Global Risks Report 2017

Transcription

1 Global Risks Report 2017 February 28, 2017 Mary Gardner, VP Business Resilience Zurich NA

2 Rising concern about environmental, societal and geopolitical threats In recent years, societal, geopolitical and environmental threats have supplanted economic risks as issues of greatest concern Pandemics Chronic disease Climate change + water supply crises Climate change + water supply crises Economic Environmental Geopolitical Societal 5 Technological Asset price collapse Major financial system failure Interstate conflict Oil price shock + Retrenchment from globalization Fiscal crises Energy price shock Note: Global risks may not be strictly comparable across years, as definitions and the set of global risks have evolved with new issues emerging on the 10-year horizon. Source: World Economic Forum, Global Risks Report

3 Top 5 risks 2017 Top 5 risks in terms of likelihood Top 5 risks in terms of impact Source: World Economic Forum, Global Risks Report

4 Top risks highlight increasing fragility of environment and society 5.5 Impact if the risk were to occur (score) Fiscal crises Food crises Water crises Unemployment or underemployment Failure of climate change mitigation and adaption Interstate conflicts Natural disasters Terrorist attacks Likelihood to occur over the next ten years (score) Cyber attacks Large-scale involuntary migration Extreme weather events Economic Environmental Geopolitical Societal Technological Source: World Economic Forum, Global Risks Report

5 Interconnected risks are amplified by global trends CHANGING CLIMATE Extreme weather events Food crises AGING POPULATION Failure of climate change mitigation and adaption Large scale involuntary migration Water crises Interstate conflict Failure of regional or global governance State collapse or crisis Failure of national governance Fiscal crises INCREASING POLARISATION OF SOCIETIES Profound social instability Unemployment or underemployment RISING INCOME AND WEALTH DISPARITY Source: World Economic Forum, Global Risks Report

6 Climate action picks up pace, but the emission gap is not yet closed Keeping global warming within 2 C requires a paradigm shift Global greenhouse gas emissions (Gt CO2 eq.) Baseline C Current policies C COP21 pledges and INDCs C Avoid short-termism thinking Take a wider system view Join up efforts public and private actors Below 1.5 C C Source: The Climate Action Tracker project: 6

7 Polarization of societies endangers global collaboration Governments prevent, limit or eradicate civil society activities Trust and mutual good faith in international relations declines International institutions remain reactive and slow moving International cooperation gives way to unilateral or transactional approaches Source: World Economic Forum, Global Risks Report

8 Social systems, essential for social stability, near their breaking point Systems already strained Demographic pressures are further threatened by the 4 th Industrial Revolution Moving to a sharing and collaborative economy Persistent low interest rates Untethering some types of work from a physical location Mass migration of labor Displacing human labor by automation, robotics and artificial intelligence Source: World Economic Forum, Global Risks Report

9 Underfunded state social protection systems require a paradigm shift Shifting responsibility for social protection from government to individuals Addressing gaps will require a Whole-of-Life Approach and careful rebalancing of public and private protection Untethering health and income protection from individual employers or jobs Revamping pension models in line with the new realities of work and ageing Implementing policies to increase flexicurity Providing greater support for working into old age Source: World Economic Forum, Global Risks Report

10 AI/Robotics and biotech are perceived to be most promising technologies. Yet as riskier technologies, the governance required also increases. Emerging technology risk landscape Negative consequences average Geoengineering Blockchain and distributed ledger Virtual and augmented realities Proliferation and ubiquitous presence of linked sensors Space technologies Benefits Neurotechnologies average 3D printing Artificial intelligence and robotics Biotechnologies New computing technologies Advanced materials and nanomaterials Energy capture, storage and transmission Source: World Economic Forum, Global Risks Report

11 Scope for rapid advances in AI to precipitate unwelcome shocks Market disruption Bumpy transition Deployment snags Accidents System uncertainties Concentration Power shifts Malicious use Convergence Source: World Economic Forum, Global Risks Report 2017; MMC. 11

12 The top five risks to doing business Globally 1 Unemployment or underemployment 2 Energy price shock 3 Fiscal crises 4 Failure of national governance 5 Profound social instability Source: World Economic Forum, Global Risks Report

13 The top five risks to doing business By region North America Europe Eurasia Cyber attacks Unemployment or underemployment Fiscal crises Fiscal crises Large-scale involuntary migration Unmanageable inflation Energy price shock Fiscal crises Inter-state conflict Data fraud or theft Failure of financial mechanism or institution Unemployment or underemployment Asset bubble Asset bubble Profound social instability Latin America Sub-Saharan Africa South Asia East Asia and Pacific Failure of national governance Unemployment or underemployment Unemployment or underemployment Fiscal crises Unemployment or underemployment Energy price shock Energy price shock Asset bubble Fiscal crises Profound social instability Energy price shock Failure of national governance Failure of critical infrastructure Fiscal crises Failure of national governance Failure of urban planning Failure of critical infrastructure Unemployment or underemployment Energy price shock Cyber attacks Source: World Economic Forum, Global Risks Report

