The typology of global risks, as summarized in Figure 8, enables a more structured approach to the complexity of interconnections than has been possible in previous reports. The 2012 survey also revealed variations in the risk perceptions of different groupings of survey respondents. Self-identified experts in a category tended to perceive the likelihood and impact of a risk in their area of expertise as higher than the rest of the survey sample. One exception to this trend was the case of technological risks, where experts often had a lower mean likelihood and impact score when compared to other respondents. Appendix 2 identifies three cases of significant differences in risk perception: first, between the six regions (Asia, europe, latin America, middle east/North Africa, north America and Sub-Saharan Africa second, between the results of different occupational affiliations (academia, business, government, international organizations, ngos and others and. The subsequent three cases help to explain some of the potential causal relations that the survey data alone cannot substantiate and to underscore the complexity of interconnected global risks that our world faces in the next 10 years. For more details on the five categories, centres of Gravity and the list of global risks, refer to The risk categories. For the full risk landscape, refer to figure.
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The 2012 list was revised through workshops and interviews with leading experts from the world Economic Forums multistakeholder communities. The list was then assessed by a larger group of experts taking part in the Global Risks Survey 469 respondents gauged the likelihood and potential impact of each of these risks over the next decade. As shown in Figure 6, the majority of risks received an average score located towards the high-impact and high-likelihood ends on the 1-5 scales, which validates the high concern about the 50 risks identified. The survey respondents were also asked to identify five centres of Gravity one per category as the risks of greatest systemic importance, or the most influential and consequential in relation to others, as well as the risks that are most strongly connected to them. The Global Risks Map 2012 in Figure 7 shows the entire network of these interconnections between global risks. From the survey results, the most frequently chosen Centres of Gravity are: Chronic fiscal imbalances (economic) Greenhouse gas emissions (environmental) Global governance failure (geopolitical) Unsustainable population growth (societal) Critical systems failure (technological) The strongest connections to the five centres of Gravity are highlighted as the. Analysis of the 2012 Global Risks Map reveals four risks as playing significant roles in connecting the centres of Gravity to each other. These four Critical Connectors, which link the main clusters of the system, are highlighted as black dots in the diagram. They are: severe income disparity (economic) Major systemic financial failure (economic) Unforeseen negative consequences of regulation (economic) Extreme volatility in energy and agriculture prices (economic) weak signals note are defined as risks which are most loosely connected in the network, based on how many links they. The top five weak signals are: Vulnerability to geomagnetic storms (environmental) Proliferation of orbital debris (technological) Unintended consequences of nanotechnology (technological) Ineffective drug policies (societal) Militarization of space (geopolitical) They have almost without exception received relatively low-impact and low-likelihood scores, and in most cases exhibit. Weak signals will not be addressed explicitly in the cases considered in this report, though it is worth bearing in mind that some experts did rate their connectedness and severity more highly.
Box 1: The evolving Risk landscape The risk landscape in this 2012 report is based on a refined and expanded set of 50 risks, compared professional to 37 in previous years. This means that comparisons to the 2011 report are not one-to-one. However, it is clear that respondents concern has shifted from environmental risks in 2011 to socioeconomic risks in 2012, as shown in Box. Economic risks have displaced environmental risks as those considered most likely. In 2011, the risks perceived as having the highest potential impact were economic and environmental; in 2012, they are economic and societal. The seventh edition of the Global Risks report is based on a revamped methodology combining surveys, workshops and interviews that engage various stakeholders of the world Economic Forum. The starting point is a set of 50 global risks which are defined as having global geographic scope, cross-industry relevance, uncertainty as to how and when they may occur, and high levels of economic and/or social impact requiring a multistakeholder approach to response. They are divided into five categories: economic, environmental, geopolitical, societal and technological risks.
