Top Risks of the 2014 WEF Global Risks Report Are … (Jan 2014)

CoverGRR2014For its 9th edition, the GRR 2014 offers the following ranking of the top global risks:

In terms of likelihood
1) Income disparity
2) Extreme weather events
3) Unemployement and underemployement
4) Climate change
5) Cyber attacks

In terms of impacts
1) Fiscal crises
2) Climate change
3) Water crises
4) Unemployement and underemployement
5) Critical information infrastructure breakdown

The report also compares the ranking between men and women (women tending to see risks as both more likely and more severe) and between younger and older generations (below and above 30 years of age) (younger people tending to see risks as both more likely and more severe too). Interesting findings… well aligned with research in behavioral economics and risk management.

The report is released worldwide on Jan 16, a week ahead of the World Economic Forum’s Annual Meeting in Davos. Dr. Michel-Kerjan and his team at Wharton have been a partner of the WEF Global Risk Report initiative since its inception in 2005. Other partners of Global Risks 2014 include Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, the Oxford Martin School (University of Oxford), and the National University of Singapore.

This year, the report also includes a special section on “Strategies for Managing Global Risks” based on findings from a Wharton research project that interviewed over 100 high-level executives in S&P 500 companies to examine the variety of ways in which firms identify and manage risks. Based on these preliminary findings, the GRR 2014 suggests strategies for firms and governments to build resilience to shocks from systemic global risks that, through interdependencies, may impact them in unexpected ways.

This inclusion is important as the community of risk thought leaders moves beyond the tasks of identifying risks, increasingly focusing on building resilience capacity that creates measurable value for firms and countries. A critical component in preparing for disasters is to create incentives that encourage risk managers to engage in long-term deliberative thinking. Techniques such as scenario analysis, stress tests and ranking/scoring metrics can help overcome myopia, inherent in human decision-making. This new mindset is entering the boardroom in a much more significant way today than when the Global Risks initiative began almost 10 years ago.