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Climate greatest risk to world’s economy

Climate biggest risk world economy, World Economic Forum reports

geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders.

Failure of tackling climate change is the biggest risk to the global economy.

This is the conclusion of the World Economic Forum in its Global Risk Report 2016.

From the press release of the World Economic Forum

‘(…) In this year’s annual survey, almost 750 experts assessed 29 separate global risks for both impact and likelihood over a 10-year time horizon.

The risk with the greatest potential impact in 2016 was found to be a failure of climate change mitigation and adaptation.

Environmental risk has topped the ranking

This is the first time since the report was published in 2006 that an environmental risk has topped the ranking. This year, it was considered to have greater potential damage than weapons of mass destruction (2nd), water crises(3rd), large-scale involuntary migration (4th) and severe energy price shock (5th).

The number one risk in 2016 in terms of likelihood, meanwhile, is

  1. large-scale involuntary migration
    followed by:
  2. extreme weather events
  3. failure of climate change mitigation and adaptation
  4. interstate conflict with regional consequences
  5. major natural catastrophes

(…)

Interconnections

The Global Risks Report 2016 also examines the interconnections among the risks. Here, data suggests a convergence may be occurring, with a small number of key risks wielding great influence. (…)

Knowledge of such interconnections is important in helping leaders prioritize areas for action, as well as to plan for contingencies.

Margareta Drzeniek-Hanouz, Head of the Global Competitiveness and Risks, World Economic Forum: “We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways.

Mitigation measures against such risks are important, but adaptation is vital,” (…)

Political co-operation

“Climate change is exacerbating more risks than ever before in terms of:

  • water crises
  • food shortages
  • constrained economic growth
  • weaker societal cohesion
  • increased security risks

Meanwhile, geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders.

These political conflicts are in turn making the challenge of climate change all the more insurmountable – reducing the potential for political co-operation, as well as diverting resource, innovation and time away from climate change resilience and prevention,” said Cecilia Reyes, Chief Risk Officer of Zurich Insurance Group. (…)’

Call to action

The Global Risks Report 2016 is a tool for stimulating dialogue among policy-makers, business executives and thought leaders around the world.

It is also a call to action to improve international efforts at coordination and collaboration to equip institutions to understand, monitor, manage and mitigate global risks, prepare for them and strengthen resilience.

Annual meeting

The Annual Meeting World Economic Forum is January 20 – 23, 2016 in Davos-Klosters, Switzerland.

One of the topics is “The Transformation of Energy ‘.

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