Lobbying group’s report urges the insurance industry to ‘think outside the box’ and act on climate change risks
Worries around climate change and the associated risks dominate global concerns, according to the latest report by international non-governmental and lobbying organisation the World Economic Forum (WEF).
The 17th edition of its Global Risk Report 2022, in partnership with Marsh McLennan, SK Group and Zurich Insurance Group, identified tensions that could result from a divergent recovery to the climate crisis.
The report urged business leaders to think outside the quarterly reporting cycle, to create policies that manage risks and shape the climate agenda going forward.
Peter Giger, Zurich Insurance’s group chief risk officer, said: “The climate crisis remains the biggest long-term threat facing humanity.
”Failure to act on climate change could shrink global [gross domestic product] by one-sixth and the commitments taken at COP26 are still not enough to achieve the 1.5 degree Celsius goal.
“It is not too late for governments and businesses to act on the risks they face and to drive an innovative, determined and inclusive transition that protects economies and people.”
The WEF’s report explored four areas of emerging risk that it believes requires worldwide coordination to tackle. These include:
- Cyber security.
- Competition in space.
- A disorderly climate transition.
- Migration pressures.
The Global Risks Report 2022 was developed with the WEF’s Global Risks Advisory board. It also draws on WEF’s network of risk experts, including the chief risk officers’ community and WEF’s Global Future Council on Frontier Risks, which operates as a brain trust for leaders from government, business and civil society.
WEF’s academic advisors include the Oxford Martin School at the University of Oxford, the National University of Singapore and the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania.
Creating a multistakeholder approach
The report additionally found that the top shorter-term global concerns were societal divides, livelihood crises and mental health deterioration.
The report concluded with a reflection on year two of the Covid-19 pandemic, offering fresh insights on national resilience projects.
It pointed out that the impact of the pandemic is impeding the visibility of emerging challenges, such as climate transition disorder, increased cyber vulnerabilities, greater barriers to international mobility and crowding and competition in space.
Saadia Zahidi, WEF’s managing director, said: “Health and economic disruptions are compounding social cleavages. This is creating tensions at a time when collaboration within societies and among the international community will be fundamental to ensure a more even and rapid global recovery.
“Global leaders must come together and adopt a coordinated, multistakeholder approach to tackle unrelenting global challenges and build resilience ahead of the next crisis.”
Carolina Klint, Marsh’s risk management leader for continental Europe, added: “As companies recover from the pandemic, they are rightly sharpening their focus on organisational resilience and [environmental, social and governance] credentials.
”With cyber threats now growing faster than our ability to eradicate them permanently, it is clear that neither resilience nor governance are possible without credible and sophisticated cyber risk management plans.
“Similarly, organisations need to start understanding their space risks, particularly the risk to satellites, on which we have become increasingly reliant given the rise in geopolitical ambitions and tensions.”