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The Actuary The magazine of the Institute & Faculty of Actuaries

WEF publishes top 2020 global risks

The top five long-term risks facing countries over the next decade are all linked to the environment, the World Economic Forum (WEF) has warned today.

Australian wildfires continue to burn ©Shutterstock
Australian wildfires continue to burn ©Shutterstock

Its Global Risks Report 2020, which brings together views from 750 decision makers and experts, lists extreme weather as the most pressing threat in terms of likelihood.

Failure of climate change mitigation and adaptation, major natural disasters, ecosystem collapse and man-made environmental catastrophes complete the top five.

This is the first time that the WEF’s annual risk report has linked all of the top five risks to the environment, and comes as wildfires continue to burn across Australia.

Peter Giger, group chief risk officer at Zurich Insurance, which co-produced the report, said insurers are now finding it hard to trust their historical data when it comes to pricing.

“So how do we look at the probability and severity of events? It is a big challenge for our industry,” he said at the report’s launch. “We want to find the winners of the new economy.”

The WEF’s report also lists ecosystem collapse and climate change mitigation and adaptation failure among the top five risks in terms of severity over the next decade.

Giger warned that ecosystems provide environmental and economic benefits estimated at $33trn (£25trn) – equivalent to the GDP of the US and China combined.

“We are already seeing companies destroyed by failing to align their strategies to shifts in policy and customer preferences,” he continued. "It’s critical that companies move faster.”

Economic confrontations and political polarisation are also expected to rise in 2020, which the researchers said would prove “catastrophic” for addressing climate change.

Large-scale cyber attacks and breakdown of critical information infrastructure and networks are among the most pressing interconnected risks identified in the report.

It calls for holistic “systems-level thinking” to tackle rising inequality, gaps in technological governance, healthcare challenges and looming geopolitical and environmental risks.

This comes less than a week before the WEF convenes world leaders in the Swiss alpine resort of Davos to help shape the global economic and political agenda.

“The political landscape is polarised, sea levels are rising and climate fires are burning," said WEF president Borge Brende.

"This is the year when world leaders must work with all sectors of society to repair and reinvigorate our systems of cooperation for tackling our deep-rooted risks."

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