Ahead of the World Economic Forum in Davos, global management consulting firm Oliver Wyman conducted a Global Risks Perception Survey, which tapped almost 900 members of the WEF’s “multistakeholder community”.
Now in its ninth year, the survey is a snapshot of what keeps global policymakers up at night, but it also maps the evolution of risk over time, categorised by their likelihood and their potential impact.
Unsurprisingly, given the timing since the survey’s inception, financial and economic risks have dominated leaders’ minds, with concerns about “the risk of an asset-price collapse heading the list in the run-up to the financial crisis, giving way to concerns about the more immediate but slow-burning consequences of constrained fiscal finances, a major systemic financial failure in the immediate post-crisis years, and income disparity.”
But this year is very different.
Oliver Wyman says the latest survey “features a radical departure from the past decade; for the first time in the report’s history, economic risks feature only marginally in the top five.”
What’s different is that geopolitical risks are back on the agenda, as the “dispute over Crimea in March 2014 serves as a forceful reminder of the consequences of interstate conflicts with regional consequences that seemed long forgotten and unfathomable.”
Add in the rise of Islamic State which has “brought state collapse and the failure of national governance back into public consciousness,” and we have the scenario for a changed set of global policy preoccupations.
A the same time, health-related risks, such as pandemics – last considered to be capable of having a major impact in the 2008 survey – have made it back into the top, following the unprecedented Ebola outbreak in west Africa.
Oliver Wyman also says there has been a shift from economic to environmental risks, “ranging from climate change to water crises.” But, while there is “recognition of the importance of these slow-burning issues, strikingly little progress has been made to address them in light of their far-reaching and detrimental consequences for this and future generations.”
What seems clear is that the pressing concerns around a financial meltdown or crisis have given way to longer-term issues.
That’s probably as clear a measure of the success of the Fed and other Central Banks in battling the GFC – the inclusion of global unemployment, however, suggests that the real economy still needs some work.
Here’s the table (which you can click to enlarge).