The World Economic Forum’s Global Risk Reports have been warning about the dangers of pandemics for the last 15 years. In 2020 the impact of ignoring long-term risk like pandemics was felt.
This is the 16th edition of the Global Risk Report which the WEF published with support from Marsh McLennan. This year’s report highlighted the disruptive implications of major risks, including the Covid-19 pandemic, that will not only be reshaping our world in 2021 but may even have implications over the next decade.
According to the report, the Covid-19 pandemic is increasing disparities and social fragmentation in the short term. However, the impact of the pandemic will be felt for years to come with threats to the global economy for the next three to five years and by weakening geopolitical stability in the next five to 10 years.
These developments, says the report, may further impede the global co-operation needed to address long-term challenges such as environmental degradation. Furthermore, it risks widening the gap between the ‘haves’ and the ‘have nots’ when it comes to technology access and digital skills which is likely to affect young people the most.
The report adds that financial, digital, and reputational pressures resulting from Covid-19 threaten to leave behind many companies and their employees in the markets of the future. Not only will this cause potential disparities and social fragmentation for some countries, but an increasingly tense and fragile geopolitical outlook could hinder the global economic recovery.
Acknowledging how difficult it is for governments, businesses and other stakeholders to address long-term risks like pandemics, Saadia Zahidi, managing director at the World Economic Forum said the lesson here “is for all of us to recognise that ignoring them doesn’t make them less likely to happen. As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet.”
The report draws on survey results from nearly 700 experts and decision-makers globally who were asked about their concerns for the next decade, how global risks interact, and where opportunities exist to collectively act to mitigate these threats.
In the short term – within the next two years - respondents listed concerns about lives and livelihoods, including infectious diseases, employment crises, digital inequality and youth disillusionment.
In the medium term – within the next three to five years – survey respondents believe the world will be threatened by knock-on economic and technological risks such as asset bubble bursts, IT infrastructure breakdown, price instability and debt crises.
Within the next five to 10 years, risks include existential threats such as weapons of mass destruction, state collapse, biodiversity loss and adverse technological advances.
Carolina Klint, risk management leader for Continental Europe at Marsh, says, “Economic and societal fallout from Covid-19 will profoundly impact the way organisations interact with clients and colleagues long after any vaccine rollout. As businesses transform their workplaces, new vulnerabilities are emerging. Rapid digitalization is exponentially increasing cyber exposures, supply chain disruption is radically altering business models, and a rise in serious health issues has accompanied employees’ shift to remote working.”
Every business, she adds, will need to strengthen and constantly review their risk mitigation strategies if they are to improve their resilience to future shocks.”
The report reflects on the responses to Covid-19, drawing lessons designed to bolster global resilience. It urges governments and businesses to utilise better pathways to manage risks and enhance resilience. “If lessons from this crisis only inform decision makers how to better prepare for the next pandemic – rather than enhancing risk processes, capabilities and culture – the world will be again planning for the last crisis rather than anticipating the next. The response to Covid-19 offers four governance opportunities to strengthen the overall the resilience of countries: formulating analytical frameworks that take a holistic and systems-based view of risk impacts; investing in high-profile ‘risk champions’ to encourage national leadership and international co-operation; improving risk communications and combating misinformation; and exploring new forms of public-private partnership on risk preparedness.”
Marsh Africa has been helping clients navigate through these new risks, finding a better way for clients to manage their exposures and to enhance client’s resilience. Spiros Fatouros, Marsh Africa CEO says the Global Risk Report applies as much to local companies as it does globally. “As economies emerge from the shock of Covid-19, we saw that South African businesses had to rapidly adapt to retain and motivate their people, manage their liquidity, weather new exposures and take advantage of new business opportunities.”
