Confronting a Fractured Future: Key Takeaways from the World Economic Forum’s Global Risks Report 2021
The World Economic Forum’s (WEF) annual Global Risks Report — produced with the support of Marsh McLennan and other strategic partners — offers useful guidance on major risks facing businesses, governments, and other organizations globally. Derived from surveys and deeper explorations of a number of short-, medium-, and long-term dangers, the annual report is intended to help risk professionals and senior executives identify critical threats and build greater resilience.
This year’s report arrives at a time of great uncertainty for the global economy. While the ultimate impact of COVID-19 remains unknown, the report explores the pandemic’s massive effects on people and businesses, including the likely significant long-term implications it will have for health systems, workplaces, economies, and societies. At the same time, climate change remains an ever-present threat.
The Global Risks Report 2021 also highlights four accelerating threats:
- A disorderly industrial shakeout. The growing power and influence of nation-states, market concentration in the technology sector, and social license challenges from key stakeholders are three critical risk drivers for global businesses. While governments continue to respond to the crisis and conditions for businesses remain volatile and dynamic, avoiding a disorderly industrial shakeout will be critical to long-term sustainability and resilience.
- A lack of digital inclusivity. The accelerated push for technology implementations is helping many organizations overcome pandemic challenges, but also exacerbating existing inequalities between individuals — and creating new ones. Progress towards greater digital inclusivity is threatened not just by growing digital dependency and automation, but by regulatory uncertainty and the suppression and manipulation of information.
- Middle powers in a divided world. Non-superpower G20 nations face a number of potential challenges in navigating the tensions between the US and China, including growing pressure to align with one or the other on trade, security, and technology. Opportunities for multilateral collaboration may suffer as a result.
- Youth in an age of lost opportunity. Already exposed to environmental degradation, rising inequality, varying degrees of violence, and disruption from industrial transformation, young adults worldwide are experiencing their second major global crisis in a decade. The risk of “youth disillusionment” — which may become a critical threat in the short term — is being largely neglected.
In the face of these and other systemic risks, it’s vital that businesses focus on resilience. Among other steps, businesses should:
- Review and revise their approach to workforce safety and productivity.
- Anticipate the intensifying operational, ethical, regulatory, and workforce-related risks due to rapid digitalization.
- Recognize the structural changes in the national environment that they operate in and anticipate their own changes in response.
- Anticipate the operational and reputational risks that may arise as popular scrutiny continues to mount globally.
- Avoid losing sight of threats from climate change and continue to critically analyze climate-related risks.
- Appreciate the potential for “forgotten risks” that are low in probability but potentially catastrophic in their impacts.