WEF highlights: Biggest Risks For Businesses This Year
The business landscape is as turbulent and tricky as it gets. This year, the World Economic Forum opens with an 80-page Global Risks Report that outlines the biggest economic, environmental, technological, geopolitical, and societal risks to global businesses and how they are affected by many of these uncontrollable negative factors.
This year, WEF highlighted the five most probable risks to businesses by impact and by likelihood, and the biggest risks so far come from natural disasters, cyberattacks, and water crises.
According to WEF's annual Risk Perception Survey, environmental effects have risen significantly as a major risk, which includes natural disasters, extreme weather events, and failure to mitigate climate change.
Projections of how natural disasters could ultimately endanger businesses follow after a year of high-impact hurricanes and storms, extreme temperatures, and the continued rise of CO2 emissions. Millions of dollars and countless of lives are lost in natural disasters, which have been increasing in number and are more destructive than the previous years.
"Biodiversity is being lost at mass-extinction rates, agricultural systems are under strain and pollution of the air and sea has become an increasingly pressing threat to human health," the report read. "We have been pushing our planet to the brink and the damage is becoming increasingly clear."
Another rising risk in 2018, not surprisingly, are cyberattacks. Ransomware have specifically become a major problem as more businesses and processes migrate online.
In 2017, two of the biggest global cyberattacks, WannaCry in May and NotPetya in June, cost businesses and individuals millions of dollars. The WannaCry ransomware attack took a hold more than 300,000 computers across 150 countries, with total damages of up to billions of dollars. NotPetya caused a huge global upheaval, as well, attacking 80 companies in countries around the globe—including the National Bank of Ukraine.
Even the rising trend of populist politics in many countries and contrasting opinions about Donald Trump's "Make America great again" plan—and many off-shoots of this populist strategy—have been cited to pose new risks to many businesses worldwide. WEF noted that variations of Trump's "America First" platform have been rising in Japan, China, Russia, Turkey, and, obviously, the Philippines.
"Clashes related to identity and community continue to drive political dislocations in many countries and are increasingly fueling cross-border tensions," the report read.
The report also noted the increase in indebtedness, disruptions in policies caused by technological advancements, and rising military tensions that go hand-in-hand with the proliferation of weapons of mass destruction.
With conflicts brewing in Syria, Yemen, North Korea, and the US, "93% of respondents expect a worsening of 'political or economic confrontations/frictions between major powers' this year."
According to the report, in the end, not one of the numerous risks that have been outlined are single-handedly causing the spikes and falls in the business landscape. Many of these risks form a web of cascading events that cause fluctuations in the market and the business environment—such as how climate change is linked to the Syrian civil war, and how that ties to the immigration issue that ultimately sparked the Brexit, and have pushed many businesses to their wits end. This is why the report encourages political and business leaders to become complexity-literate, or at least be capable of understanding and navigating through the science of interconnected systems that make for the complexity of the business and political landscapes.