World Economic Forum Releases Global Risks Report 2019

The World Economic Forum (WEF) has released its Global Risks Report 2019 which coincides with its annual event in Davos, Switzerland. The Report is based on a survey among around 1,000 experts and decision-makers from around the world. They were surveyed for their perception of economic, environmental, geopolitical, societal and technological risks. For the third consecutive year, environmental-related risks like “extreme weather events’’ and “failure of climate-change mitigation and adaptation” dominate the Top 5 Global Risks identified by the respondents.

For the report, perceived risks were ranked both by likelihood and impact. Environmental risks continued to dominate the results in both categories and accounted for three of the top five risks both by likelihood and by impact. For the third year in a row, extreme weather events posed the greatest concern. The survey respondents also worried about environmental policy failure: Having fallen in the previous rankings after the Paris Agreement of 2015, “Failure of climate-change mitigation and adaptation” in this year’s report was the second most important risk identified by the respondents, both in terms of likelihood and impact. For the authors of the report, this indicates that “the results of climate inaction are becoming increasingly clear”. As they state, “in a world of disparate powers and divergent values, it is likely to be more difficult to make progress on shared global goals” and this may explain the respondent’s scepticism towards the success of international climate change mitigation policies.

The respondent’s concern may reflect the series of extreme weather events that took place in 2018, a year with record-setting wildfires and storms in the United States, deadly floods in South Asia and Japan and droughts in northern Europe. In so far, the Global Risks Report 2019 is in line with the findings of the IPCC Special Report on impacts of 1.5 C global warming, Hothouse earth and the State of Climate Report released in 2018. The three reports highlight the consequence of an increase in greenhouse gas concentration in the atmosphere.

In addition, the results of the Global Risks Perception Survey show, that the respondents see a clear interconnection between “Failure of climate-change mitigation and adaptation” and “Extreme weather events” and thus are convinced that human behaviour and climate change are closely linked.

Other risks that the report highlighted, include: disasters, biodiversity loss and water crises, food insecurity and involuntary migration.

Risk-awareness and low-carbon transition
As the report summarizes, there is now more awareness of the risks that climate change poses and greater consensus on the need for collective policy responses. The authors are sure, that “the low-carbon transition will shape the profile of infrastructure investment in multiple ways”.

The climate-change imperative will drive increased investment in green infrastructure solutions. These work with natural materials and can, for example, lower energy demand, reduce urban temperatures and improve water management. The rapid roll-out of sustainable infrastructure is likely to lead to continuing financial innovation as more investors move into this market. Already there has been a significant increase in the number of funds investing in infrastructure assets generally, pushing returns down from 14% in 2004 to 10.6% in 2016. According to UN Environment, issuance of green bonds jumped from US$11 billion in 2013 to US$155 billion in 2017.

More on the Global Risk Report 2019 at https://www.weforum.org/reports/the-global-risks-report-2019

BACKGROUND

This year’s meeting took place on 22-25 January, bringing together more than 3 000 leaders from business, government, academia, experts and young leaders, civil society, and media from all over the world. The Forum’s theme is “Globalisation 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution (4IR)”.