NU Online News Service, Jan. 12, 2:51 p.m. EST

Experts and industry leaders see world-economic conditions having far greater consequences on society in the near term than environmental risks, according to a report from the World Economic Forum.

In the WEF's seventh edition of Global Risks 2012 report, 469 experts and industry leaders were surveyed about the global risks that will have the greatest impact on society over the next 10 years.

Severe income disparity and chronic fiscal imbalances were viewed as the most likely risks to affect the global landscape. Major systemic-financial failure was viewed as having the greatest impact, followed by water-supply crises.

“It is clear that respondents' concern has shifted from environmental risks in 2011 to socioeconomic risks in 2012,” the report says.

“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs,” says Lee Howell, the WEF managing director responsible for the report in a statement. “This new malaise is particularly acute in the industrialized countries that historically have been a source of great confidence and bold ideas.”

The report highlights three risk cases that are likely to develop over the next 10 years breaking them down into:

Seeds of Dystopia—described as the opposite of a utopia where “life is full of hardship and devoid of hope.”
How Safe are our Safeguards—globalization and technology have made the world more interdependent. The concern is the safeguards in place adequate enough to the challenge of managing “vital resources and ensure orderly markets and public safety.”
The Dark Side of Connectivity—our technological connectivity has made the world hyper-connected and that reality has made information more vulnerable to cyber threats and digital disruption. This digital space needs to be made secure to “ensure stability in the world economy and balance of power.”

“Individuals are increasingly being asked to bear risks previously assumed by governments and companies to obtain a secure retirement and access to quality healthcare,” notes John Drzik, chief executive officer of Oliver Wyman Group, a Marsh & McLennan Companies member and one of sponsors of the report along with Swiss Re, Zurich Financial Services Group and The Wharton School,UniversityofPennsylvania. “This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community.”

“We need to get the balance right with regulations and, to that end, our safeguards must be anticipatory rather than reactive,” notes David Cole, chief risk officer of Swiss Re, reflecting on the issue of safeguards. “It's equally important that regulations be made more flexible to effectively respond to change.”

On the issue of connectivity, Steve Wilson, chief risk officer for general insurance atZurich, says, “The Arab Spring demonstrated the power of interconnected communications services to drive personal freedom, yet the same technology facilitated riots inLondon. Governments, societies and businesses need to better understand the interconnectivity of risk in today's technologies if we are truly to reap the benefits they offer.”

Special Reports /

WEF: Financial Risk Trumps Environmental Concerns

Related Stories

Recommended For You