In the wake of a pandemic that has already had profound effects on the global economy, work, social cohesion and national politics, risks of all kinds are set to increase. Yet, the dominating risk factor that looms large is that of climate change.

Ahead of its annual Davos conference, the World Economic Forum has published its Global Risks Report 2021 in a bid to make leaders and policymakers pay attention to the risks the world is facing and their relative importance. The report, which includes the results from the Global Risks Perception Survey, looks at the risk landscape of our post-pandemic world, where environmental damage, widening inequality and possible further erosion of multilateralism prevail.

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“In 2020, the risk of a global pandemic became reality — something this report has been highlighting since 2006”, said Saadia Zahidi, managing director at the World Economic Forum, adding that “the lesson here is for all of us to recognise that ignoring [risks] doesn’t make them less likely to happen”.

Impact and likelihood

Climate change-related concerns dominate both the list of global risks by likelihood, meaning that it is most likely to happen in the next 10 years; and the list of global risks by impact, the severity of the impact should this risk arise.

Extreme weather, climate action failure and human environmental damage feature as the top three risks by likelihood, while infectious diseases, climate action failure and weapons of mass destruction lead in the parallel list by impact.

John Scott, one of the key contributors to the report and head of sustainability risk at the Zurich Insurance Group, says that it is hardly surprising that infectious diseases are at the forefront of respondents’ minds, but stresses that global risks are typically “highly interconnected” and understanding the relative view of their importance is “key to prioritising risk mitigation".

Fissures and fractures 

The report outlines that coming out of the Covid crisis, “structural fissures exacerbated by the crisis threaten to make the recovery deeply uneven”, with the pandemic exacerbating existing interrelated fractures and disparities — be they economic, social, racial or gender-based.

The “public health gaps, digital inequality, educational disparities and unemployment may fray social cohesion”, it says, citing that 70% of working women believe their careers will be slowed as a result. 

The uneven recovery is also set to be compounded by the emerging digital divide — gaps determined by the differential ability to access data and digital technologies — which is taking place between and within countries.

‘Pandemials’ and middle countries 

Young adults (aged 15–24), dubbed “pandemials”, are at risk of becoming the double-lost generation of the 21st century, according to the report, after being hit by both the credit crisis of 2008 and the Covid crisis, blunting their access to education and the job market. 

The report also calls on middle powers — states which lack superpower status, but have clout on the international stage — to come together, co-operate and reinforce global resilience in the face of weakened multilateral institutions and US–China trade wars.

Mr Scott says: “If you go back to climate risk or climate change, we’ve got to work together across government, business and society more broadly and across different economies, different countries and different industrial sectors to figure out what the transition pathways are that will enable the carbon-intensive sectors to deliver their vital services, but in a low-carbon way to drive sustainable economic growth.”   

In a world of increased regional partnerships and where heavily globalised supply chains have come into question, Mr Scott expects a similar sort of collaborative flexibility in trade, but stresses that more intra-regional trade will not wholly replace globalisation.

“We’re not moving away from global trade and into local trade; it’s [about] getting an appropriate mix of the two to build supply chain resilience.”