Worsening Wealth Gap Seen as Biggest Risk Facing the World in 2014
The World Economic Forum’s Global Risks 2014 report finds income disparity the most likely risk to cause an impact on a
global scale in the next decade Other risks of significant concern include extreme weather events, unemployment and
fiscal crises The report analyses 31 global risks and includes special in-depth investigations into youth unemployment,
digital disintegration and geopolitical risks
The report can be read in full at http://reports.weforum.org/global-risks-2014 The introductory video can be viewed at
http://wef.ch/GRR2014video
London, United Kingdom, 16 January 2014 – The chronic gap between the incomes of the richest and poorest citizens is
seen as the risk that is most likely to cause serious damage globally in the coming decade, according to over 700 global
experts that contributed to the World Economic Forum’s Global Risks 2014 report.
Taking a 10-year outlook, the report assesses 31 risks that are global in nature and have the potential to cause
significant negative impact across entire countries and industries if they take place. The risks are grouped under five
classifications – economic, environmental, geopolitical, societal and technological – and measured in terms of their
likelihood and potential impact.
Most likely global risks: After income disparity, experts see extreme weather events as the global risk next most likely
to cause systemic shock on a global scale. This is followed by unemployment and underemployment, climate change and
cyberattacks.
Most potentially impactful global risks: Fiscal crises feature as the global risk that experts believe has the potential
to have the biggest impact on systems and countries over the course of the next 10 years. This economic risk is followed
by two environmental risks – climate change and water crises – then unemployment and underemployment, and fifth critical
information infrastructure breakdown, a technological risk.
“Each risk considered in this report holds the potential for failure on a global scale; however, it is their
interconnected nature that makes their negative implications so pronounced as together they can have an augmented
effect,” said Jennifer Blanke, Chief Economist at the World Economic Forum. “It is vitally important that stakeholders
work together to address and adapt to the presence of global risks in our world today.”
In addition to measuring the seriousness, likelihood and potential impact of these 31 global risks, Global Risks 2014
includes special investigations into three specific cases: the increasing risk of “cybergeddon” in the online world; the
increasing complexity of geopolitical risk as the world moves to a multipolar distribution of power and influence; and
youth unemployment and underemployment.
In particular, the report considers the twin challenges facing those coming of age in the current decade of reduced
employment opportunity and the rising cost of education, and considers the impact on political and social stability as
well as economic development. With over 50% of young people in some developed markets currently looking for work and
rising informal employment in developing regions where 90% of the world’s youth live, the report offers insight into how
technological and other measures can be deployed to mitigate some of this risk.
David Cole, Group Chief Risk Officer of Swiss Re, said: "Many young people today face an uphill battle. As a result of
the financial crisis and globalisation, the younger generation in the mature markets struggle with ever fewer job
opportunities and the need to support an ageing population. While in the emerging markets there are more jobs to be had,
the workforce does not yet possess the broad based skill-sets necessary to satisfy demand. It's vital we sit down with
young people now and begin planning solutions aimed at creating fit-for-purpose educational systems, functional
job-markets, efficient skills exchanges and the sustainable future we all depend on!”
The deepening reliance on the Internet to carry out essential tasks and the massive expansion of devices that are
connected to it, make the risk of systemic failure – on a scale capable of breaking systems or even societies – greater
than ever in 2014, according to the report. Recent revelations on government surveillance have reduced the international
community’s willingness to work together to build governance models to address this weakness.
The effect could be a balkanization of the Internet, or so-called “cybergeddon”, where hackers enjoy overwhelming
superiority and massive disruption is commonplace.
“Trust in the Internet is declining as a result of data misuse, hacking and privacy intrusion,” said Axel P. Lehmann,
Chief Risk Officer at Zurich Insurance Group. “A fragmentation of the Internet itself is the wrong way to solve this
issue, as it would destroy the benefits the Web provides to all of us. Rather than building walled gardens, it is time
to act by setting up security standards and regaining trust.”
Today’s multipolar world presents four key threats that could each impact global stability in the next five to ten
years:
1. Emerging market uncertainties, whereby the world’s major emerging markets become unstable as a result of social,
political or economic pressure
2. Commercial and political frictions between countries, where trade and investment become increasingly used as a proxy
for geopolitical power, with increased flashpoints as a result
3. Proliferation of low-level conflict, caused by technological change and reluctance of major powers to intervene,
which could easily spill over into full-scale warfare
4. Slow progress on global challenges, where persisting deadlock in global governance institutions leads to failure to
adequately address environmental and developmental challenges that are truly global in nature “A more fractured
geopolitical environment threatens to impede progress in industries which are critical to global development, such as
financial services, healthcare and energy,” noted John Drzik, President of Global Risk and Specialties at Marsh. “The
world needs more coordinated governance to prevent slow-burning, systemic risks from developing into full-blown crises.”
Global Risk 2014 has been developed with expert contributions from Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, the Oxford Martin School (University of Oxford), the National
University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).
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