemic (COVID-19) has had severe impacts on the economy and on people’s lives. Its impact was sudden and disruptive, leading to various changes in different aspects of everyday life and business. Access to education has become much more difficult due to its dependence on technology. Countries, regions, and people who are financially disadvantaged, now find it even more difficult to climb up the ladder of education to view an improved vocational prospect.
Even though free education is also available online, smart devices and access to internet are still not available to a myriad of people in various regions. The same situation applies to work places. Those who lack sufficient funds to purchase devices to work remotely will encounter more problems than solutions from technology. Meanwhile, certain jobs require workers to physically appear in site for work, risking their lives for livelihood and thus losing the chance to have technology mitigate the risks. In some cases, they even lose their jobs to automated machines and processes, experiencing the unfortunate side of technology.
Climate Action Failure
Extreme weather has been perceived to be the most likely risk since 2017, while the highest ranking impact changed from climate action failure to infectious diseases in 2021. Climate action failure held the top rank only in 2020 and 2016, whereas weapons of mass destruction overtook this risk for three consecutive years. More importantly, infectious diseases were only considered as the second risk with the highest impact in 2015, a risk now considered to have the highest level of impact in 2021, overtaking both climate action failure and weapons of mass destruction. However, it is considered to be the 4th risk by likelihood. While technological risks such as cyber attacks and data fraud or theft appeared Among the top five risks since 2017, their impact and likelihood is no longer among the highest risks.
Human Environmental Damage
Environmental risks such as extreme weather, climate action failure, human environmental damage, and biodiversity loss are among both risks of highest likelihood and impact. Societal risk such as infectious diseases and livelihood have climbed to the top in 2021, generating more concern than before. Digital inequality and digital power concentration seem to have become affected by technological advances and infectious diseases preventing people from adhering to prepandemic lifestyles. Work, education, and interactions are more dependent on technology, turning it into a possible risk escalating inequality.
The Global Risk Report 2021 shows that there has been a shift in perceived global risks in the past few years. Livelihood, Infectious diseases, climate change and climate action failure, and several other risks are now considered to be more likely to affect the life of human beings than before. Perhaps knowledge of these crises and understanding them can help in preparing to take necessary actions, or even spark ideas to address these issues in a more responsible and creative ways. It appears that people can better recognize and understand risks and threats when they come together and share their opinions. Now, it is time for those capable of turning ideas into plans of action to suggest the best courses of action and those with the ability to take action to get together to put them into practice efficiently. These times press for more cooperation indeed.
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