WEF Global Risks 2023 – What’s new and what’s changed?

On the 11^th of January 2023, the World Economic Forum (WEF) produced its 18^th Global Risks Report. The report is based upon a Global Risks Perception Survey (GRPS), reflecting the perspectives and insights of over 1,200 experts from business, academia, government and civil society. This year’s report shows a continuation of the trend to recognise and prioritise environmental risks, but what are the specific findings and what has changed?

The headline issues and risks

The Global Risk Report 2023 structures risks into two main categories, those representing shorter-term, 2-year trends, and those over the longer term – 10 years (see sections below).

• The cost-of-living crisis has jumped to the top of shorter-term risks – reflecting the challenges of dealing with longer-term problems in a time of consistent disruption.
• While environmental issues contribute 5 of the top 10 shorter-term risks, they dominate the longer-term risk list, comprising the top 4 risks.
• Economic instability and geopolitical conflict are likely to present challenges to the coordinated multinational action required to respond in an integrated manner to global environmental risks.
• Risks vary in scale and scope and will give rise to negative feedback loops, such as climate change mitigation and adaptation failures (numbers 1 and 2 in the longer-term risks) and ecosystem collapse (number 4 in the longer-term risks) will have knock on effects on economic inequality and geopolitical risks – the report calls these ‘polycrises’.
• The more systemic an issue, and the more global in scope, the lower the confidence in political, government and governance systems to respond adequately.

The top 10 global risks by severity for the next 2 years

1. Cost-of-living crisis
2. Natural disasters and extreme weather events
3. Geoeconomic confrontation
4. Failure to mitigate climate change
5. Erosion of social cohesion and societal polarization
6. Large-scale environmental damage incidents
7. Failure of climate change adaptation
8. Widespread cybercrime and cyber insecurity
9. Natural resource crises
10. Large-scale involuntary migration.

The top 10 global risks by severity for the next 10 years

1. Failure to mitigate climate change
2. Failure of climate change adaptation
3. Natural disasters and extreme weather events
4. Biodiversity loss and ecosystem collapse
5. Large-scale involuntary migration
6. Natural resource crises
7. Erosion of social cohesion and societal polarisation
8. Widespread cybercrime and cyber insecurity
9. Geoeconomic confrontation
10. Large-scale environmental damage incidents.

The outlook

The 2023 Risk Report provides a mixed picture of optimism and pessimism for the longer term. Not quite 20% of respondents were optimistic that current economic disruptions would likely settle down into greater stability, but more than 50% believed that continued, persistent crises and significant tipping points were likely to lead to catastrophic outcomes over the next 10 years.

Surprisingly, perhaps, younger respondents were most optimistic for the future, around 30% of those under the age of 40 were neutral or positive about the longer term.

The report explores four emerging futures, categorising a number of ‘polycrises’ – where specific risk trends interact and develop negative feedback loops, exacerbating the scale and severity of impacts.

Optimism in the face of such complex systemic risks is perhaps hard, but the report looks to provide some seeds for hope by emphasising the need for cross-sector risk preparedness, rebuilding global cooperation, and strengthening international assessment, planning and governance institutions.

As ever, with sustainability some of the picture is clear, global problems need global responses. At the very least, consensus is required on the future we want if we are to become fit to be a planetary species.

What do global risks mean for company strategy?

It’s useful for companies to develop awareness of global risks and sustainability drivers so strategy and policy can be developed consciously, well informed by context. That’s what we often help people with. For our take on what 2023’s challenges mean for sustainable business, see 2023 sustainable business trends and challenges – what to watch out for.

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