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The Actuary The magazine of the Institute & Faculty of Actuaries

Global elite anticipate year of heightened risk

Political and economic confrontations between major powers are expected to worsen in 2018, with the global elite preparing for another year of intensifying risks.

Geopolitical uncertainty ©Shutterstock

A survey of nearly 1,000 business leaders, politicians and academics by the World Economic Forum (WEF) also reveals there is increasing concern over the possibility of new wars breaking out this year.

Cyberattacks and environmental threats are the top two risks identified in terms of likelihood, while weapons of mass destruction and extreme weather events are though to have the greatest potential impact.

The findings were published today in the WEF’s Global Risks Report 2018, less than a week before world leaders descend on the Swiss alpine resort of Davos to shape the global economic and political agenda.

Speaking at the report’s launch, Marsh president of global risk and digital, John Drzik, said: “Geopolitical friction is contributing to a surge in the scale and sophistication of cyberattacks.

“While cyber risk management is improving, business and government need to invest far more in resilience to prevent the same bulging ‘protection gap’ between economic and insured losses that we see for natural catastrophes.”

Some 59% of respondents to the WEF survey said they expect risks to intensify this year, compared with 7% that predict a decline, while 93% believe confrontations between countries will worsen, and 80% are more concerned about conflicts.

As in 2017, the environment dominates the list of risks, with extreme weather, ecosystem collapse, man-made environmental disasters, and failure of climate-change mitigation and adaptation, all ranked highly.

Economic threats feature less prominently after the IMF raised its global GDP projections to 3.6% for this year, with WEF founder, Klaus Schwab, saying this presents an opportunity to strengthen the world’s institutions.

“We must take seriously the risk of a global systems breakdown – together we have the resources and new scientific and technological knowledge to prevent this,” he said.

“Above all, the challenge is to find the will and momentum to work together for a shared future.”

This ‘shared future’ concept was a reoccurring theme at the report's launch, with WEF managing board member, Richard Samans, revealing that an ‘inclusive development index’ will be proposed in Davos next week, as will discussions regarding the reformation of market capitalism.

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