World Economic Forum Outlines Global Risks

With unprecedented levels of interconnectedness between all areas of risk, the report said, the need to combat governance gaps globally is greater than ever. This can only be addressed by an overhaul of current values and behavior by decision-makers to improve coordination and supervision.

One of the key risks is the fiscal crisis "looming for the major developed economies with high deficits like in the U.S. and rising debt levels relative to output," Kurt Karl, chief U.S. economist for Swiss Re in New York, said in an interview.

"Of course, if you tackle that aggressively, or perhaps too aggressively, you might have a sustained period of high unemployment, and that would potentially lead to political turnover and possible social unrest, depending on the country," he observed.

A secondary and connected risk, he said, is an underinvestment in infrastructure. "Certainly one sensible way to spend some money and be compatible with the first one is if you are stimulating the economy, infrastructure is an issue." He mentioned the collapse of the Minneapolis bridge in 2007. Not taking care of infrastructure, Mr. Karl said, can result in loss of lives as well as economic issues.

The third major issue, he added, is chronic diseases. He referred to these as developed economy diseases, such as heart disease, diabetes and cancer. He noted that chronic disease is becoming "the predominant global disease and mortality issue."

Mr. Karl said the report also looks at ways to approach the issues and coordinate globally. It suggests establishing "country risk officers," who would be in charge of a range of risks countries face.

Committees for financial, catastrophic and other risks could be established, he said. Disasters such as the one currently being seen in Haiti could be coordinated globally, so there is "efficient and effective rescue and help response," he said.

Operational risk, he noted, would tend to be governance issues at the government level. In the U.S., he said, a silo approach often is taken to regulatory, supervision and risk management. This approach, he added, has been found not to be sufficient.

The report details the impact of the global recession on long-standing under-investment in infrastructure, especially in energy and agriculture, and the rising costs of treating chronic disease. Although these "creeping" risks have not appeared overnight, the recession has limited the ability of decision-makers to combat them effectively.

A massive $35 trillion of infrastructure investment is required over the next 20 years, according to the World Bank. "This is particularly acute for agriculture and food security," Swiss Re's Chief Risk Officer Raj Singh said in a statement.

"We need a vast increase in food production to feed the growing world population, and a billion people are already undernourished," said Mr. Singh

He said billions of dollars are needed for water provision, energy supply, transport and climate change adaptation measures. "Governments must work together with the private sector to make it happen. Insurers can provide risk management tools that create greater financial stability for farmers and the agriculture industry," Mr. Singh said.