The World’s Biggest Risks

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.

That’s according to more than 700 global experts contributing to the World Economic Forum’s Global Risks 2014 report released in late January.

After income disparity the global risk next most likely to cause systemic shock on a global scale is extreme weather events, the report revealed. This is followed by unemployment and underemployment, climate change and cyber attacks.

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.

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.

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.

“As a result of the financial crisis and globalization, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an aging population,” said David Cole, group chief risk officer of Swiss Re.

And a more fractured geopolitical environment threatens to impede progress in industries which are critical to global development, such as financial services, healthcare and energy, said 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,” Marsh’s Drzik said.

• Income disparity (societal risk)
• Extreme weather events (environmental risk)
• Unemployment and underemployment (economic risk)
• Climate change (environmental risk)
• Cyber attacks (technological risk)

• Fiscal crises (economic risk)
• Climate change (environmental risk)
• Water crises (environmental risk)
• Unemployment and underemployment (economic risk)
• Critical information infrastructure breakdown(technological risk)