Extreme weather events and natural disasters have been identified as the top two global risks most likely to happen in the next ten years, according to The Global Risks Report 2018 published by the World Economic Forum to coincide with this week’s Davos summit.

In terms of greatest impact, together with the failure of climate-change mitigation and adaptation and water crises, environmental risks account for four out of five of the top global risks – weapons of mass destruction take the number one slot.

Introducing the report, the World Economic Forum’s President  Børge Brende and Klaus Schwab Founder and Executive Chairman of WEF commented:

“Our hope is that this edition of the Global Risks Report and the debates it fosters at the World Economic Forum’s Annual Meeting 2018 will focus minds on the need for systems thinking and new ways of collaborating globally and involving all stakeholders.”

Issues surrounding cyber security and the use of cyberattacks to target critical infrastructure and strategic industrial sectors are a growing source of concern. A new section on Future Shocks is also highlighting the potential for artificial intelligence (AI) to generate “AI weeds”—low-level algorithms that slowly choke off the internet.

Now in its 13th Edition, the WEF report says environmental risks have grown in prominence in recent years while economic risks have faded sharply in the annual Global Risks Perception Survey which forms part of the Report.

The trend has continued this year, with all five risks in the environmental category being ranked higher than average for both likelihood and impact over a 10-year horizon. This follows a year characterized by high-impact hurricanes, extreme temperatures and the first rise in CO2 emissions for four years.

The GRPS was completed by around nearly 1,000 experts and decision-makers in WEF’s multistakeholder communities which assess the likelihood and impact of 30 global risks over a 10-year horizon. Over this medium-term period, environmental and cyber risks predominate.

Among the most pressing environmental challenges identified in the report are

•             extreme weather events and temperatures;

•             accelerating biodiversity loss;

•             pollution of air, soil and water;

•             failures of climate-change mitigation and adaptation;

•             and transition risks as the world moves to a low-carbon future.

The report says:

“We have been pushing our planet to the brink and the damage is becoming increasingly clear. Biodiversity is being lost at mass-extinction rates, agricultural systems are under strain and pollution of the air and sea has become an increasingly pressing threat to human health.”

“A trend towards nation-state unilateralism may make it more difficult to sustain the long-term, multilateral responses that are required to counter global warming and the degradation of the global environment.

Need to prepare for dramatic disruptions which could cause “massive and irreversible deterioration”

The report also includes a new “Future Shocks” section which highlights the importance of being prepared not just for familiar slow-burn risks, but for dramatic disruptions that can cause rapid and irreversible deterioration in both the natural and man-made systems the world relies on.

The report describes the 10 scenarios set out in Future Shocks as a warning against complacency and a reminder that risks can crystallize with disorientating speed.

 ”In a world of complex and interconnected systems, feedback loops, threshold effects and cascading disruptions can lead to sudden and dramatic breakdowns. We present 10 such potential breakdowns—from democratic collapses to spiralling cyber conflicts—not as predictions, but as food for thought.”

The Future Shocks include the possibility of simultaneous breadbasket failures which would then threaten the sufficiency of global food supplies.

Under this scenario, rising temperatures and more frequent heatwaves would disrupt agricultural systems that are already strained. The report flags up a warning by the Food and Agriculture Organization of the United Nations that there is now a one-in-twenty chance per decade that heat, drought, and flood events will cause a simultaneous failure of maize production in the world’s two main growers, China and the United States.

It also highlights the fact that with more than 75% of the world’s food coming from just 12 plants and five animal species, monoculture production heightens vulnerability to catastrophic breakdowns in the food system.

The risk of a systemic breakdown could be further elevated by wider fragilities, including reduced crop diversity, competition for water from other sectors and geopolitical tensions, the report says.

The report says that just as global risks are increasingly complex, systemic and cascading, the responses must be increasingly interconnected across the numerous global systems that make up our world.

Cyber security risks growing

Cybersecurity risks are also growing, both in their prevalence and in their disruptive potential. Attacks against businesses have almost doubled in five years, and incidents that would once have been considered extraordinary are becoming more and more commonplace.

Another growing trend is the use of cyberattacks to target critical infrastructure and strategic industrial sectors, raising fears that, in a worst-case scenario, attackers could trigger a breakdown in the systems that keep societies functioning.

The Report says that what would once have been considered large-scale cyberattacks are now becoming normal, citing the fact that in 2016 companies revealed breaches of more than 4 billion data records, more than the combined total for the previous two years.

Distributed denial of service (DDoS) attacks using 100 gigabits per second (Gbps) were once exceptional but have now become commonplace, jumping in frequency by 140% in 2016 alone. Attackers are also becoming become more persistent—in 2017 the average DDoS target was likely to be hit 32 times over a three-month period.

The financial costs of cyberattacks are rising. A 2017 study of 254 companies across seven countries put the annual cost of responding to cyberattacks at £11.7 million per company, a year-on-year increase of 27.4%.43

The cost of cybercrime to businesses over the next five years is expected to be US$8 trillion, the report warns. It also references the explosion of the Internet of Things which is expected to expand from an estimated 8.4 billion devices in 2017 to a projected 20.4 billion in 2020.

Future Shocks also includes a scenario  where the adverse impact of artificial intelligence (AI) involves “AI weeds”—low-level algorithms that slowly choke off the internet –rather than  a superintelligence that takes control from humans

The report says that algorithms are already proliferating but as they increase in sophistication— for example, we become more reliant on code that writes code—explosive growth could see AI “weeds” proliferate and choke off the performance of the internet.

Diversity is key structural resilience strategy

The report says that, as in nature, diversity is a key structural resilience strategy with a focus on bouncing back faster from a disturbance. This encompasses redundancy, modularity and requisite diversity – with redundancy as possibly the most familiar resilience strategy.

However, the report says that this is the most expensive approach, because it requires non-performing assets - like the spare tyre on a car.

The report says that just as global risks are increasingly complex, systemic and cascading, the responses must be increasingly interconnected across the numerous global systems that make up the world.

The report says ystem modularity can only build resilience if the modules are loosely coupled.  If they are separated too much you no longer have a system and if they are too tightly coupled the adaptive capacity is lost. For organizations, however, this requires “addressing the hard question of which diversity is fit for purpose for this problem at this time”, the report says.

Momentum and necessary depth of collaboration needed to deliver change on scale required still lacking

WEF cautions that while there are many signs of progress and reasons for hope, the momentum and the necessary depth of collaboration needed to deliver change on the scale required is currently still lacking.

The report states:

“By providing a global platform for public-private collaboration, the World Economic Forum seeks to advance this goal by working with governments, businesses and civil society organizations to find new ways of tackling the systemic risks that affect us all.

“We have to work together—that is the key to preventing crises and making the world more resilient for current and future generations. Humanity cannot successfully deal with the multiplicity of challenges we face either sequentially or in isolation.

“Just as global risks are increasingly complex, systemic and cascading, so our responses must be increasingly interconnected across the numerous global systems that make up our world.

“Multistakeholder dialogue remains the keystone of the strategies that will enable us to build a better world.”

Click here to download The Global Risks Report 2018