Insights from the WEF’s Global Risk Report 2024

Flood Stock photos by Vecteezy

The World Economic Forum’s Global Risk Report 2024 presents a comprehensive analysis of the world’s risks over short and long-term horizons. Developed in collaboration with Zurich and Marsh McLennan, the report draws from the Global Risks Perception Survey (GRPS), capturing insights from nearly 1,500 experts across various fields.

The 2024 edition highlights an increasingly pessimistic outlook, with concerns intensifying over the next decade.

Short-term Risks (Next 2 Years)

• Misinformation and Disinformation: Identified as the most significant short-term risk, the spread of misinformation and disinformation has become a major concern, potentially undermining public trust and response to global challenges.
• Geopolitical Shifts: The report anticipates a move towards a multipolar or fragmented world order, with significant geopolitical shifts and power contests at regional levels. This could lead to increased regional tensions and instability.
• Economic Strains: The survey suggests that the aftermath of the COVID-19 pandemic, along with geopolitical tensions like the Russia-Ukraine conflict, have caused significant disruptions to global supply chains and economies, raising concerns about rising debt and living costs.

Long-term Risks (Next 10 Years)

• Climate Change and Environmental Degradation: Environmental risks, particularly those related to climate change, dominate the long-term risk landscape. This includes extreme weather events, critical changes to Earth systems, biodiversity loss, ecosystem collapse, and natural resource shortages.
• Pollution: Pollution is also highlighted as one of the top ten most severe risks over the next decade, further emphasising the environmental focus of long-term risks.
• Societal and Ecosystem Impacts: The report stresses the interconnected nature of climate change and biodiversity loss, warning of irreversible damage to both society and ecosystems if urgent action is not taken.

The EU’s climate service confirmed this week that 2023 was the hottest year among global temperature records going back to 1850. Days were an average of 1.48C warmer than in pre-industrial times. Yet worryingly, experts in the private sector were less likely to view environmental risks as imminent in the near term than their counterparts in policymaking and civil society.

For asset managers, this report is a valuable resource for understanding and preparing for the evolving risk environment. In leveraging SI Engage’s capabilities, actively engaging with portfolio companies, investment teams, and the private sector more generally, can contribute to a more sustainable and stable financial ecosystem.

From 15th to 19th January, a diverse assembly of decision-makers, including leaders in government, business, and philanthropy, will gather for the World Economic Forum’s (WEF) annual meeting in Davos. The theme for this year’s summit is centred around the concept of ‘Rebuilding Trust.’