Glossary five risk categories in the report: economic, environmental, geopolitical, societal and technological. Centres of Gravity are the risks shredder of greatest systemic importance, as identified by the Global Risks Survey. Critical Connectors are risks connected to multiple centres of Gravity, and join the five centres of gravity into one coherent system. In this report global risks are defined as having global geographic scope, cross-industry relevance, uncertainty as to how and when they will occur, and high levels of economic and/or social impact requiring a multistakeholder response. Weak signals exhibit the weakest links to other risks and high uncertainty in terms of variation in survey ratings of impact and likelihood. X factors are emerging concerns of possible future importance and with unknown consequences. Although they are not considered among the global risks surveyed, they were submitted by experts as issues to monitor in the future.
50 Global Risks, structured on a 10-year outlook, the survey captured the perceived impact, likelihood and interconnectedness of 50 prevalent global risks. Figures 4 and 5 respectively show the average ratings of the five risks which were assessed in this years survey as having the highest perceived likelihood and potential impact over the next 10 years (see appendix 2 for a full breakdown of survey responses). As explained in the section on methodology, the 2012 report introduces the concept of Centres of Gravity those risks perceived by survey respondents to be of greatest systemic importance within each of the five risk categories. For risk-related planning, centres of Gravity should serve as focal points to guide strategic interventions. The 2012 Centres of Gravity are: Chronic fiscal imbalances (economic) Greenhouse gas emissions (environmental) Global governance failure (geopolitical) Unsustainable population growth (societal) Critical systems failure (technological) The report also looks ahead to x factors, which require further research. The notion of a volcanic winter, epigenetics and mega-accidents are some x factors for future consideration. This report serves as the research base on which the risk response network works together on mapping, monitoring, managing and mitigating global risks.
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Case 3: The dark side of Connectivity. The impacts of crime, terrorism and war in the virtual world have yet to equal that of the physical world, but there is fear that this could change. Hyperconnectivity is a party reality. With over five billion mobile phones coupled with internet connectivity and cloud-based applications, daily life is more vulnerable to cyber threats and digital disruptions. The related constellation of global risks in this case highlights that incentives are misaligned with respect to managing this global challenge. Online security is now considered a public good, implying an urgent need to encourage greater private sector engagement to reduce the vulnerability of key information technology systems.
While significant material and human resources were required in the past to exercise political or economic influence on a global scale, borders have become permeable as power shifts from the physical to the virtual world. A healthy digital space is needed to ensure stability in the world economy and balance of power. Special Report: The Great East Japan Earthquake. This section of the report features a special review of the important lessons learned from the 2011 earthquake, tsunami and the subsequent nuclear crisis at fukushima, japan. It focuses on the role of leadership, challenges to effective communication in this information age and resilient business models in response to crises of unforeseen magnitude.
Three distinct constellations of risks that present a very serious threat to our future prosperity and security emerged from a review of this years set of risks. The three risk cases describe the links across a selection of the global risks, their interplay and how they are likely to develop over the next 10 years. The cases are initially based on a quantitative analysis of interconnections identified in the survey and then developed further via a qualitative analysis conducted through Forum workshops worldwide and follow-up discussions with project advisors. Case 1: seeds of Dystopia. Dystopia, the opposite of a utopia, describes a place where life is full of hardship and devoid of hope. Analysis of linkages across various global risks reveals a constellation of fiscal, demographic and societal risks signalling a dystopian future for much of humanity.
The interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already heavily indebted governments. Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability. This case underscores the danger that could arise if declining economic conditions jeopardize the social contracts between states and citizens. In the absence of viable alternatives, this could precipitate a downward spiral of the global economy fuelled by protectionism, nationalism and populism. Case 2: How Safe are our Safeguards? As the world grows increasingly complex and interdependent, the capacity to manage the systems that underpin our prosperity and safety is diminishing. The constellation of risks arising from emerging technologies, financial interdependence, resource depletion and climate change exposes the weak and brittle nature of existing safeguards the policies, norms, regulations or institutions which serve as a protective system. Our safeguards may no longer be fit to manage vital resources and ensure orderly markets and public safety. The interdependence and complexity inherent in globalization require engaging a wider group of stakeholders to establish more adaptable safeguards which could improve effective and timely responses to emerging risks.
