- Carbon/Climate Change
Climate Change: the riskiest risk?
In the latest edition of its Global Risk Report, the World Economic Forum ranks environmental threats at the top of the list in terms of both impact and probability and confirm the trend of the recent past years projected over a 10-year time horizon. In order to mitigate the matter, it should be noted that the conclusions of the report are based on the annual Global Risks Perception Survey, which asks the Forum's network of companies, governments, civil society and opinion leaders to assess the risks to which our world is exposed.
As can be seen in the graph, extreme weather events, exacerbated by climate change, are considered the most likely and one of the most significant risks over the next ten years. The same applies to other natural disasters. This follows a year (2018) that saw unprecedented heat waves, storms and floods around the world and the first increase in CO2 emissions in four years. In addition, we face complex risks in the interconnected systems that underpin our world, and the risks of climate change are at the heart of this interconnection of risks according to the report, suggesting that that they could cause a domino effect that would have a much greater impact.
It is also interesting to note that cybersecurity risks are also increasing, both in terms of their prevalence and their disruptive potential. Attacks on companies have almost doubled in five years and the financial impact of cyber security breaches is increasing. The NotPetya attack, which caused quarterly losses of US$300 million for several affected companies, is a notable example.
However, it is surprising to note that all the risks qualified as "economic" by the World Economic Forum such as unemployment or speculative bubbles in a large economy (both absent on this graph) are below the average in terms of impact and at the average level in terms of probability. This might raise the question of whether the impacts of globalized economic crises are somehow neglected or whether the impacts of climate change are such that they have positioned themselves as the first threat to the global economy.
Félix Fouret, Carbon/Climate Analyst
Sources: Beyond Ratings, World Economic Forum