Global Risks 2007 highlights a growing disconnect between the power of global risks to cause major systemic disruption, and our ability to mitigate them
The Global Risks 2007 report released today highlights a growing disconnect between the power of global risks to cause major systemic disruption, and our ability to mitigate them.
The annual Global Risks report – published by the World Economic Forum in cooperation with Citigroup, Marsh & McLennan Companies, Swiss Re and the Wharton School Risk Center – suggests that many of the 23 core global risks explored in the report have worsened over the last 12 months, despite growing awareness of their potential impacts. In addition to specific risk mitigation measures, institutional innovations may be needed to create effective responses to a complex risk landscape.
The report suggests two such innovations – the appointment of country risk officers and the creation of flexible “coalitions of the willing” around specific global risk issues, providing crucial momentum to mitigation efforts.
The first would provide a focal point in government for mitigating global risks across departments, learning from private-sector approaches and escaping a ‘silo-based' approach. The second would allow mitigation strategies to emerge from dynamic interplay between governments and business, achieving a balance between inclusiveness and decisiveness.
In addition, the report recommends a number of key needs for addressing specific global risks, including:
- Linking energy security with considerations on climate change
- Urgently beginning work on a successor to the Kyoto agreement with three central principles:
– Involvement of the United States and major developing countries (particularly China and India);
– Differential responsibilities for future emissions' reduction dependent upon past emissions and stage of economic development; and,
– Common overall responsibility for climate change - Renewing terrorism insurance schemes scheduled to sunset in 2007 in some form; improve framework for public-private arrangements in other countries, and
- In order to prepare for a pandemic, governments should increase research into the identification of critical choke-points in the supply/value chain where skill sets are rare, interdependencies are greatest and the risk of triggering systemic failure is highest.
Jacques Aigrain, chief executive officer of Swiss Re said, “Risks are often still viewed and dealt with in isolation. However, in today's world global risks are tightly interwoven. To address our contemporary risk landscape, governments and enterprises need to take a holistic approach to overcome silo-thinking and acting.
“We need to prioritise risks effectively, improve preparedness and strengthen public-private partnerships to mitigate risks and to finance economic losses. Finally, we propose to coordinate global risk mitigation efforts by creating the function of country risk officers at governmental level who regularly meet on an international level.”
