The Global Risks Report 2021, 16th Edition. World Economic Forum. Geneva, Switzerland: World Economic Forum, 2021.

The Global Risks Report 2021 released by the World Economic Forum, is a collective effort by Marsh McLennan, SK Group, Zurich Insurance Group, National University of Singapore, Oxford Martin School, and the Wharton Risk Management and Decision Processing Center.[1] A global risk is defined as “an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the next 10 years.”[2] The report is timely and covers a broad range of risks that pose a threat to international security and stability. This article reviews the relevance of the Global Risks Report to corporate and public sectors delving into the risks identified in the report, the methodology used to collect the data, and demographic profiling.

Report Findings

The report has three main parts: global risks, global risk response, and Covid-19 response. The report identifies 35 global risks which include: short-term threats most likely to occur within the time frame of the next 0-2 years which are most imminent, medium-term threats likely to occur within a 3-5 years’ time frame, and long-term threats likely to occur within a 5-10 years’ time frame. Short-term risks include, risks to employment and livelihood, youth disillusionment, digital inequality, economic stagnation, human induced environmental damage, erosion of social cohesion, and terrorist attacks.[3] Out of these, the respondents of the survey voted risks to employment and livelihood, youth disillusionment, and digital inequality as the three most imminent threats facing the globe today. Medium-term risks include economic risks, macroeconomic instability, geopolitical risks, conflicts, and resource geopoliticisation. Long-term risks are found in two main domains–climate change and cyber security.

…the Covid-19 crisis is labelled a black swan event by many, but others counter-argue that pandemics are not surprising and have been around for centuries. Therefore, under-preparedness for pandemics is simply a failure in governance.

The second and third parts of the report delve into the global risk response and the Covid -19 response in which the main problems conceived when mitigating the risks include gaps in public health, educational and digital disparities. There is emphasis on the issue of unemployment and ruptures in social cohesion as effects of the pandemic. In the report, these risks are identified and analyzed in advance to avoid the Black Swan effect; a concept introduced by Nassim Nicholas Taleb.[4] According to Taleb, a black swan event is one which is an outlier that is entirely unexpected, carrying an extreme impact and it is only after the event transpires that humans begin to explain it. For example: the Covid-19 crisis is labelled a black swan event by many, but others counter-argue that pandemics are not surprising and have been around for centuries. Therefore, under-preparedness for pandemics is simply a failure in governance.

What is also noticeable in this report is the identification of 12 new risks that were generated due to the dynamism of the geopolitical, societal, and technological trends, especially the vulnerabilities and knock-on effects of the Covid-19 crisis.[5] These include: declining multilateralism, collapse of important industries, social security systems, digital inequality and digital power concentration, failure of technology governance, poor inter-state relations, backlash against science, prolonged economic stagnation, and mental health deterioration.

Risk analysis is therefore similar to gathering intelligence where information is processed, assessed, analyzed and organized to generate the big picture or the proximate reality. Such a picture is useful to avoid strategic surprise or a black swan event, or more realistically how to manage crises when they occur.

Methodology and Demographic Profiling

The methodology of the report is a simple one which is based on opinions gathered from across a spectrum of sectors. The main findings of the report are generated through the results of a survey. On a scale of 1-5, respondents were asked to score on the likelihood of each global risk occurring over the course of the three different time frames and on the severity of its impact at the global level. The respondents were asked to rank the first, second, and third most concerning risks to the world. From among the 35 risks, the respondents were asked to rank the three risks that they thought were ‘blind spots’ or what the current global response falls short to address and also to rank which three risks could have potentially been prevented or mitigated had there been a global response.[6] With regard to Covid-19, respondents had to rate the effectiveness of the pandemic response globally or within their region on a scale of 1- 5.

If an environmental activist is asked to rank the 35 risks, there will be a bias attached to his/her opinion and may rank geopolitical risks in a lower tier if such knowledge falls outside their expertise.

However, there is a disclaimer on the report regarding the information, statements and assumptions made. It says, the information is not independently verified and the readers are cautioned regarding their validity or verifiability. The disclaimer also states that assumptions are made of both known and unknown risks and also uncertainties which are not necessarily based on historical or current facts. This means when assumptions are made about risks and their impacts, opinions have been given more weight. There are both advantages and disadvantages in gathering opinions because they tend to be biased or made without adequate prior knowledge. If an environmental activist is asked to rank the 35 risks, there will be a bias attached to his/her opinion and may rank geopolitical risks in a lower tier if such knowledge falls outside their expertise.

