The novel coronavirus (COVID-19) pandemic is increasing disparities and social fragmentation, according to the World Economic Forum’s Global Risks Report for 2021.
The report, which was released on Tuesday, added that in the next 3-5 years, these disparities will threaten the economy, and weaken geopolitical stability in the following 5-10 years.
In 2020, the world saw the catastrophic effects of ignoring long-term risks such as pandemics, which are now an immediate risk.
The report added that the COVID-19 pandemic has not only claimed millions of lives, but it has also widened long-standing health, economic and digital disparities.
Billions of caregivers, workers, and students, especially minorities who were disadvantaged before the pandemic, are now at risk of missing pathways to new and fair societies that the recovery could unlock.
These developments may further impede the global cooperation needed to address long-term challenges such as environmental degradation, the report noted.
When it comes to accessing technology and digital skills, the gap between the “haves” and the “have nots” risks widening and challenging social cohesion. This will particularly affect young people worldwide, as this group faces its second global crisis in a generation. It could, in fact, miss out altogether on opportunities in the next decade.
Financial, digital, and reputational pressures resulting from the pandemic also threaten to leave behind many companies and their workforces in the markets of the future.
While these potential disparities could cause societal fragmentation for states, an increasingly tense and fragile geopolitical outlook will also hinder the global recovery. This is if mid-sized powers lack a seat at the global table.
Environmental risks dominate by impact and likelihood, looking ahead towards the next decade. Societal fractures, uncertainty, and anxiety will make it more difficult to achieve the coordination needed to address the planet’s continued degradation.
For the first time, the report also rates risks according to when respondents perceive they will pose a critical threat to the world. Clear and present dangers in the short term, likely in the next two years, reveal concern about lives and livelihoods, among them infectious diseases, employment crises, digital inequality and youth disillusionment.
In the medium-term, in 3-5 years, respondents believe the world will be threatened by knock-on economic and technological risks. This may take several years to materialise, and may include asset bubble bursts, IT infrastructure breakdown, price instability and debt crises.
Existential threats (5-10 years) dominate long-term concerns, and include weapons of mass destruction, state collapse, biodiversity loss and adverse technological advances.
“In 2020, the risk of a global pandemic became reality, something this report has been highlighting since 2006,” said Saadia Zahidi, Managing Director of the World Economic Forum (WEF), “We know how difficult it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognise that ignoring them doesn’t make them less likely to happen.”
Zahidi added, “As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet.”
She also noted that, to help meet this challenge, next week’s The Davos Agenda event will mobilise global leaders to shape the principles, policies and partnerships needed in this new context.
The report also reflects on the responses to the COVID-19 pandemic, drawing lessons designed to bolster global resilience. These lessons include: formulating analytical frameworks; fostering risk champions; building trust through clear and consistent communication; and creating new forms of partnership.
The key risks outlined in the report are complemented with recommendations to help countries, businesses, and the international community to act, rather than react, in the face of cross-cutting risks.
The report closes with an overview of “frontier risks”, naming nine high-impacting, low-probability events drawn from expert foresight exercises. These include geomagnetic disruption, accidental wars, and exploitation of brain-machine interfaces.
Peter Giger, Group Chief Risk Officer at the Zurich Insurance Group, said, “The acceleration of the digital transformation promises large benefits, such as for example the creation of almost 100 million new jobs by 2025.”
At the same time however, he noted that digitalisation may displace some 85m jobs, and since 60% of adults still lack basic digital skills the risk is the deepening of existing inequalities.
He added that the biggest long-term risk remains a failure to act on climate change. There is no vaccine against climate risks, so post-pandemic recovery plans must focus on growth aligning with sustainability agendas to build back better.