Top threat to the global economy in 2016: climate change

This article was written by Oliver Cann for World Economic Forum, you can read the full version here.

A catastrophe caused by climate change is seen as the biggest potential threat to the global economy in 2016, according to the latest survey by the World Economic Forum (WEF). The annual assessment of risks conducted by the WEF before its annual meeting in Davos on 20-23 January showed that global warming had catapulted its way to the top of the list of concerns. 750 experts assessed 29 separate global risks for both impact and likelihood over a 10-year time horizon. The risk with the greatest potential impact in 2016 was found to be a failure of climate change mitigation and adaptation. This is the first time since the report was published in 2006 that an environmental risk has topped the ranking. This year, it was considered to have greater potential damage than weapons of mass destruction (2nd), water crises (3rd), large-scale involuntary migration(4th) and severe energy price shock (5th).

A warming climate in 2015 is likely to raise the global average surface temperature to the milestone of 1°C above the pre-industrial era for the first time. The number of people forcibly displaced in 2014 stood at 59.5 million according to UNHCR, almost 50% more than in 1940. Data from the report appears to support the increased likelihood of risks across the board, with all 24 of the risks continuously measured since 2014 having increased their likelihood scores in the past three years.

In addition to measuring their likelihood and potential impact, the Global Risks Report 2016 also examines the interconnections among the risks. Here, data suggests a convergence may be occurring, with a small number of key risks wielding great influence.

Knowledge of such interconnections is important in helping leaders prioritize areas for action, as well as to plan for contingencies. "We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways. Mitigation measures against such risks are important, but adaptation is vital," said Margareta Drzeniek-Hanouz, Head of the Global Competitiveness and Risks, World Economic Forum.