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Key message Title page
GLOBAL RISKS REPORT 2019 John Drzik | Warsaw
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RISK LANDSCAPE
• Out of control…
A DEEPER LOOK
• Multiconceptual world, human side of global risks, preparing for sea-level rise, biological risks
EVOLUTIONS AND EXTRAPOLATIONS
• From infrastructure investing to AI capabilities; civil society erosion to food security challenges
RISK MANAGEMENT
• Risk trade-offs, managing risks
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THE CONTROL PARADOX
Key message This slide introduces the key theme of the GRR which is “The control fallacy/paradox”
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THE CONTROL PARADOX
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FRACTURES, DISCONNECTS AND FAILINGS
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RISK COMMUNITY FEARS FOR 2019 – ISSUES ON THE RISE
Key message Several risks are expected to increase in • Economic confrontations between
major powers 91% • Erosion of multilateral trading rules
and agreements 88% • Cyber-attacks (theft of data or
money) 82% • Cyber-attacks (disruption of
operations and infrastructure) 80% • Loss of confidence in collective
security alliances 83% • Populist and nativist agendas 72% • Media echo chambers and ‘fake
news’ 69% • Domestic political polarization 67% Major-power
economic tensions Major-power
political tensions
Populist and nativist agendas
Cyber-attacks (operations / infra)
Erosion of trade relations
91% 88% 85% 83%
Loss of confidence in security alliances
82% 80%
Cyber-attacks (theft of data / money)
Media echo chambers / ‘fake news’
69% 72%
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GROWING CONCERN ABOUT ECONOMIC RISKS
Note: Global Risk Perceptions Survey (885 responses worldwide): Top 5 increased and decreased concern reflect largest absolute increase/decrease from 2016 to 2017. Source: World Economic Forum, Global Risks Report 2019
Likelihood
Climate change adaption failure
Impact
1
2
3
Incr
ease
d c
on
cern
D
ecr
ease
d c
on
cern
Risks with the greatest change in concern, 2018-2019
Economic Environmental Geopolitical Technological Societal
4
Failure of regional governance
Inflation
Critical information systems failure
Biodiversity loss
Weapons of mass destruction
Terrorist attack
State collapse or crises
Food crises
Natural catastrophe
Failure of major financial institution or mechanism
Critical information systems failure
Inflation
Biodiversity loss
Failure of regional governance
Food crises
Natural catastrophe
Extreme weather
Social instability
Weapons of mass destruction
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
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TOP BUSINESS LEADER CONCERNS IN EUROPE
Fiscal crises; Asset bubble; or Financial institution failure
Energy price shock or Illicit trade
National governance failure
Interstate conflicts and Regional / global governance failure
Cyber attacks
Unemployment or underemployment
Natural disasters
Note: WEF Executive Opinion Survey (12,548 responses worldwide; 2,922 in Europe).
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Key message When business leaders globally were asked what the biggest obstacles to doing business are, failure of national governance ranked number two globally, Topic Domestic leadership and populism
CYBER RISKS A RISING CONCERN FOR BUSINESS LEADERS GLOBALLY
1st
2nd
3rd
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A MORE PRECARIOUS ECONOMIC SITUATION
January April
3.5%
July October January
3.0%
4.0%
4.5%
EXCHANGE RATES AGAINST USD
60
80
100
120
January October January April July
STOCK MARKET INDEXES (indexed)
Euro Stoxx 50
FTSE 100
Dow Jones
SSE Composite
US INTEREST RATE HIKES
1.0
1.5
2.0
2.5
3.0
January October January April July
2018 GLOBAL GROWTH FORECAST
OECD IMF
60
January July April January October 40
80
100
120
Brasilian real
South African rand Turkish lira
Argentine peso
Worst year for stocks in 10 years
US interest rates increased four times
Emerging markets weaken against USD
Global growth forecasts downgraded
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CLIMATE AND SEA LEVEL RISE
Amsterdam, Netherlands
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3.0
4.0
3.2
3.5 2.5 3.0
3.4
3.6
4.5
3.8
4.0
2.8
Terrorist attack
Failure of regional governance
Failure of major financial institution or mechanism
Failure of urban planning
Failure of national governance
Imp
act
Extreme weather
Asset bubble
Biodiversity loss Critical information systems failure
Infrastructure failure
Climate change adaption failure
Cyberattacks
Deflation
Interstate conflict
Energy price shock
Fiscal crises
Natural catastrophe
Food crises
Illicit trade
