The next decade has been characterised as environmental and societal crises, driven by underlying geopolitical and economic trends. However, the cost of living crisis is the most severe global risk over the next two years. On the other hand, biodiversity loss and ecosystem collapse is considered the fastest deteriorating risk over the next decade.
As we navigate an increasingly interconnected and complex landscape, it is crucial to understand and address the emerging risks that have the potential to shape our future. This report serves as a valuable resource for policymakers, business leaders, and individuals seeking to comprehend and mitigate these risks effectively.
Cost of Living Crisis
The cost of living crisis was marked as the most severe global crisis over the next two years. It is hitting disproportionately those who already cannot afford the food. Even before the COVID-19 pandemic, the price of necessities of non-expendable items such as food and housing was on the rise. Costs further increased in 2022, primarily due to continued disruptions in the flows of energy and food from Russia and Ukraine. The FAO price index has reached its highest level after its inception in 1990. Energy prices are estimated to remain 46% higher than the average in 2023.
Natural Disasters and Extreme Weather
It was ranked second place in the list of severe risks in the next two years. The frequent occurrence of climate-induced events has increased the vulnerability of the people. As floods, heatwaves, droughts and other extreme weather events become more severe and frequent, a wider set of populations will be affected.
Geoeconomics Confrontation
The geoeconomics confrontation is considered the third most severe risk over the next two years. It includes trade wars, sanctions, and investment and was amongst the top five threats in the coming two years. The geopolitical conflicts and international economic competition are becoming more and more entwined, creating a new kind of conflict. Conflicts in geoeconomics entail a variety of strategies, including trade squabbles, penalties, investment restrictions, and technological rivalry. These conflicts have the potential to undermine the stability of the world economy, alter supply chains, and affect international collaboration. It is important for businesses and politicians to grasp the dangers related to geoeconomic conflicts and manage this complicated environment.
Failure to Mitigate Climate Change
As per World Economic Forum (WEF), Failure to mitigate climate change risk is ranked fourth place and highlighted that there is an urgent need for effective action to address the challenges posed by climate change. WEF further added that if mitigation efforts fall short, the world will face severe consequences, including rising global temperatures, extreme weather events, ecosystem disruptions, and negative impacts on human health and well-being. The report emphasizes that failure to mitigate climate change not only poses environmental risks but also has significant economic, social, and political implications. It calls for enhanced international cooperation, increased investment in sustainable technologies, and the adoption of robust climate policies to mitigate the risks associated with climate change and ensure a sustainable future.
Erosion of Social Cohesion and Societal Polarisation
There are growing divisions and polarisation within societies around the world, leading to a decline in social cohesion. It identifies various factors contributing to this erosion, such as economic inequality, political polarization, identity politics, social media algorithms, and disinformation. It is emphasised by WEF that the fragmentation of societies poses significant risks, including decreased trust, weakened democratic institutions, and increased social unrest. It calls for concerted efforts to promote social cohesion, strengthen inclusive governance, bridge societal divisions, and promote dialogue and understanding among diverse communities. It is important to foster a sense of shared identity, values, and purpose to address the challenges posed by the erosion of social cohesion and societal polarisation.
Large-scale Environmental Damage Incidents
It is reported that globally the occurrence of environmental disasters is increasing, such as oil spills, industrial accidents, and natural resource depletion, on a significant scale. It underscores the devastating consequences of these incidents, including ecological damage, loss of biodiversity, health risks for communities, and economic impacts. To overcome this there is the need for robust preventive measures, effective regulations, and improved response capabilities to mitigate the risks associated with large-scale environmental damage incidents. It calls for greater accountability, enhanced cooperation between governments and industries, and adopting sustainable practices to minimise environmental risks and protect ecosystems for future generations.
Failure of Climate Change Adaptation
There is a need to minimise the adverse impact of climate change by adopting new approaches. It highlights that despite efforts to adapt, there is a risk of inadequate response to the changing climate conditions. There are various factors contributing to this failure, including limited resources, inadequate infrastructure, and governance challenges. The consequences of the failure to adapt to climate change include increased vulnerability to extreme weather events, ecosystem disruptions, food and water scarcity, and displacement of populations. There is an urgent need for governments, communities, and businesses to prioritize climate change adaptation, invest in resilient infrastructure, and develop robust strategies to cope with the challenges posed by a changing climate. It calls for enhanced collaboration, knowledge sharing, and capacity building to ensure effective adaptation measures and build a more resilient future.
Widespread Cybercrime and Cybersecurity
WEF report highlights the increasing prevalence of cybercrime and the escalating importance of cybersecurity in today’s interconnected world. It identifies cyber threats, such as data breaches, ransomware attacks, and hacking, as significant risks to individuals, businesses, and governments. Moreover, there are potential consequences of widespread cybercrime, including financial losses, compromised personal information, disruption of critical infrastructure, and erosion of trust in digital systems. To mitigate the impact there is the need for robust cybersecurity measures, enhanced collaboration between public and private sectors, and increased investments in cybersecurity technologies and workforce. The report calls for greater awareness, improved regulation, and international cooperation to effectively combat cybercrime and ensure the security and resilience of digital ecosystems.
Natural Resource Cirses
The report of WEF identifies key resources such as water, minerals, energy sources, and agricultural land as being under increasing pressure due to factors such as population growth, climate change, and unsustainable consumption patterns. The report emphasises that natural resource crises can lead to environmental degradation, social conflicts, economic instability, and geopolitical tensions. It calls for sustainable resource management practices, responsible consumption patterns, and investment in innovative technologies to mitigate the risks associated with natural resource crises. There is a need for international cooperation, inclusive governance, and long-term planning to ensure the availability and sustainable use of natural resources for future generations.
Large-scale Involuntary Migration
The increasing occurrence of forced migration on a significant scale, is driven by factors such as conflicts, political instability, environmental disasters, and economic hardships. Large-scale involuntary migration poses significant challenges for migrants and the countries they seek refuge in. The report identifies potential consequences of such migration, including social tensions, strained resources, increased inequality, and political instability. Government should take proactive measures to address the root causes of involuntary migration, promote peaceful resolutions to conflicts, strengthen humanitarian responses, and foster international cooperation. There is a need for inclusive policies, support systems, and integration efforts to ensure the well-being and protection of migrants and to address the challenges associated with large-scale involuntary migration.
Conclusion
The World Economic Forum highlighted the several risks that will prevail in the world in the next two years and it includes geoeconomic confrontations and failure to mitigate climate change to erosion of social cohesion, cybersecurity threats, natural resource crises, and large-scale involuntary migration. WEF emphasizes the importance of sustainable practices, inclusive governance, international cooperation, and investment in innovative technologies to address these risks effectively. There is a need for a comprehensive approach that integrates economic, social, and environmental dimensions to build resilience, promote sustainable development, and safeguard the well-being of present and future generations. Governments, businesses, and communities worldwide prioritise risk management, resilience-building, and the pursuit of a sustainable and secure future.
This article is written by Sehrish Irfan. Sehrish is a research analyst at the Iqbal Institute of Policy Studies (IIPS).
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