By many accounts, the world's top economies are in good shape, with unemployment continuing to decline and global growth picking up.
Yet below the surface lurks a number of serious and potentially devastating risks, according to the World Economic Forum, which released its annual global risks report on Wednesday and which kicks off its annual conclave in Davos, Switzerland on January 23. The survey of 1,000 experts found almost 59% think the world faces mounting risks, while only 7% believed risks were lessening, CBSNews reported.
"A widening economic recovery presents us with an opportunity that we cannot afford to squander—to tackle the fractures that we have allowed to weaken the world's institutions, societies and environment," said Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, in a statement. "We must take seriously the risk of a global systems breakdown. Together we have the resources and the new scientific and technological knowledge to prevent this."
Natural Disasters and Populism
Among the chief concerns are several related to the environment, including extreme weather events and natural disasters. The impact of climate change also ranks as a top risk this year.
The report also pointed to the interconnection between environmental dangers and other risks, such as mass human migration as planetary conditions change.
Aside from environmental risks, the WEF highlighted dangers tied to the rise in populism and societal polarization, which it calls a "politically destabilizing force". President Donald Trump's "America First" platform is escalating geopolitical volatility, with 93% of the WEF's respondents saying they expect economic confrontations and frictions between major world powers to worsen in 2018.
At the same time, the global economy continues to show improvement, with the International Monetary Fund expecting global GDP growth of 3.6% in 2017, compared with 3.2% in 2016. Yet worsening income inequality means not everyone is enjoying the fruits of that expansion, with the report noting that more than half of the world's countries have seen an increase in income inequality during the past 30 years.
That helps explain why more middle- and low-income workers feel the system is rigged, preventing them from climbing the socioeconomic ladder no matter how hard they work.
Behind the global economy's overall solid growth, fault lines remain, the WEF said. Productivity "remains puzzlingly weak” and workers in many countries are suffering from stagnating real income.
"The reassuring headline indicators mean that economic and f?inancial risks are becoming a blind spot: Business leaders and policymakers are less prepared than they might be for serious economic or financial turmoil," the WEF noted.
Top Five Global Risks
Below are the WEF's top five global risks in terms of likelihood in 2018:
Extreme weather events: Hurricanes, extreme temperatures and other weather events are a likely risk in 2018, coming off a year when the US struggled to recover from the most expensive hurricane season ever. Last year is expected to be among the three hottest years on record, the WEF noted. Climate change is creating more frequent heat waves, which will strain agricultural systems and raise the risk of breakdowns in the food supply, it added.
Natural disasters: Eight of the 10 most deadly natural disasters in the first half of 2017 involved floods and landslides. Extreme weather events and climate change are raising the risks of natural disasters. Other natural disasters could include earthquakes, landslides or volcanic activity.
Cyberattacks: Attacks on computers and networks are increasingly common, with some of the biggest costs last year tied to "ransomware" schemes. Cybercriminals are also taking down infrastructure and trying to disrupt critical industrial sectors, such as the 2015 attack on Ukraine's power grid, the WEF said.
Data fraud or theft: The increase in cyberattacks is placing the personal information of millions of consumers at risk. "What would once have been considered large-scale cyberattacks are now becoming normal," the WEF noted. "For example, in 2016, companies revealed breaches of more than four billion data records, more than the combined total for the previous two years."
Failure of climate-change mitigation and adaptation: The risk that governments and businesses will fail to take action against the impact of climate change is a real risk in 2018, the WEF said, citing Trump's decision last year to withdraw the US from the Paris Agreement as an example.
