World Economic Forum’s grim post-Covid warning: Social, economic and geo-political instability

Somewhat unsurprisingly “infectious disease” has topped the list of short-term risks facing the world in 2021 in the World Economic Forum’s annual Global Risks Report.

But with that has come a rise in concern about social risks like digital inequality and the erosion of social cohesion.

The Covid-19 pandemic has increased disparities and social fragmentation, the 2021 report concludes.

Looking at longer-term risks, it is likely that the world will feel the economic fallout of the pandemic in the next three to five years and over the next five to 10 years it will weaken geopolitical stability, it says.

Meanwhile, environmental concerns still top the list in terms of likelihood and impact for the next decade.

Put together in partnership with the Marsh & McLennan Companies (MMC) Risk Centre, the Global Risks Perception Survey polls more than 650 senior leaders from the World Economic Forum’s global network.

The Risk Report’s release is a regular fixture at the World Economic Forum in Davos Switzerland, although this year the event will be held largely online due to the pandemic.

This year’s results showed the top five global risks (by likelihood) in the next two years were perceived to be:

Other social issues in the top 10 included youth disillusionment and erosion of social cohesion.

To some extent that is a shift from previous years in that economic concerns do not dominate.

However this year the survey also asked respondents to rate the biggest risks over longer time frames.

Those results suggested that there were growing concerns about economic fallout in the post-Covid world as emergency measures put in place were unwound.

The biggest perceived risks across a three-to-five-year time frame were:

• Asset bubble burst
• IT infrastructure breakdown
• Price instability
• Commodity shocks
• Debt crises

Looking out across five to 10 years concerns shifted towards the geopolitical with the top five being:

• Weapons of mass destruction
• State collapse
• Biodiversity loss
• Adverse tech advances
• Natural resource crises

The survey was ultimately a perception study and it was always hard to account for perception bias,said Marcus Pearson, Marsh, country head New Zealand.

So, for example, it was natural that infectious disease would top the list, even though you could argue the world was now better placed to deal with future pandemics.

“The interconnected nature of the risks is the big take-out from the report this year,” he said.

Covid was “the match that lit up a bonfire” of wider social and economic risks that had been featuring in the report results for several years.

Short of a nuclear war or climate change there was really no other risk that could affect the whole planet so dramatically, he said.

“Infectious disease is immediate and the whole planet goes into lockdown. Then what you see is this whole interconnection of other risks coming into play.”

One of the big geopolitical risks for small trading nations like New Zealand was the collapse of multilateralism which was rated one of the top 10 long-term risks, he said.

“So this is the subversive geopolitical influence that you’re seeing from the superpowers, whether it be resource grabs, cyber attacks or blatantly breaking established international trade rules.”

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