ERM News - The World Economic Forum's 2014 Global Risk Report
The World Economic Forum recently released its 2014 Global Risk Report with over 31 major risks in 5 categories. Three major risks are highlighted.
Of all 31 risks discussed in 5 categories, three significant risks are highlighted.
1. Instabilities in an increasingly multipolar world
The authors say changing demographics, growing middle classes and fiscal constraints will place increasing domestic demands on governments, deepening requirements for internal reform and shaping international relations. Set against the rise of regional powers, an era of greater economic pragmatism and national self-protection might increase inter-state friction and aggravate a global governance vacuum. This may hinder progress on cross-cutting, long-term challenges, and lead to increased inefficiencies and friction costs in strategically important sectors, such as healthcare, financial services and energy. Managing this risk will require flexibility, fresh thinking and multi-stakeholder communication.
2. Generation lost?
The generation coming of age in the 2010s faces high unemployment and precarious job situations, hampering their efforts to build a future and raising the risk of social unrest. In advanced economies, the large number of graduates from expensive and outmoded educational systems – graduating with high debts and mismatched skills – points to a need to adapt and integrate professional and academic education. In developing countries, an estimated two-thirds of the youth are not fulfilling their economic potential. The generation of digital natives is full of ambition to improve the world but feels disconnected from traditional politics; their ambition needs to be harnessed if systemic risks are to be addressed.
3. Digital disintegration
So far, cyberspace has proved resilient to attacks, but the underlying dynamic of the online world has always been that it is easier to attack than defend. The world may be only one disruptive technology away from attackers gaining a runaway advantage, meaning the Internet would cease to be a trusted medium for communication or commerce. Fresh thinking at all levels on how to preserve, protect and govern the common good of a trusted cyberspace must be developed. Collaborative multi-stakeholder action is needed. Wide variance in how risks are identified and managed still exists. Businesses, governments and civil society alike can improve how they approach risk by taking steps such as opening lines of communication with each other to build trust, systematically learning from others' experiences, and finding ways to incentivize long-term thinking. By offering a framework for decision-makers to look at risks in a holistic manner, the Global Risks 2014 report aims to provide a platform for dialogue and to stimulate action.