Climate change, our Greatest 2016 Treat to Global Economy

A calamity brought on by climate change is seen as the greatest potential threat to the worldwide economy in 2016, as indicated by a review of 750 specialists led by the World Economic Forum.

 

The annual review of dangers led by the WEF before its yearly meeting in Davos on 20-23 January illustrated that global warning has crept its way up to top the list of concerns. 

 

The failure to monitor and adapt to changes in climate has been perceived to likely have a greater impact than the distribution of weapons of mass destruction, water crises, mass involuntary migrations, a spike in the price of energy. For the first time in eleven years, the environment has been made a priority place at the top of Global risks report.  

 

The report was put together by the World’s Economic Forum and risk specialists Marsh & Mclennana and the Zurich Insurance Group a month following the deal signed in France to reduce carbon emissions. Interconnections between risks was evident and becoming stronger as per the WEF. Links between the change in climate and involuntary migration or international security where cited, 

Zurich’s chief risk officer, Cecilia Reyes advised that: “Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks.

 

“Meanwhile, geopolitical instability is exposing businesses to cancelled projects, revoked licences, 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 cooperation, as well as diverting resource, innovation and time away from climate change resilience and prevention.”

 

The WEF believes the broad range of risks – from environmental to geopolitical and economic – was unprecedented.

 

The report added that risks appeared to be rising, with global average surface temperatures increasing by more than 1C over pre-industrial levels for the first time, and the number of compulsorily displaced people at 59.5 million – around 50% greater than 1940 when the Second World War was being fought. “Data from the report appears to support the increased likelihood of risks across the board, with all 24 of the risks continuously measured since 2014 having increased their likelihood scores in the past three years,” says the WEF

 

Respondents stated that the greatest risk to materialise in 2016 would that of large scale involuntary migration. Following the migration of hundreds of thousands of from the Middle East and North Africa in Europe after conflicts last year. 

 

This was followed by climate change, interstate conflict with regional consequences, extreme weather events, and major natural catastrophes.

“Events such as Europe’s refugee crisis and terrorist attacks have raised global political instability to its highest level since the cold war,” said John Drzik, president of Marsh Global Risk and Specialties.

 

“This is widening the backdrop of uncertainty against which international firms will increasingly be forced to make their strategic decisions. The need for business leaders to consider the implications of these risks on their firm’s footprint, reputation and supply chain has never been more pressing.”