Climate change called top risk for economy
LONDON — The global economy faces an array of risks, from natural disasters related to climate change to the rise of the Islamic State group and increasingly sophisticated cyberattacks, according to experts polled by the World Economic Forum, which organizes the annual gathering of political and business leaders in the Swiss resort of Davos.
In a bleak assessment published Thursday before next week's meeting in Davos, the WEF said its survey found that a failure to deal with and prepare for climate change is potentially the most costly risk during the next 10 years, ahead of weapons of mass destruction, water crises, large-scale migration flows and severe energy price shocks.
That's the first time that an environmental concern has topped the list of global risks of the WEF's Global Risks Report and comes after what meteorologists say was the hottest year on record.
“Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker social cohesion and increased security risks,” said Cecilia Reyes, chief risk officer at Zurich Insurance, which helped develop the annual Global Risks Report.
The survey of nearly 750 experts and decision-makers from a variety of fields, locations and ages was conducted in the autumn of 2015 before the global warming targets agreed upon in Paris in December.
John Drzik, president of global risk at insurance broker Marsh, which also helped develop the report, conceded that climate change might not have topped the list if the poll had been conducted after the Paris Agreement. The deal saw nearly 200 countries agree to keep global temperatures from rising another degree Celsius (1.8 Fahrenheit) between now and 2100.
Drzik said the 2016 report, overall, has the “broadest array” of risks facing the global economy in the survey's history. However, he noted that the 2008 financial crisis, which saw the collapse of numerous banks and caused the deepest global recession since World War II, may have prompted more immediate damage from a purely economic point of view.
“Events such as Europe's refugee crisis and terrorist attacks have raised global political instability to its highest level since the Cold War,” Drzik said.
A major concern identified by all involved in the report is the interconnectedness of all the risks.
“We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways,” said Margareta Drzeniek-Hanouz, the WEF's head of global competitiveness and risks.
Purely economic factors remained high on the list of concerns, too, including the scale of the slowdown in China, the world's No. 2 economy, high unemployment levels in many countries, and the impact of low oil prices on the budgets of oil exporters.