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Moreover, each of the three cases in this report now feature key discussion questions to contemplate in this regard. The rrn will also focus on the three cases by convening board members, risk executives and policy-makers at the highest level at Forum events throughout the year ahead, to discuss resilient global risk management. Looking beyond 2012, the risk response network will explore the global risks highlighted in this report in their appropriate regional, country or industry contexts by launching task forces and initiatives designed specifically for their mitigation. Many of these efforts will be driven by an interdisciplinary and multistakeholder community, the network of Global Agenda councils, as they are the key experts focusing on risk mitigation within the rrn. We look forward to your comments and feedback, as our aim is to enhance the quality and impact of this report each and every year as part of the forums commitment to improve the state of the world. Lee howell, managing Director. Risk response network, the world Economic business Forums, global Risks 2012 report is based on a survey of 469 experts from industry, government, academia and civil society that examines 50 global risks across five categories. The report emphasizes the singular effect of a particular constellation entry of global risks rather than focusing on a single existential risk.
The assessments of these risks more than doubled as a result of this years survey, with 469 experts and industry leaders responding worldwide. The survey captures the perceived impact and likelihood for each risk over a 10-year time horizon using a clear and simple five-point scale to indicate the severity of impact, which provides a more intuitive measure than the billions of us dollars or hundreds of thousands. All of the above was achieved as a result of the unprecedented support from the forums lisp Network of Global Agenda councils of over 1,000 renowned experts worldwide. Readers will also see marked improvements in data analysis and visualization in this report. A dynamic assessment of each global risk will be available via a new digital platform, toplink. It is a collaborative, intelligence-sharing platform with a social media interface and mobile applications for those engaged in the rrn. The risk radar and dynamic risk barometer are among the innovative analytical and measurement tools currently in development. Many of these features are also available on the forums website. An important aim of, global Risks 2012 is to help decision-makers evaluate complex risk events and to respond proactively in times of crisis hence the inclusion this year of a special report on the 11 March crisis in Japan.
more complex the system, the greater the risk of systemic breakdown, but also the greater the potential for opportunity. Together, we have the foresight and collaborative spirit to shape our global future and particularly the survival instinct to move from pure urgency-driven risk management to more collaborative efforts aimed at strengthening risk resilience to the benefit of global society. Klaus Schwab, founder and Executive chairman, world Economic Forum. The world Economic Forums Risk response network (RRN) was launched to provide private and public sector leaders with an independent, impartial platform to map, measure, monitor, manage and mitigate global risks. Our flagship research activity is this report. Now in its seventh edition, the reports research methodology has been significantly revamped. Data and analysis are based on a newly designed survey covering a meaningfully expanded set of 50 global risks across five categories.
We need to explore and develop new conceptual models which address global challenges. It is in this spirit that I present the world Economic Forums. Global Risks 2012 report. Now in its seventh edition, writing the report features more refined risk descriptions and rigorous data analysis covering 50 global risks. It aims to improve public and private sector efforts to map, monitor, manage and mitigate global risks. It is also a call to action for the international community to improve current efforts at coordination and collaboration, as none of the global risks highlighted respects national boundaries. This report captures the input of risk leaders in thought and practice, including members of the world Economic Forums Global Agenda councils.
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Preparing report viewer - please wait. World Economic Forum in collaboration with: Marsh mcLennan Companies, swiss reinsurance company, wharton Center for Risk management, University of Pennsylvania. Zurich Financial Services, across every sector of society, decision-makers are struggling with the roles complexity and velocity of change in an increasingly interdependent world. The context for decision-making has evolved, and in many cases has been altered in revolutionary ways. In the decade ahead, our lives will be more intensely shaped by transformative forces, including economic, environmental, geopolitical, societal and technological seismic shifts. The signals are already apparent with the rebalancing of the global economy, the presence of over seven billion people and the societal and environmental challenges linked to both. The resulting complexity threatens to overwhelm countries, companies, cultures and communities.