Global Risks Report 2022: Climate change in crisis mode

This year’s Global Risks Report from the World Economic Forum (WEF) raises alarm bells for threats that can no longer be eclipsed by COVID-19. A climate crisis and growing social upheaval are two of the dominant risks explored in this 17th annual report, which, like its predecessors, examines the emerging and evolving risks confronting the world over the next 10 years.

Download The Global Risks Report 2022 Executive Summary 

Make no mistake, the report’s authors emphasize the continuing adverse impacts of the pandemic, now in its third year, which have directly or indirectly influenced many of the leading economic and societal risks. All of this turbulence, including the lingering pandemic, has helped fuel the fear by most experts that a global economic recovery will be volatile and uneven over the next three years.

Nonetheless, climate concerns — notably extreme weather, climate action failure and biodiversity loss — dominate the report’s Global Risks Perception Survey (GRPS) of short-, medium- and long-term top 10 risks as well as its top 10 list of global risks by severity. (The survey of 1,000 global risk experts and leaders serves as the foundation of the larger report.) In addition, the report also warns of increasing societal divides, created by myriad events. “Preventing the world from drifting apart will be decisive to restoring trust and marshalling ever-so-crucial cooperation within societies and between countries,” the authors write, and their call for global consensus and collaborative leadership is a theme that runs throughout the report.

The Global Risks Report 2022 breaks down the interconnected and often competing risks confronting the planet by focusing a targeted lens on challenges the world cannot afford to ignore, including:

• Climate change: Disorder prevails without global consensus. As climate change continues to foster extreme weather events, including droughts, fires, floods and species loss, the lack of cohesive global action and an unwillingness by some leaders to surrender short-term economic and political gains may thwart meaningful solutions. “An orderly and inclusive transition to net zero — the state in which greenhouse gases emitted into the atmosphere are balanced by their removal from the atmosphere — could be as transformative for economies and societies as past industrial revolutions have been,” the authors write. Unfortunately, the “divergent trajectories across countries and sectors are creating more barriers to collaboration and cooperation,” they note. The report projects that the price tag for complete climate inaction will cost a staggering 4% to 18% of global GDP. More daunting, however, is this price: “Along with the continuing destruction of nature, climate change could provoke cataclysmic feedback loops that push ecosystems beyond tipping points —and eventually render any decarbonization efforts futile.”
• As digital dependency grows, so do cyber threats. The GRPS ranks cyber security failure as among the top 10 risks that have worsened the most since the COVID-19 crisis began. Growing digital dependency, which existed before COVID-19 and ballooned after it, has transformed businesses and societies around the world. It has also created cascading cyber security risks. In 2020, malware and ransomware attacks increased by 358% and 435%, respectively, the report notes, “and are outpacing societies’ ability to effectively prevent or respond to them.” The rise of cryptocurrency has allowed cyber criminals to collect payments with little risk of detection, and their victims’ digital dependency increases their willingness to pay ransoms. The report also warns of less tangible risks, such as disinformation, fraud and a lack of digital safety, creating public mistrust and political instability.
• Divergent recovery between the haves and have-nots. The economic fallout from the pandemic, addressed in last year’s report, has “created labor market imbalances, protectionist policies and widening education and skills gaps at the risk of splitting the world into divergent trajectories,” the authors note. Currently, advanced economies — though grappling with the pandemic — largely experienced a successful vaccine rollout, digital transformations that accommodated lockdowns, and new growth opportunities. For underdeveloped nations, low vaccination rates have burdened healthcare systems. In the poorest 52 countries, the report notes, just 6% of the population has been vaccinated. And, unlike the projected 0.9% GDP growth of advanced economies by 2024, developing nations (excluding China) will have fallen 5.5% below their pre-pandemic expected growth, a situation exacerbated by healthcare crises, lack of digital resources and stagnant job markets.
• Global homelessness and growing global insecurity. Migration is creating a tenuous situation that the report sees as a top long-term concern, particularly as many countries impose policies that set higher barriers to migrants seeking refuge and opportunity. “Livelihood crisis” for large parts of the global population is listed as among the most potentially severe risks over the next decade. COVID-19 decimated economies and created healthcare and economic hardships on a massive scale, leading to financial uncertainty for millions and a search for opportunity outside their home nations. Moreover, the report notes, environmental and political crises have led to “involuntary migrations,” forcing millions to flee. Not all of them succeeded in finding a safe place to land: 4 million migrants remained stateless in 2020, the report notes, the highest number in a decade.
• Stumbling blocks in the race to space. As commercial entrants fund private expeditions into space, the authors warn of this new “realm of risk.” These new space explorers, motivated in part to secure commercial advantages in delivering satellite services and internet-related communications, introduce a variety of potential calamities, especially with what the report cites as limited and outdated global governance. “One consequence of accelerated space activity is a higher risk of collisions that could impact the orbits that host key systems on Earth, damage valuable space equipment, or spark international tensions,” the report notes. “Key systems impacted could include the internet and all that relies on it, precision weaponry, early-warning systems, and the Global Positioning System (GPS) network — which is critical to communication systems, electrical power grids and financial networks.”

This year’s edition also includes an international roundup, gathered through WEF’s Executive Opinion Survey, of 12,000 respondents from 124 countries who identify what they view as critical short-term risks.

The Global Risks Report 2022 closes with the authors citing the positive lessons in resilience the world has gleaned from the pandemic. The COVID-19 crisis necessitated collaboration and communication on an international scale, not only between governments but also businesses and communities. These lessons in resilience offer an example to the running theme throughout the report, that a coordinated global response to all of the challenges facing the planet, one that takes a long-term view in managing risk, is imperative.

Zurich Insurance Group is proud to be a strategic partner with the World Economic Forum in the development of The Global Risks Report 2022, which is designed to identify, understand and navigate the ever-changing risk landscape. Strategic partners also include Marsh McLennan and SK Group, as well as academic advisers at the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).

As a leader in understanding the world’s emerging and evolving risks, Zurich is committed to helping our customers, and the communities we serve around the world, build a sustainable future with foresight and innovation.