Five global risks


In our increasingly globalised world, boards should consider key global risks and trends in developing business strategy. In order to prepare for and build resilience against global risks, it is important that boards take a long-term view and understand the likelihood of particular risks and their potential impact.

The World Economic Forum recently released the 10th edition of the global risks report. The report is based on a survey of nearly 900 leading decision-makers from business, academia, and the public sector. It sets out a view on 28 global risks (economic, environmental, societal, geopolitical and technological) as well as the drivers of those risks in the form of 13 trends.

The report highlights five global risks that stand out as both highly likely and highly potentially impactful: interstate conflict; failure of climate-change adaptation; water crises; unemployment and underemployment; and cyber-attacks.

The 2015 report shows a shift from past years away from economic risks to geopolitical and environmental risks. In terms of economic risks, the report states "there is a feeling that significant progress has been made in reducing the likelihood of another financial crisis", but notes that this "may reflect a false sense of control".

Technological risks (notably, cyber-attacks) are also increasing in significance. Further, the report examines the potential risks (including hard-to-foresee risks) and rewards of emerging technologies – with disciplines such as synthetic biology and artificial intelligence creating new fundamental capabilities.

This story first appeared in the February update of the Australian Institute of Company Director's Centre for Governance Excellence and Innovation. For more highlights of the February update go to www.companydirectors.com.au/cgei.