Unchecked cyberattacks ‘pose a growing threat to a fragile global economy’

Over the past 17 years, the World Economic Forum Global Risks Report warned of deeply interconnected global risks. Conflicts and geoeconomic tensions have triggered a series of deeply interconnected global risks, according to the World Economic Forum Global Risks Report 2023. These include shortages of energy and food supplies, which are expected to persist for the next two years, and sharp increases in the cost of living and debt service. At the same time, these crises risk undermining efforts to address longer-term risks, including those related to climate change, biodiversity and investment in human capital.

These are the conclusions of the Global Risks Report 2023released today, which argues that the window for action on the most serious long-term threats is rapidly closing and in a concerted fashion, collective action is needed before risks reach a tipping point.

The report, produced in partnership with Marsh McLennan and Zurich Insurance Group, draws on the views of more than 1,200 global risk experts, policymakers and industry leaders. Over three time periods, it paints a picture of the global risk landscape that is both new and eerily familiar, as the world grapples with many pre-existing risks that previously seemed to be fading.

Currently, the global pandemic and the war in Europe have brought the energy, inflation, food and security crises back to the fore. These create follow-on risks that will dominate the next two years: the risk of recession; growing over-indebtedness; an ongoing cost of living crisis; polarized societies made possible by disinformation and misinformation; a pause in rapid climate action; and zero-sum geoeconomic warfare.

Unless the world begins to cooperate more effectively in climate change mitigation and adaptation, this will lead over the next 10 years to continued global warming and ecological degradation. Failure to mitigate and adapt to climate change, natural disasters, biodiversity loss and environmental degradation account for five of the top 10 risks – with biodiversity loss listed as one of the risks that are deteriorating fastest over the next decade. At the same time, leadership sparked by crises and geopolitical rivalries risk creating societal distress on an unprecedented scale, as investments in health, education and economic development disappear, further eroding social cohesion. Finally, growing rivalries risk not only increasing geo-economic militarization, but also remilitarization, especially through new technologies and rogue actors.

The years ahead will present difficult trade-offs for governments facing competing concerns for society, the environment and security. Already, near-term geoeconomic risks are testing net zero commitments and revealing a gap between what is scientifically necessary and politically acceptable. Significantly accelerated collective action on the climate crisis is needed to limit the consequences of global warming. Meanwhile, security considerations and increased military spending may leave less fiscal space to cushion the impacts of a protracted cost-of-living crisis. Without a change in trajectory, vulnerable countries could reach a state of perpetual crisis where they would be unable to invest in future growth, human development and green technologies.

The report calls on leaders to act collectively and decisively, balancing short- and long-term views. In addition to urgent and coordinated climate action, the report recommends joint efforts between countries as well as public-private cooperation to strengthen financial stability, technological governance, economic development and investment in research, science, technology and technology. education and health.

“The near-term risk landscape is dominated by energy, food, debt and disasters. Those who are already the most vulnerable are suffering – and in the face of multiple crises, those who qualify as vulnerable are growing rapidly, in rich and poor countries alike. In this already toxic mix of known and growing 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 the concerns of world leaders to build resilience against future shocks,” said Saadia Zahidi, Managing Director of the World Economic Forum.

John Scott, Head of Sustainability Risk, Zurich Insurance Group, said: “The interplay between the impacts of climate change, biodiversity loss, food security and the consumption of natural resources is a dangerous cocktail. Without significant policy change or investment, this mix will accelerate the collapse of ecosystems, threaten food supplies, amplify the impacts of natural disasters and limit further progress in climate change mitigation. If we accelerate action, there is still an opportunity by the end of the decade to achieve a 1.5°C trajectory and respond to the natural emergency. Recent advances in the deployment of renewable energy technologies and electric vehicles give us good reason to be optimistic.

Carolina Klint, Head of Risk Management, Continental Europe, Marsh, said, “2023 is expected to see increased food, energy, commodity and cybersecurity risks, which will disrupt more global supply chains and will impact investment decisions. At a time when countries and organizations should step up their resilience efforts, economic headwinds will limit their ability to do so. Faced with the most challenging geoeconomic conditions in a generation, companies should focus not only on managing near-term concerns, but also on developing strategies that will position them well for longer-term risks and structural change.

The Global Risks Report is a pillar of the Forum’s Global Risks Initiative which strives to promote a better common understanding of global risks in the short, medium and long term in order to enable learning about risk preparedness and resilience. This year’s report also examines how current and future risks may interact with each other to form a “polycrisis” – a group of linked global risks with cumulative impacts and unpredictable consequences. The report explores ‘resource rivalry’, a potential cluster of interrelated environmental, geopolitical and socio-economic risks related to the supply of and demand for natural resources, including food, water and energy.

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