Executive Summary:
The world is in no position to face major, new shocks. The financial crisis has reduced global economic resilience, while increasing geopolitical tension and heightened social concerns suggest that both governments and societies are less able than ever to cope with global challenges.

Yet, as this report shows, we face ever-greater concerns regarding global risks, the prospect of rapid contagion through increasingly connected systems and the threat of disastrous impacts.

In this context, Global Risks 2011, Sixth Edition reveals insights stemming from an unparalleled effort on the part of the World Economic Forum to analyse the global risk landscape in the coming decade.

Two cross-cutting global risks Two risks are especially significant given their high degrees of impact and interconnectedness. Economic disparity and global governance3 failures both influence the evolution of many other global risks and inhibit our capacity to respond effectively to them. In this way, the global risk context in 2011 is defined by a 21st century paradox: as the world grows together, it is also growing apart.

Globalization has generated sustained economic growth for a generation. It has shrunk and reshaped the world, making it far more interconnected and interdependent. But the benefits of globalization seem unevenly spread – a minority is seen to have harvested a disproportionate amount of the fruits. Although growth of the new champions is rebalancing economic power between countries, there is evidence that economic disparity within countries is growing.

Issues of economic disparity and equity at both the national and the international levels are becoming increasingly important. Politically, there are signs of resurgent nationalism and populism as well as social fragmentation. There is also a growing divergence of opinion between countries on how to promote sustainable, inclusive growth.

To meet these challenges, improved global governance is essential. But this is another 21st century paradox: the conditions that make improved global governance so crucial – divergent interests, conflicting incentives and differing norms and values – are also the ones that make its realization so difficult, complex and messy. As a result, we see failures such as the Doha Development Round of the World Trade Organization (WTO) and the lack of international agreement at the Copenhagen Conference on climate change. The G20 is seen as the most hopeful development in global governance but its efficiency in this regard has not been proven. ...

Read Full Report: Global Risk 2011

PDF format, 5.3MB, 60Pages.

Global Risks 2011
Sixth Edition
An initiative of the Risk Response Network

World Economic Forum in collaboration with:
Marsh & McLennan Companies
Swiss Reinsurance Company
Wharton Center for Risk Management, University of Pennsylvania
Zurich Financial Services

Preface
Since 2006 the World Economic Forum’s Global Risks report has provided a unique and timely analysis of the risks that are shaping the global environment. Underscored by an unprecedented pace of change, stakeholders from across business, government and civil society face a new imperative in understanding and managing emerging risks.

Global Risks 2011, Sixth Edition provides a highlevel overview of 37 selected global risks as seen by members of the World Economic Forum’s Global Agenda Councils and supported by a survey of 580 leaders and decision-makers around the world. The report also benefits from the expertise and thought leadership of the World Economic Forum’s Global Risk Partners: Marsh & McLennan Companies, Swiss Reinsurance Company, Wharton Center for Risk Management, University of Pennsylvania, and Zurich Financial Services.

This report aims to enhance understanding of how a comprehensive set of global risks are evolving, how their interaction impacts a variety of stakeholders, and what trade-offs are involved in managing them.

Global Risks 2011, Sixth Edition is a useful tool for policy-makers, CEOs, senior executives and thought leaders around the world. It aims to equip institutions to understand and respond to global risks and to embrace change as a source of innovation. ...

Conclusion:
As the different chapters of this report have shown, addressing global risks requires new capacities in terms of risk analysis as well as formal and informal risk response mechanisms at the global level. Three key features stand out to define the requirements of these capacities:

First, interconnections between risks require us to better understand the systems behind risks as well as the risk context. It is no longer sufficient to simply assess operational risks in the corporate context or national security challenges in the government context. Identifying the central nodes in risk interconnections is a crucial element of risk response. Analyses such as the one provided in this report that focus on risk interconnections therefore play an important role at focusing the debate on risk response.

Second, with global risks playing out both at the global and national levels and different stakeholders being affected in different ways, the world faces a significant challenge in coordinating national and global responses. By definition, none of the risks discussed in this report can be addressed by a single actor alone; we therefore need to continue efforts to create a common framework for assessing risks in a multistakeholder, collaborative environment.

Third, while in an increasingly turbulent global environment there is the temptation to always focus on the most recent risk event, it is important to take a long-term perspective to risk assessment and response. Many global risks could emerge over decades rather than months or years; this is one reason why this report maintains a ten-year outlook. Long-term commitment is required to ensure that the effectiveness of the response matches the magnitude of global risks.

As such, addressing the two central risks in this report – economic disparity and global governance failures – could go a long way towards improving both the effectiveness of risk response and overall resilience at the global level. Both risks have strong impact on the three important clusters highlighted by this year’s risk perception survey. While many of the longer-term developments and effects of global risks are difficult to anticipate with a reasonable degree of certainty, investments in these central risks are certain to have positive effects on overall risk resilience.

However even with the best analysis, we can never anticipate or prepare for all risks. In an increasingly connected world, there is a plethora of risks that are beyond the planning and assessment capacities of decision-makers and risk experts alike.

To be prepared for these future challenges and to continue to seize opportunities in rapidly changing strategic environments, organizations and decision-makers must continue to invest in our ability to adapt and learn, thereby building more resilient systems. We hope that the Forum’s Risk Response Network will make a tangible and valuable contribution towards achieving this goal.

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