Economic weaknesses, extreme weather major global risks over next decade

Global economic weaknesses, leading in part to an inability to tackle major environmental challenges, are the primary risks facing the world in 2013 and over the next decade, suggests a new report from the World Economic Forum.

The Global Risks 2013 report, developed in part by several major reinsurance companies and academic institutions, cites severe income disparity and unsustainable government debt as the top two most prevalent risks, according to results from a survey of more than 1,000 experts and industry leaders.

“Two storms – environmental and economic – are on a collision course,” John Drzik, CEO of Oliver Wyman Group, a part of Marsh & McLennan Companies noted in a WEF statement. “If we don’t allocate the resources needed to mitigate the rising risk from severe weather events, global prosperity for future generations could be threatened. Political leaders, business leaders and scientists need to come together to manage these complex risks.”

Other economic issues, such as mismanagement of ageing populations, and chronic fiscal imbalances, were also cited in the report as major risks having an impact in the world in 2013 and the next several years.

Despite a relatively quiet year for natural catastrophes, survey respondents also rated “rising greenhouse gas emissions” as the third most likely global risk overall, while the “failure of climate change adaptation” is seen as the environmental risk with the most knock-on effects for the next decade, according to the WEF.

“Inherent cognitive biases make the international community reluctant to deal with such a long-term threat, despite recent extreme weather events,” the WEF suggests, noting Hurricane Sandy and severe flooding in China as major catastrophes in 2012 alone.

The WEF also warned of major health issues creating a risky world environment in the coming years. “Rising resistance” to antibiotics is one of the major risks in a “hyperconnected world” where pandemics can spread quickly, the report suggests.

“These global risks are essentially a health warning regarding our most critical systems,” Lee Howell, the editor of the report and managing director at the WEF noted in a statement. “National resilience to global risks needs to be a priority so that critical systems continue to function despite a major disturbance,” he added.

The full Global Risks 2013 report is available for download on the WEF website, and outlines 50 global risks, along with providing a geographic breakdown.