Mitigating Old Risks, Mending Old Risks: Business Takeaways
The World Economic Forum (WEF) emphasizes pinpointing risks and risk mitigation; the theme “Global Risks 2023: The turbulent twenties, when risks collide” is one of the critical issues of this year’s WEF Annual Meeting. There, corporate representatives, government officials, and experts worldwide gave the concensus: many risks humanity currently faces are not new. Simultaneously, more threats are brewing; if the world does not focus on preventative action, known and unknown risks would intersect, unleashing an unknown magnitude of problems.
OLD AND NEW RISKS
“Old” risks—issues that have been around for some time, such as inequality, the polarization of the economy, and poverty—are plenty in today’s world. However, “new” disruptions have been experienced globally in the last couple of years, aggravating the risks already present. The pandemic, for instance, has worsened the recessions (due to decreasing trades), political divides (e.g., the uproar on quarantine mandates), and the wealth gap (as the economy ground to a halt). Apart from that, climate change has been brought up. Though identified as the top long-term risk, the issue is getting worse due to the increasing intensity of biodiversity loss in recent years. This resulted in more extreme weather patterns—the mega-flood in Pakistan and the record-high heat wave in the US, to name a few. Apart from these, the forum noted that the world would also be facing totally new challenges in decades to come. Cyber warfare and disinformation are rated as the top new threats for their potential to disrupt the economy and people’s way of life significantly.
COLLABORATION IS KEY
With new risks exposing the fragility of the global system and exacerbating old threats, the WEF panels have made recommendations on how to stem the tide:
Rethinking the time horizon of risks and addressing both socioeconomic and climate concerns now in conjunction with one another.
Investing in cross-sector risk preparedness, where governments and businesses together fund multi-domain, resilience-creation programs through financial inclusion, education, health, care, and climate-resilient infrastructure.
Strengthening and re-building international cooperation and multilateral governance to address global risks better through international coordination, data sharing, and knowledge exchange.
Enhancing foresight at global, national, and institutional levels.
For businesses, these highlight the importance of understanding the risks landscape and adapting and preparing for the future by using scenarios, finding data on weak signals, and scanning multistakeholder perceptions. Additionally, companies should collaborate with governments and international organizations through Public-Private Partnerships (PPPs) to invest in cross-sector risk preparedness. These can build societal resilience and address socioeconomic and climate concerns together.
The WEF stands behind the notion that to tackle all risks—old and new—businesses must understand the risks landscape and adapt and prepare for the future via collaboration with multiple stakeholders. Only when every sector works together can concrete, holistic mitigations happen.
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