Climate change, and fears over lack of mitigation or adaptation, has been rated the top risk on the World Economic Forum’s 11th annual Global Risk Report – higher than weapons of mass destruction. What is more, it was closely linked with the other most likely risks and those with the highest impact, notably water and food crises, extreme weather events and large scale involuntary migration.
Climate change has been steadily climbing up the rankings over recent years, not least because the effects, like drought or flooding, can lie behind social issues.
Launching the report, which looks at risks over the coming decade, all the panelists said the COP15 agreement in Paris was an important step forward in reducing climate risk. John Drzik, president, global risk and specialties at Marsh, said that if the risks survey had been carried out after the Paris agreement the climate risk “would probably go down” in the WEF rankings.
Cecilia Reyes, chief risk officer at Zurich Insurance, said “mitigation of climate change is necessary but adaptation is vital” adding “we need to manage consequences like flooding” and that would require work from both public and private sectors. She called the Paris agreement “a good step”, but said, “mitigation efforts are not having any kind of discernable impact” on the problem and the challenge was implementing and executing the agreements made.
Nevertheless, Reyes said opportunity was ”the other side of risk”, saying it was “an opportunity for clean technology, building green infrastructure and the transition to a low carbon economy”.
Among other risks, energy price shocks still rate highly – the panel said that referred to fears over a rebound in currently low energy prices, as well as the impact of those low prices in energy-producing regions, where mass underemployment would feed societal risk.
Drzik also highlighted the risk of cyber attacks, which he noted were rated first by US respondents but were “not even in the top ten” in many regions. He warned this was “boundaryless” and an “arms race” and the risk was much broader than it appeared.