World Economic Forum Global Risk
Comment of the Day

January 23 2023

Commentary by Eoin Treacy

World Economic Forum Global Risk

This report goes to some lengths to highlight the worst possible outcome for the global economy but then goes on to say that fewer than half of participants are as gloomy as the report’s conclusions. Here is a section: 

The report describes four potential futures centred around food, water and metals and mineral shortages, all of which could spark a humanitarian as well as an ecological crisis – from water wars and famines to continued overexploitation of ecological resources and a slowdown in climate mitigation and adaption. Given uncertain relationships between global risks, similar foresight exercises can help anticipate potential connections, directing preparedness measures towards minimizing the scale and scope of polycrises before they arise.

In the years to come, as continued, concurrent crises embed structural changes to the economic and geopolitical landscape, they accelerate the other risks that we face. More than four in five GRPS respondents anticipate consistent volatility over the next two years at a minimum, with multiple shocks accentuating divergent trajectories. However, respondents are generally more optimistic over the longer term. Just over one-half of respondents anticipate a negative outlook, and nearly one in five respondents predict limited volatility with relative – and potentially renewed – stability in the next 10 years.

Indeed, there is still a window to shape a more secure future through more effective preparedness. Addressing the erosion of trust in multilateral processes will enhance our collective ability to prevent and respond to emerging cross-border crises and strengthen the guardrails we have in place to address well-established risks. In addition, leveraging the interconnectivity between global risks can broaden the impact of risk mitigation activities – shoring up resilience in one area can have a multiplier effect on overall preparedness for other related risks. As a deteriorating economic outlook brings tougher trade-offs for governments facing competing social, environmental and security concerns, investment in resilience must focus on solutions that address multiple risks, such as funding of adaptation measures that come with climate mitigation co-benefits, or investment in areas that strengthen human capital and development.

Some of the risks described in this year’s report are close to a tipping point. This is the moment to act collectively, decisively and with a long-term lens to shape a pathway to a more positive, inclusive and stable world.

Eoin Treacy's view

The worst case scenario seldom comes to pass. That’s an important point to remember when sentiment about the future is so bearish. Some of the biggest challenges are with relation to how populations are distributed globally. That’s true because of migration within countries to the coasts and because the highest population growth countries are all in the emerging markets. These factors are stressing water resources. So is the fact that water infrastructure is hard to build and politically fraught so also hard to get paid for building it. In the end it comes down to governance. 

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