Global risks persist despite reports of economic recovery

The long shadow of the global economic recession has created underlying risks in the global economy that persist despite reports of an economic recovery, according to the World Economic Forum (WEF)’s annual report, Global Risks 2010.
The fifth annual report is produced in partnership with Citigroup, Marsh & McLennan Companies, Swiss Re, the Wharton School Risk Center and Zurich Financial Services.
It is the result of year-long consultations with business, academia and policy-making experts.
“The findings of the report confirm that we must face up to the challenges created by these unprecedented levels of interconnectedness between risks,” said Robert Greenhill, managing director and chief business officer at the WEF.
“The financial crisis and the ensuing recession have created a more vulnerable environment where unaddressed risks may become tomorrow’s crises.”
In reaction to the financial crisis, many countries have put themselves at risk of overextending their fiscal positions and being burdened with extremely high levels of debt, added Daniel M. Hoffman, group chief economist of Zurich Financial Services.
“This could put upward pressure on real interest rates, rein back growth and lead to protracted high levels of unemployment.”
The report argues that the events of the past year have revealed a fundamental need to change thinking on global risks and how they are managed.
“With unprecedented levels of interconnectedness between all areas of risk, the report stresses that the need to combat governance gaps globally is greater than ever,” a release WEF says.
“It argues that this can only be addressed by an overhaul of current values and behaviours by decision-makers to improve coordination and supervision.”