Infectious disease spread
Inflation
Man-made catastrophe
Social instability
Water crises
Consequences of technological advancement
Likelihood
Involuntary migration
Unemployment
WMD
Data fraud
State collapse
ENVIRONMENTAL RISKS DOMINANT ON A 10-YEAR OUTLOOK
Key message Environmental risks dominate the global risk landscape, with all five risks strongly present in the high-impact, high-likelihood quadrant, with extreme weather remaining the greatest concern Topic Climate agenda
0, 168, 200
252, 175, 23
111, 133, 194
240, 78, 69
114, 190, 68
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3.4 3.6 4.0 4.4 3.8 4.2 3.4
3.6
3.8
4.0
Water crises
Involuntary migration
Cyberattacks
Likelihood
Biodiversity loss
Imp
act
Climate change adaption failure
Man-made catastrophe
Natural catastrophe
Extreme weather
ENVIRONMENTAL RISKS DOMINANT ON A 10-YEAR OUTLOOK
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CITIES AT GREATEST RISK
Cities with >10 million people, at risk of 0.5m sea-level rise by 2100
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FORESTALLING INFRASTRUCTURE CRISES
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GROWING CHALLENGES
Key Message #1 relates to crumbling infrastructure or infrastructure that can’t keep up with populations and economic growth. #2 refers to impacts from droughts, flood, sea surges, sea-level rise, windstorm etc. #3 refers to cyber attacks and ambitions by foreign powers to invest in our infrastructure and in partner countries. The technology aspect of #4 relates to the technology trends that require new types of infrastructure. These technology trends include drones, smart cities, autonomous vehicles etc.
Unsustainable pressure of use
Vulnerability to disasters
Rapid economic and population growth
New forms of infrastructure
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0
20
40
60
80
100
Investment Need Current InvestmentTrend
$79 TN
$97 TN
SIGNIFICANT FINANCING GAP
By region
AsiaAmericasEuropeAfricaOceania
By sector
RoadElectricityRailWaterTelecomAirportPort
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SIGNIFICANT FINANCING GAP
0
20
40
60
80
100
Investment Need Current InvestmentTrend
$79 TN
$97 TN
By sector
RoadElectricityRailWaterTelecomAirportPort
By region
Americas
Asia
Europe
Africa
Oceania
Investment gap
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THREE IMPERATIVES
Strengthen system resilience
Improve project bankability
Negotiate geopolitical realities
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HEADS AND HEARTS
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RISING ANXIETIES AND CONCERNS
Societal stressors
• Political uncertainty/ divisiveness
• Financial challenges
• Conflict and violence
• Isolation and loneliness
Technological stressors
• Digital addiction
• Replacement of relationships
• Fake news and echo chambers
Workplace stressors
• Blurred line between work and life
• Automation concerns
• Increased monitoring
• Job insecurity
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IMPLICATIONS AND IMPERATIVES FOR FIRMS
“Human capital” risk
Workforce demographics
Workforce psychographics
Reskill or replace Enabling environment
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CONCLUDING REMARKS
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FUTURE SHOCKS
Key message The GRR identifies 10 future shocks which are scenarios which could materialise in the next five years. These are structured around three themes including: technological advancements, global tensions and socioeconomic issues.
Open secrets
Contested space
Digital panopticon
Emotional disruption
Weather Wars
Against the grain
Monetary populism
Tapped out
City limits
No rights left
What if…?
Geostrategic
Traditio
nal
Tech
no
logi
cal
Domestic
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FUTURE SHOCKS
Open secrets
Contested space
Digital panopticon
Emotional disruption
Weather Wars
Against the grain
Monetary populism
Tapped out
City limits
No rights left
What if…
a form of AI that can recognise and respond to human emotions creates
new possibilities for harm?
Geostrategic
Domestic
Traditio
nal
Tech
no
logi
cal
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NURTURING CORPORATE VERSATILITY
Crisis preparedness playbook 1
Broad-based resilience 2
Strategic adaptation 3
!
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New thinking on corporate risk and resilience in the global economy
GO TO: www.brinknews.com
FOR MORE INFORMATION…
Unique perspectives and solutions for society’s most complex challenges
GO TO: www.mmc.com/insights.html
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EXTRA SLIDES
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CLIMATE AND SEA LEVEL RISE
Miami Beach, USA