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RISK = Really Important Stuff to Know about … the World Economic Forum’s list of 28 Global Risks

The World Economic Forum has just listed five environmental risks among the 28 identified in its latest annual report, Global Risks 2015, released last week.

The report defines a global risk as “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”.

900 respondents from business, academia and the public sector identified 28 global risks, which are grouped into the five usual categories: economic risks, environmental risks, geopolitical risks, societal risks and technological risks.

Of the five environmental risks, two relate to poor governance; failure of climate change adaptation and so-called man-made catastrophes. Natural catastrophes are a third set of environmental risk for which we can only improve our avoidance and response, while extreme weather events and biodiversity loss & ecosystem collapse are a legacy of poor environmental governance from the past.

Many of the other risks will arise from these five, including geopolitical, societal and economic risks.
Worryingly, the report notes that persistence of these environmental risks for year to year reflects the respondents’ concerns about how little tangible action has been taken to address them, saying that “Even though all of these risks are well known, governments and businesses often remain woefully underprepared …”

Furthermore, the report notes a trend for higher social instability risks, including the possible overshadowing of economic risks by other risks including unaddressed environmental risks, including climate change, food crises and water crises.

Decision-makers are increasingly realizing that biodiversity loss is not a second-order issue but is intricately linked to economic development, including employment, food challenges and water security, say the authors.

Respondents perceived water crises and failure of climate change adaptation as more impactful than average, and the report cites the following statistics from a number of specialist reports:

– global water requirements are projected to be pushed beyond sustainable water supplies by 40% by 2030
– agriculture already accounts for on average 70% of total water consumption
– food production will need to increase by 50% by 2030 as the population grows and dietary habits change
– water consumption to meet the needs of energy generation and production is projected to increase by 85% by 2035
– the nexus of food, water, energy and climate change has been identified  as one of four overarching mega trends that will shape the world in 2030.

This situation will worsen as man-made environmental catastrophes cause shocks to the system, for example major spills such as Deepwater Horizon, Fukushima and the like, say the authors.

Why am I fascinated by this? Because it’s all about R.I.S.K. – Really Important Stuff to Know.  

But why do we identify risks and then do nothing about them – or do too little too late? The science around the kluge that is our brain tells us we’re wired better for emergencies than for long term risks, so we become unwilling to cede our perceived individual or corporate freedoms to benefit people in other places or in the future whom we can barely conceptualise – including our future selves. And so, as the report says, “Stakeholders have been slow to address the underlying causes of environmental risks or to address their economic, social, political and humanitarian consequences” – consequences we are seeing horrifyingly played out in the media almost every day and which pose clear and present threats to “global prosperity and environmental security”.

Here’s my favourite sentence in the whole report:

“At the heart of the problem is a risk-management approach based on responsive measures that assume things go back to normal after a crisis – an approach that falls short with complex or slowly evolving environmental risks such as climate change.”

Yep – it’s all about RISK. I love it.

And the fab thing is that the report concludes on a strongly positive note. Acknowledging the examples of major consumer companies and financial institutions seeing the need to reduce global climate risks and mobilising action along their supply chains, the report notes that “the international community has a once-in-a-generation opportunity to align the climate change and development agenda … [and] … sustainable development goals … [that] … could embed into the post-2015 global governance architecture a coherent agenda for tackling interlocking environmental risks.”

Environmental training – growing jobs, increasing profits and healing people and places – has a major role to play.

Let’s get cracking now!

You can see The World Economic Forum Global Risks 2015 at http://bit.ly/1ZFTQ9t

Register for my forthcoming workshop on Risk, “Liability to Viability” at https://clarefeeney.com/training/workshops-2016/ – it’s far from the usual take on risk and is based on extensive experience with a wide range of businesses and government bodies as well as in-depth research.

Great reads

Gary Marcus (2008) Kluge: the haphazard evolution of the human mind. Houghton Mifflin Harcourt Publishing Company, New York – wonderful stuff about how our brain tricks us all the time!

Naomi Klein (2015) This changes everything – Capitalism vs the Climate. Simon And Schuster – like the WEF, Naomi sees climate change as offering unprecedented opportunities for concerted action that solves a multitude of related problems for people, businesses and environments all round the world.