Global recession, high unemployment among top risk concerns, report finds
The economic fallout of the COVID-19 pandemic is the top concern of risk managers and corporations in the next 18 months.
Due to the implications of COVID-19, risk professionals anticipate prolonged economic distress to be the greatest threat to businesses globally over the next 18 months.
“Prolonged global recession,” “high unemployment,” “another outbreak of infectious disease,” and protectionism are among the top risk concerns for companies globally, according to a new report by the World Economic Forum.
Published May 19, the “COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications” report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, is based on a survey of 350 risk managers asked to assess 31 risks across three dimensions: most likely for the world, most concerning for the world and most worrisome for companies.
Emerging risks in 2020 and beyond
The economic fallout of the COVID-19 pandemic is top of mind for risk managers and corporations. Overwhelmingly, two-thirds of respondents identified a prolonged global recession as a top concern for business. Half identified bankruptcies and industry consolidation as a top risk.
Along with a prolonged recession, other economic concerns include a failure of industries to recover, cyberattacks, disruption of supply chains, weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, and the collapse of a major emerging market.
The report projects that over the next 18 months, social discontent and economic tensions will rise unless corporations and government officials work to mitigate the fallout of the pandemic globally.
“The pandemic will have long-lasting effects, as high unemployment affects consumer confidence, inequality and well-being, and challenges the efficacy of social protection systems,” Peter Giger, group chief risk officer at Zurich Insurance Group, said in a statement.
“With significant pressures on employment and education — over 1.6 billion students have missed out on schooling during the pandemic — we are facing the risk of another lost generation,” Giger adds. “Decisions taken now will determine how these risks or opportunities play out.”
Existential risks pre-COVID persist — and require action
In analyzing survey results and top global risks pre-COVID-19, the report also calls on leaders to act swiftly against a number of existing threats, primarily the climate crisis, along with geopolitical turbulence around the world, rising inequality, strains on people’s mental health, gaps in technology governance and health systems under continued pressure.
Researchers warn in the report that longer-term risks will have serious and far-reaching implications for societies, the environment, and the governance of breakthrough technologies, arguing that society collectively is not ready for “the knock-on effect” of these risks.
Offering some hope, the report explains how a “green recovery” and more resilient, “cohesive, inclusive and equal societies” can come to fruition with active policy change and initiatives.
“COVID-19 has shown it is crucial to keep existential risks in focus, and climate change is one of these,” Giger said. “As we reboot our economies, changes in working practices and in attitudes towards traveling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future.”
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