This article was first published on May 19, 2020.
COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications, published by the World Economic Forum with support from Marsh & McLennan, examines familiar risks that may be amplified by the pandemic and new ones that may emerge.
The report draws on survey results of nearly 350 senior risk professionals who were asked to identify their biggest concerns over the next 18 months for both the world and their business.
Economic distress, another pandemic, and protectionism are among top concerns
The likely depth and longevity of the economic fallout unsurprisingly dominates companies’ risks perceptions. These include a prolonged recession, the weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, the protracted disruption of global supply chains, and an increase in cyber-attacks and data fraud.
Source: MMC Report
Four areas of global concern in the new emerging risks landscape
COVID-19 has diminished economic activity, required trillions of dollars in response packages, and is likely to cause structural shifts in the global economy going forward, as countries plan for recovery and revival.
A build-up of debt is likely to burden government budgets and corporate balances for many years; global economic relations could be reshaped; and emerging economies are at risk of submerging into a deeper crisis while businesses could face increasingly challenging consumption, production, and competition patterns.
As countries start to reboot their economies, new working practices and attitudes towards traveling, commuting, and consumption may make it easier to achieve a lower carbon and more sustainable recovery. But omitting sustainability criteria in recovery efforts or returning to an emissions-intensive global economy risks hampering the climate resilient low-carbon transition.
Years of progress could be lost through underinvestment in industry decarbonization initiatives, infrastructure renewal, and institutional adaptation. This would give way to a vicious cycle of continued environmental degradation, biodiversity loss, and further zoonotic infectious disease outbreaks, as well as more damaging disasters.
High levels of concern about another infectious disease outbreak indicates the persistent fragility of public health systems and the vulnerability of societies to repeated shutdowns. High structural unemployment is likely to exacerbate inequality and affect mental health and societal cohesion.
An accelerated automation of the workforce is also likely to affect individual and societal well-being. One third of respondents also expect a developing economy to collapse in the medium term, which would have dire humanitarian consequences. In some countries, the educational and wealth prospects of the younger generation may also be under threat.
Technology has been central to the way people, companies, and governments have managed the COVID-19 crisis, and the contact-free economy may create new employment opportunities in a post-pandemic world.
However, a greater dependence on technology has increased cybersecurity risks. Nearly two fifths of the risk experts surveyed reckoned that new working patterns leading to cyberattacks and data fraud was highly likely. A rapid roll-out of new technology solutions has exacerbated other risks, such as digital fragmentation, privacy violations, and inequality.
COVID-19 is likely to challenge technology governance expectations, and mistrust in, or the misuse of, technology could have lasting societal effects.