February 13, 2018
Head of Communications
Global Risks Report 2018
The Global Risks Report 2018 was well received by world leaders at the World Economic Forum Annual Meeting in Davos, Switzerland, positioning the global risks landscape at the heart of the global agenda at the beginning of the year and to identify priorities for 2018.
Key areas of concern this year include climate change, species’ extinction, income inequality, youth unemployment, privacy, cybercrime, as well as the financial system. The report, produced by the World Economic Forum in strategic partnership with Zurich and MMC, shows that environmental risks have grown in prominence in recent years and have continued this year, following a year characterized by high-impact hurricanes, extreme temperatures and the first rise in CO2 emissions for four years. The damage is now undeniable. Biodiversity is being lost at mass-extinction rates, agricultural systems are under strain and pollution of the air and sea has become an increasingly pressing threat to human health. Deterioration in the quality of air, soil and water from ambient concentrations of pollutants and other activities and processes are also at dangerous levels.
Cybersecurity risks are also growing, both in prevalence and in disruptive potential. Attacks against businesses have almost doubled in five years, and incidents that would once have been considered extraordinary are becoming more and more commonplace. The financial impact of cybersecurity breaches is rising, and some of the largest costs in 2017 related to ransomware attacks, which accounted for 64% of all malicious emails. Notable examples included the WannaCry attack—which affected 300,000 computers across 150 countries—and NotPetya, which caused quarterly losses of US$300 million for a number of affected businesses. The Report points to another growing trend; the use of cyberattacks to target critical infrastructure and strategic industrial sectors, raising fears that, in a worst-case scenario, attackers could trigger a breakdown in the systems that keep societies functioning.
Economic indicators suggest the world is finally getting back on track after the global crisis that erupted 10 years ago, but this upbeat picture masks continuing underlying concerns. The global economy faces a mix of long-standing vulnerabilities and newer threats that have emerged or evolved in the years since the crisis. The familiar risks include potentially unsustainable asset prices, with the world now eight years into a bull run; elevated indebtedness, particularly in China; and continuing strains in the global financial system. Among the newer challenges are limited policy firepower in the event of a new crisis; disruptions caused by intensifying patterns of automation and digitalization; and a build-up of mercantilist and protectionist pressures against a backdrop of rising nationalist and populist politics.
According to the Report, the world has moved into a new and unsettling geopolitical phase. Multilateral rules-based approaches have been fraying. Re-establishing the state as the primary locus of power and legitimacy has become an increasingly attractive strategy for many countries, but one that leaves many smaller states squeezed as the geopolitical sands shift. International relations now play out in increasingly diverse ways. Beyond conventional military buildups, these include new cyber sources of hard and soft power, reconfigured trade and investment links, proxy conflicts, changing alliance dynamics, and potential flashpoints related to the global commons. Assessing and mitigating risks across all these theatres of potential conflict will require careful horizon scanning and crisis anticipation.
Peter Englund, Senior Executive Officer, Head of Commercial Insurance at Zurich ME said on a regional note: “As we conclude 2017 – and review the major events that have had the most business impact for regional insurers and reinsurers – we note the VAT introduction; US hurricanes, large losses across the region and their effect on rates; the oil price development and subsequent impact on construction demand; privatization of state assets; energy diversification along with austerity measures. Products in demand include Cyber Insurance, Public Offering of Securities Insurance (POSI) as well as Environmental Liability Insurance. Our commercial model is agile, and enables us to put in place tailor made coverages to our clients to cope with the changing risk landscape.”