World Economic Forum: This is why climate is still the biggest risk

While all top long-term risks were environment-related in the Global Risks Report 2020, climate and sustainability risks dropped down in rankings in the World Economic Forum COVID-19 Risk Outlook report. Yet, now is the time to act if we would like to respond appropriately to warnings on climate. Comment by Saadia Zahidi, Managing Director, World Economic Forum and partners Marsh & McLennan, Zurich Insurance Group, and SK Group follows.

Climate risks are a reminder of the need for proactive action to shape the desired new normal. This call to action from global leaders comes ahead of the World Economic Forum’s Sustainable Development Impact Summit (21-24 September) which will focus on action-oriented solutions to address the economic, human and environmental challenges of our time.

Leaders flagged severe threats to climate and the economy as top risks in the Global Risks Report 2020. For the first time, the top risks were all environment-related. However, climate and sustainability risks dropped down in rankings in the Forum’s COVID-19 Risk Outlook report.

“The crisis has devastated lives and livelihoods. It has triggered an economic crisis with far-reaching implications and revealed the inadequacies of the past. As well as managing the immediate impact of the pandemic, leaders must work with each other and with all sectors of society to tackle emerging known risks and build resilience against the unknown. We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive,” said Saadia Zahidi, Managing Director, World Economic Forum.

Climate spending has become a lower priority despite clear lessons to be learned from the pandemic on the importance of resilience planning. There is also a bigger case for tackling climate change due to its interconnection with risks related to jobs, health and the economy.

Risks can be tackled through public-private collaboration, which has already helped to solve some of the most urgent challenges associated with the pandemic.

The findings are part of the World Economic Forum’s Global Risks Initiative, in partnership with Marsh & McLennan, Zurich Insurance Group and SK Group.

For the first time since its launch, the top five global risks in terms of likelihood were all environmental in the Global Risks Report 2020. The report sounded the alarm on:

  • Extreme weather events with major damage to property, infrastructure and loss of human life
  • Failure of climate-change mitigation and adaptation by government and business
  • Human-made environmental damage and disasters, including environmental crime, such as oil spills and radioactive contamination
  • Major biodiversity loss and ecosystem collapse (terrestrial or marine) with irreversible consequences for the environment, resulting in severely depleted resources for humankind as well as industry
  • Major natural disasters such as earthquakes, tsunamis, volcanic eruptions and geomagnetic storms

“COVID-19 has left businesses and societies more vulnerable to climate-related disasters such as wildfires, storms and floods. Supply chains are frail, balance sheets are stretched, and lockdowns and social distancing make emergency response harder. Meanwhile the risk of a chaotic transition, where societal concerns eventually compel governments to take drastic and costly action to reduce emissions, remains real. The recovery from COVID-19 must spur greater resilience and set a clear path to a low-carbon future,” said Scott McDonald, President & CEO, Oliver Wyman Group, Vice Chair, Marsh & McLennan.

Peter Giger, Group Chief Risk Officer, Zurich Insurance Group said, “huge investments are being made to support COVID-hit economies. Meanwhile, repositioning the global economy for a greener future also requires tremendous resources. We should not miss a unique opportunity to tackle these two crises together, turning the COVID-19 support measures green, and building back better.”

‘Environmental risks topped the Global Risks Report in January, however the global pandemic has since then unleashed untold damage to our economies and societies. As new partners to the initiative we are working to better understand the interconnection between climate and the pandemic. What we already know is that tackling climate change will be a cornerstone of the desired new normal,’ said Lee Hyung Hee President, Social Value Committee, SK Group.

The Forum’s Global Risks Team will release new country and regional data Thursday 8 October on

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