14 This year s global risks in focus A troubling time for Western Democracy as well as risks posed by the closing of civil society space. The future of social protection systems, artificial intelligence and infrastructure needs and vulnerabilities: 1 A troubling time for Western democracy Years of building pressure in many parts of the world, at least since the global financial crisis, crystallized during 2016 into dramatic political developments in some of the world s advanced democracies. Numerous factors have been suggested as playing a role in weakening democratic legitimacy and effectiveness. Rapid economic and technological change Worsening social and cultural polarisation Post-truth political debate The future of social protection systems, 3 the other hot potato This chapter looks at how the future of work and other challenges impact social protection systems that consist of policies and programs designed to reduce poverty and vulnerability by helping individuals manage key economic and social risks, such as unemployment, exclusion, sickness, disability and old age. The Fourth Industrial Revolution (4IR) is threatening to bring this evolution full circle: 4IR is fundamentally changing the ways that people work and live. 2 The closing of civil society space, a social and political challenge Closing civil society space refers to actions by governments and others that, intentionally or otherwise, result in the prevention, limitation or eradication of civil society activities (i.e. media, legal, NGO). Civil society actors are increasingly looking to the private sector for support in expanding their space to operate. There are however some interesting examples of businesses promoting an inclusive civic space. Business leaders can promote space for civil society behind the scenes, for example through lobbying in meetings with governmental authorities. 4 Assessing the risk of artificial intelligence (AI) There are two broad types of AI: a superintelligence and forms of artificial specialized intelligence. The risks report looks at the risks to decision-making, security and governance of AI and explains why policy-makers will be required to look for measures that will build resilience to the impact of automation. 5 Physical infrastructure networks and the 4IR Explores how the 4IR is shaping up the interdependent set of critical physical infrastructure networks on which we all depend (including transport; energy, digital communications, water and solid waste), and how this process brings huge opportunities for innovation, but also complex risks. Source: World Economic Forum, Global Risks Report

15 Global risks demand resilient and agile business strategies THE ROLE OF RISK MANAGEMENT Risk identification and landscape Risk prioritization and risk appetite SCENARIO PLANNING Triggers, trends and scenarios Strategic options BUSINESS IMPORTANCE Understanding risk inter-connectivity Managing risks and maximizing opportunities RISK AWARENESS AND RESILIENCE Starts in the boardroom Driven by C-suite Cascaded at every level Source: World Economic Forum, Global Risks Report

16 Imperative for business leaders to combine canniness with strategic focus 2017 OUTLOOK Market reverberations from political resets Transformational societal and technological shifts INSULATE INVESTMENTS DEEPEN RELATIONSHIPS NURTURE REPUTATION Strengthen alignment with government priorities Mitigate cyber and supply chain threat scenarios Encourage diverse and challenging perspectives Embed and incentivize appropriate behaviors Encourage diverse and challenging perspectives Embed and incentivize appropriate behaviors Reduce risk of trapped capital, assets and revenue Source: World Economic Forum, Global Risks Report

17 Questions? For more information go to: This presentation has been prepared by Zurich Insurance Group Ltd and the opinions expressed therein are those of Zurich Insurance Group Ltd as of the date of writing and are subject to change without notice. This presentation has been produced solely for informational purposes. All information contained in this presentation has been compiled and obtained from sources believed to be reliable and credible but no representation or warranty, express or implied, is made by Zurich Insurance Group Ltd or any of its subsidiaries (the Group ) as to their accuracy or completeness. This presentation is not intended to be legal, underwriting, financial, investment or any other type of professional advice. The Group disclaims any and all liability whatsoever resulting from the use of or reliance upon this publication. Certain statements in this publication are forward-looking statements, including, but not limited to, statements that are predictions of or indicate future events, trends, plans, developments or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by numerous unforeseeable factors. The subject matter of this presentation is also not tied to any specific insurance product nor will it ensure coverage under any insurance policy. This presentation may not be distributed or reproduced either in whole, or in part, without prior written permission of Zurich Insurance Group Ltd, Mythenquai 2, 8002 Zurich, Switzerland. Neither Zurich Insurance Group Ltd nor any of its subsidiaries accept liability for any loss arising from the use or distribution of this presentation. This presentation does not constitute an offer or an invitation for the sale or purchase of securities in any jurisdiction. Zurich NA 17