Nations are in no position to face “major, new shocks,” says the World Economic Forum in its somber report, Global Risks 2011.
“The financial crisis has reduced global economic resilience, while increasing geopolitical tension and heightened social concerns suggest that both governments and societies are less able than ever to cope with global challenges,” the report stated.
World Economic Forum Chief Business Officer Robert Greenhill said the world “is probably more vulnerable to future shocks than it ever has been in the last half-century,” according to a news report. “The response to the financial crisis has drained national treasuries and drained household incomes, but the underlying risks still remain.”
The World Economic Forum’s annual report is compiled from a survey of 580 world leaders and a network of Global Agenda Councils. The report asked the leaders to assess the probability and impact of 37 global risks in the coming decade. Those risks are divided into five categories: economic, environmental, societal, geopolitical and technological.
Greenhill has further stated that 20th century systems are failing to manage 21st century risks. “We need new networked systems to identify and address global risks before they become global crises,” he said.
The report highlights two “cross-cutting risks”—economic disparity and global governance failures. “In this way, the global risk context in 2011 is defined by a 21st century paradox: As the world grows together, it is also growing apart,” the report stated.
The report identified three “clusters” of risks that are expected to create significant liabilities in the coming decade: “macroeconomic imbalances,” including unfunded social liabilities and the “tension between the increasing wealth and influence of emerging economies and high levels of debt in advanced economies”; “the illegal economy,” including organized crime, illicit trade and corruption (in 2009, global illicit trade was estimated at $1.3 trillion and growing); and growth limits brought about by resource scarcity.
In addition to the three clusters, the report identified five risks to be alert for in the coming decade: cybersecurity, high population growth, resources security (extreme price volatility with energy and commodities), retrenchment from globalization, and nuclear and biological weapons.
Dan Huntley is a freelance reporter based in Charlotte, N.C.