Humanity’s biggest risks are ‘climate-related, not economic’: World Economic Forum

The WEF has produced global risk reports annually for the past 15 years - and climate-related risks have never featured so prominently 

Published today (15 January) ahead of the organisation’s annual summit in Davos next week, the analysis has ranked climate-related risks above economic risks across the board for the first time in the history of the annual report.

Risks are assessed in terms of both likelihood and severity of impact – the latter of which is assessed across metrics including economic damage and health impacts – by the WEF’s methodology. An overall score is then assigned, enabling risks to be compared on a like-for-like basis.

Based on this overall score, the WEF has ranked the top five risks as extreme weather events; failures at business and government level to adapt to, and mitigate, climate change; major biodiversity loss and ecosystem collapse; major natural disasters and human-made damage such as oil spills and waste crime.

As the top ten list continues, no risks classed as solely economic are included.

The WEF has called this shift away from economic risk dominating its charts as “worrying, given the continuing global economic malaise that will limit progress in all other areas, including climate action”.

“Because environmental and economic risks are inextricably linked, risk perceptions that account for only one over the other mean blind spots may be arising and integrated mitigation efforts may be lacking,” the Forum’s head of global risks and geopolitical agenda Emilio Granados Franco added.

In order for nations and businesses to properly account for the links between the economy and environment in their entirety and complexity, the WEF is advocating for a shift towards a “growth paradigm” in which all decisions behind actions made for economic benefit involve the consideration of social and environmental impacts – in equal measure.

The WEF’s report highlights several occasions on which humanity’s inability to notice the links between these three spheres and act accordingly – dubbed “blind spots” – have generated negative outcomes.

It additionally warns against the prioritisation of reactionary responses to short-term risks – such as temporary market uncertainty in particular nations or sectors-  over the development of holistic and strategic methods to manage long-term risks like climate change, arguing that such an approach has dominated national policymaking and corporate strategizing in the past decade.

“While sudden shocks can have a huge impact … the biggest risks facing the world today may be from slow failures or creeping risks,” the report states. “Because these failures and risks emerge over a long period of time, their potentially enormous impact and long-term implications can be vastly underestimated.”

Setting the stage for Davos 2020

The report sets the stage for the WEF’s annual summit in Davos, Switzerland, where more than 3,000 business leaders, policymakers, thought leaders and celebrities are due to gather next week.

The aim of the summit is to co-create solutions to some of the world’s most pressing environmental and socio-economic challenges and to give attendees a platform on which to make fresh announcements or commitments in these fields.

At last year’s event, discussions around the circular economy took centre-stage, with much time dedicated to how and why businesses and nations should address the need to design out waste and keep resources in the economy.

For 2020, the shift from fossil fuels to clean energy, and the role of finance in this transition, is being widely slated as a key focus, as these are the issues which Greta Thunberg has said she will discuss.

Biodiversity and nature protection and restoration are also likely to be high on the agenda, given that the UN has this month published its draft statement on nature. The document, which is being dubbed a ‘Paris-Agreement-style’ framework for ecology, sets a 2030 deadline for averting the Earth’s sixth mass extinction.

Sarah George

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