Explained: World Economic Forum's Global Risks Report 2021

Why in News?

Recently the Global Risks Report 2021 was recently released by the World Economic Forum. Global Risks Perception Survey undertaken by more than 650 members of WEF is the basis of the report. 

About the Report 

The 15th edition of the World Economic Forum’s Global Risks Report has been published as critical risks are manifesting. 

Significance:

1. The global economy has been facing an increased risk of stagnation and climate change is striking harder and more rapidly than expected. 
2. The report provides an open viewpoint which can lead to global economic benefit. 
3. The World Economic Forum has argued since 1970 for the need to consider social well-being alongside economic gains. Unless the global economic system is reformed to be more socially conscious, the twin risks of prolonged slowdown and stronger defiance towards the current economic model will continue to exacerbate each other

What are the risks as per the Report?

As per the report the following can lead to dire consequences and lost opportunities for large parts of the global population:

1. Risk of job losses
2. A widening digital divide
3. Disrupting social interactions
4. Abrupt shifts in markets

What would be the consequences of the risks?

These risks could lead to 

1. Social and political unrest
2. Political Fragmentation
3. Geopolitical Tensions 
4. It would also shape the effectiveness of responses to other key threats of the coming 10 years

Highest Likelihood Risks

1. Extreme Weather
2. Climate Action Failure 
3. Human-led Environmental Damage 
4. Digital Power Concentration
5. Digital Inequality and Cybersecurity Failure  

Most Imminent Threats

As per the report, the most imminent threats are:

1. Employment and Livelihood crises
2. Widespread Youth Disillusionment 
3. Digital Inequality
4. Economic Stagnation
5. Human-made Environmental Damage 
6. Erosion of Societal Cohesion
7. Terrorist Attacks

Risks to economic stability and social cohesion:

As per the Global Risks Report, it has been warned that downward pressure on the global economy from macroeconomic fragilities and financial inequality. These pressures continued to intensify in 2019, increasing the risk of economic stagnation. Low trade barriers, fiscal prudence and strong global investment, once seen as fundamentals for economic growth are fraying as leaders advance nationalist policies.

Climate threats and accelerated biodiversity loss

Climate change is striking harder and more rapidly than many expected. The last five years are on track to be the warmest on record, natural disasters are becoming more intense and more frequent, and last year witnessed unprecedented extreme weather throughout the world. 

Alarmingly, global temperatures are on track to increase by at least 3°C towards the end of the century—twice what climate experts have warned is the limit to avoid the most severe economic, social and environmental consequences.

Way ahead:

The challenges before us demand immediate action to be taken together. It can be said that the fractures within the global community appear to be widening. Stakeholders must act in time and with purpose within an unsettled global landscape.

Also Read| What is K shaped Economic Recovery?

Source: World Economic Forum: 15th edition of Global Risk Report 2021