A problem with the methodology is therefore its demographic profiling. 73% of the respondents were male and only 23% were female. There is no adequate gender representation which is a serious flaw, especially when it comes to developing an accurate picture of the Covid-19 crisis. According to UN Women statistics, 70% of global health and social care workers are women, who are at the frontlines of the pandemic crisis management.[7] Also, 30% of leaders in the global healthcare sector are women and it is doubtful whether efforts have been made to make the respondent pool more inclusive.

Moreover, the age distribution is also flawed as there is no adequate youth representation. Those less than 30 years of age amount to only 2.2% of the respondents. Since the report identifies youth disillusionments as a serious global risk, assumptions could have been made with more depth if there were more youth respondents. The UN has classified youth between the ages of 15-24, as composing 16% of the global population.[8] Another issue with the demographic profiling is that, the majority of the respondents are European but Europe is only the 3rd most populous of regions in the world amounting to only 9.6% of the world share. The first and second most populated regions are Asia and Africa. The world share of population by region for Asia and Africa are 59.5 % and 17.2 percent respectively.[9]

How useful is it?

The applicability and usefulness of the findings in the report are both wide and constrained at the same time. Unlike actionable threat intelligence in the field of security studies, the findings of the report could only function as a guideline for organizations to make certain decisions regarding business or governance. For example: how to innovate businesses and what technological products could strengthen IT infrastructure. Additionally, governments could use the findings to address healthcare policies. For example: the pressing need to integrate gender into healthcare governance so that the Covid-19 crisis response is inclusive and female healthcare workers are given an adequate voice.

A closer look at the report would also make a researcher think about what is more important for decision-making: facts or opinions?

The report could also be useful to a more academic audience in their research on the impacts of global risks. A closer look at the report would also make a researcher think about what is more important for decision-making: facts or opinions? This is mainly because the findings of the report are based on opinions gathered from a variety of people and not necessarily facts which can be proven true or false. Opinions could be based on facts or based on emotions which cannot be externally verified. When making business or policy decisions, emotions matter to a lesser extent. Facts on the other hand are useful, and opinions too if they are based on a valid set of logical reasons.

While the problem of bias will always be present in opinions, the identification of an exhaustive list of 35 risks especially in times as uncertain as the Covid-19 crisis has demonstrated that challenges in the security environment could be overcome. This is why the report also expands to the so-called blind spots-another set of anticipated events which could potentially be mitigated if they weren’t ignored or given adequate attention. In conclusion, the mitigation of these risks in the short, medium and long-term requires effective decision making, innovations and partnerships at global, regional and local levels.

Natasha Fernando is a graduate of the S. Rajaratnam School of International Studies at the Nanyang Technological University, Singapore. She is a bilingual columnist at OBOREurope.

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Header Image: Untitled, June 28, 2021 (Edwin Chin).

Notes:

[1] Word Economic Forum. (2021). The Global Risks Report 2021 16th Edition. Geneva. Retrieved from https://www.weforum.org/reports/the-global-risks-report-2021

[2] The Global Risks Report (2021), page 90

[3] The Global Risks Report (2021), page 11, page 40.

[4] Taleb, N. (2007). ‘The Black Swan: The Impact of the Highly Improbable’. The New York Times. Retrieved from https://www.nytimes.com/2007/04/22/books/chapters/0422-1st-tale.html

[5] The Global Risks Report (2021), page 90.

[6] The Global Risks Report (2021), Page 23.

[7] Paying attention to women’s needs and leadership will strengthen COVID-19 response. (2020). Retrieved 23 May 2021, from https://www.unwomen.org/en/news/stories/2020/3/news-womens-needs-and-leadership-in-covid-19-response

[8] United Nations Department of Economic and Social Affairs. (2019). International Youth Day 2019 Ten Key Messages. Retrieved from https://www.un.org/development/desa/youth/wp-content/uploads/sites/21/2019/08/WYP2019_10-Key-Messages_GZ_8AUG19.pdf

[9] Population by Regions in the World. (2021). Retrieved 23 May 2021, from https://www.worldometers.info/world-population/population-by-region/