With the profound events of the last year, it was little surprise that the World Economic Forum’s flagship report on global risks released on January 14 reflects potentially dramatic consequences on people, businesses and countries. Water shortages, damaging floods, political instability and increasing cyber dependence—these are just a few of the risks that occurred with greater intensity last year.
The Global Risks Report 2016 also highlights the interconnections between risks and how they are becoming stronger and creating more unpredictable scenarios. Why should businesses pay attention to these types of large global risks and their interconnections? Because, if not proactively addressed in their strategy, they can result in negative impacts to their operations, brand and ability to capitalize on profitable growth opportunities.
The insights found in the Global Risks Report 2016 can guide corporate leaders in prioritizing areas for resilience planning—an imperative in today’s volatile and rapidly changing world. Even though it may be difficult for an individual company to affect the course of these global risks, management can certainly review the potential influence of these issues on their business model to redirect operations accordingly.
Of the 29 global risks considered in the Report, these three consistently ranked highest across regions and respondents, and are particularly worthy of a company’s attention:
- There are now more geopolitical tensions than any other time since the end of the Cold War with increased interstate conflicts, state collapses and dangerous non-state players. Companies are faced with a wide range of political dangers: riots halting production, damaged assets, cancelled projects, revoked licenses and restricted movement of funds across borders, to name a few.
- Climate is rated the number one trend for shaping global development. Climate change is exacerbating more risks than ever before: water crises, economic growth, societal cohesion, peace and security. Climate change most immediately impacts a business in its supply chain networks where reliability of resources—whether natural or human—is key to future growth.
- Businesses in all industries and of all sizes have been affected by the increased complexity and frequency of cyberattacks that negatively impact a company’s reputation and finances. Crimes in cyberspace cost the global economy an estimated US$445 billion in 2014. Cyber attacks were among the top five risks in 27 countries, and the top risk in eight countries, including the USA, Japan, Germany, Switzerland and Singapore.
There is much to digest and consider in the resilience imperative suggested by the Global Risks Report 2016. The World Economic Forum’s introductory video is a good place to start. While the Global Risks Report outlines “early warning signs” for business resilience, it also offers the opportunity to focus on the positive early planning that can be done to ensure your organization’s strategic decisions can lead to greater future growth wherever in the world you operate.
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