The coronavirus (COVID-19) global health crisis has exposed fundamental shortcomings in pandemic preparedness, socioeconomic safety nets and global cooperation. Governments and businesses have struggled to balance health security imperatives against the economic fallout and rising societal anxieties, while relying on digital infrastructure in unprecedented ways.
As countries seek to recover, some of the more lasting economic, environmental, societal and technological challenges and opportunities are only beginning to emerge. The World Economic Forum, in partnership with Marsh & McLennan and Zurich Insurance Group, has prepared the report COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications. The report seeks to provide an early view of the familiar risks that may be amplified by the crisis and the new risks that may emerge from it.
Impacts of coronavirus include creating new risks landscape
The report taps into the views of nearly 350 senior risk professionals who participated in the COVID-19 Risks Perceptions Survey. They were asked to assess 31 risks across three dimensions: most likely for the world, most concerning for the world and most worrisome for companies.
The economic fallout from COVID-19 dominates companies’ risks perceptions. Two-thirds of respondents identified a prolonged global recession as a top concern for business. Half identified bankruptcies and industry consolidation, failure of industries to recover, and a disruption of supply chains as crucial worries. The third most worrisome fallout for companies is an increase in cyber attacks and data fraud.
Four key areas of significant challenges emerge from the survey as global concerns.
Respondents reckoned that economic risks are the most likely and concerning fallout for the world and companies over the next 18 months. COVID-19 diminished economic activity, required trillions of dollars in response packages, and is likely to cause structural shifts in the global economy going forward, as countries plan for recovery and revival. A build-up of debt is likely to burden government budgets and corporate balances for many years.
The gravest environmental fallout for the world is a shortfall of investment in climate action. Even though industrial production worldwide was cut by lockdowns and shutdowns, resulting in a sharp drop of emissions and pollution globally, COVID-19 could have severe post-crisis effects on the planet and its species. As countries start to emerge from the immediate health crisis and work on rebooting their economies, new working practices and attitudes toward traveling, commuting and consumption may make it easier to have a lower carbon and more sustainable recovery. But omitting sustainability criteria in recovery efforts or returning to an emissions-intensive global economy risks hampering the climate-resilient low-carbon transition.
Another infectious disease outbreak is of greatest concern among societal risks for the world, according to survey respondents. In addition to the dangers to public health, the pandemic and resulting lockdowns and shutdowns could have long-lasting effects on people and societies. High structural unemployment is likely to exacerbate inequality and affect mental health and societal cohesion, in addition to its direct economic consequences. There are also growing risks to personal freedom, well-being and mental health, and the educational and wealth prospects of the young generation.
Technology has been central to the way people, companies and governments have managed the COVID-19 crisis, and the contact-free economy may also create new employment opportunities in the post-pandemic world. However, a greater dependence on technology has increased cyber security risks. The rapid rollout of new technology solutions has exacerbated other risks, such as digital fragmentation, privacy violations and inequality.
An opportunity to build back better
The results of the survey and the associated analyses are a reminder of the need for proactive action today to shape the new normal that we want rather than the one that may arise if emerging risks are not addressed. As economies restart, there is an opportunity to embed greater societal equality and sustainability into the recovery, accelerating rather than delaying progress toward the 2030 Sustainable Development Goals and unleashing a new era of prosperity.
There has been a collective revaluing of who performs “essential work” and a new understanding of essential public services, such as health, education, care and other safety nets. The solidarity created by the COVID-19 pandemic offers the possibility of investing in building more cohesive, inclusive and equal societies. The implementation of green stimulus programs holds the potential to fundamentally change the way economies and industries operate. For businesses, there is an opportunity to accelerate a transformation toward more sustainable and digital operating models, while enhancing productivity.
Yet, to ensure positive outcomes from this crisis, the immediate and longer-term emerging risks must be managed. The aim of this report is to raise awareness and trigger timely debate as governments and businesses design post-lockdown measures.