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The Global Risk Landscape For 2013

Tyler Durden's picture





 

The World Economic Forum (WEF), during its Davos jaunt, created an intriguing set of 50 'global risks'. Of course these are from the perspective of the elitest of the elite but with more than 1000 respondents, the results seem all-encompassing. The global risk that respondents rated most likely to manifest over the next 10 years is severe income disparity, while the risk rated as having the highest impact if it were to manifest is major systemic financial failure. There are also two risks appearing in the top five of both impact and likelihood – chronic fiscal imbalances and water supply crisis. The report covers five key categories of 'risk' - which we will be posting on in the next few days - Economic, Environmental, Societal, Geopolitical, and Technological. In this first post we expose the 50 risks by magnitude and probability, how they have evolved over the past few years, and the importance of their inter-connectivity.

Click image for very large chart. The most 'worrying' risks are up and to the right (higher probability and high impact)... Chronic Fiscal Imbalances tops the chart along with Sever Income Disparity.

 

The Top 5 Global Risks by Impact have evolved notably over the past few years - but it appears 'economic' remains high, though 'societal' is catching up...

 

The Top 5 Global 'Most Likely' Risks have also evolved but Economic remains the most dominant...

 

and as every good central banker (and physicist) knows, every action has consequences and so here is the WEF's view on the interconnectedness of global risks...

 

Three Risk Cases

The report introduces three risk cases, based on an analysis of survey results, consultation with experts and further research. Each case represents an interesting constellation of global risks and explores their impact at the global and national levels. The three risk cases are:

Testing Economic and Environmental Resilience

Continued stress on the global economic system is positioned to absorb the attention of leaders for the foreseeable future. Meanwhile, the Earth’s environmental system is simultaneously coming under increasing stress. Future simultaneous shocks to both systems could trigger the “perfect global storm”, with potentially insurmountable consequences. On the economic front, global resilience is being tested by bold monetary and austere fiscal policies. On the environmental front, the Earth’s resilience is being tested by rising global temperatures and extreme weather events that are likely to become more frequent and severe. A sudden and massive collapse on one front is certain to doom the other’s chance of developing an effective, long-term solution. Given the likelihood of future financial crises and natural catastrophes, are there ways to build resilience in our economic and environmental systems at the same time?

Digital Wildfires in a Hyperconnected World

In 1938, thousands of Americans confused a radio adaptation of the H.G. Wells novel The War of the Worlds with an official news broadcast and panicked, in the belief that the United States had been invaded by Martians. Is it possible that the Internet could be the source of a comparable wave of panic, but with severe geopolitical consequences? Social media allows information to spread around the world at breakneck speed in an open system where norms and rules are starting to emerge but have not yet been defined. While the benefits of our hyperconnected communication systems are undisputed, they could potentially enable the viral spread of information that is either intentionally or unintentionally misleading or provocative. Imagine a real-world example of shouting “fire!” in a crowded theatre. In a virtual equivalent, damage can be done by rapid spread of misinformation even when correct information follows quickly. Are there ways for generators and consumers of social media to develop an ethos of responsibility and healthy scepticism to mitigate the risk of digital wildfires?

The Dangers of Hubris on Human Health

Health is a critical system that is constantly being challenged, be it by emerging pandemics or chronic illnesses. Scientific discoveries and emerging technologies allow us to face such challenges, but the medical successes of the past century may also be creating a false sense of security. Arguably, one of the most effective and common means to protect human life – the use of antibacterial and antimicrobial compounds (antibiotics) – may no longer be readily available in the near future. Every dose of antibiotics creates selective evolutionary pressures, as some bacteria survive to pass on the genetic mutations that enabled them to do so. Until now, new antibiotics have been developed to replace older, increasingly ineffective ones. However, human innovation may no longer be outpacing bacterial mutation. None of the new drugs currently in the development pipeline may be effective against certain new mutations of killer bacteria that could turn into a pandemic. Are there ways to stimulate the development of new antibiotics as well as align incentives to prevent their overuse, or are we in danger of returning to a pre-antibiotic era in which a scratch could be potentially fatal?

 

Source: WEF

 


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Thu, 02/21/2013 - 22:54 | Link to Comment MrX
MrX's picture

here is some risk: http://vimeo.com/31304149

Thu, 02/21/2013 - 23:15 | Link to Comment DJ Happy Ending
DJ Happy Ending's picture

Risk? I thought Krugman said the Fed will print the risk away.

Thu, 02/21/2013 - 23:43 | Link to Comment ACP
ACP's picture

True. After all, it is the year of the Bernanke...er, Snake.

Thu, 02/21/2013 - 23:56 | Link to Comment Half_A_Billion_...
Fri, 02/22/2013 - 02:50 | Link to Comment fourchan
fourchan's picture

just wait until this summer when unprecedented heat and drought really set in for the long haul.

Fri, 02/22/2013 - 11:14 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Missing from the list, as far as I could tell, is a major volcanic event in the South Western Pacific.  Every few hundred years a giant volcano explodes in Indonesia that cools the globe causing catastrophic crop failures and mass starvation.  Krakatoa, Tambora, created years without Summers.  We are long overdue for another such event and we're more vulnerable than ever.

 

Thu, 02/21/2013 - 23:12 | Link to Comment disabledvet
disabledvet's picture

that vimeo thing is REAL cool. I'm a Beck guy myself "cuz if you can't solve the world's problems without dancing you're never going to get there." http://vimeo.com/7457818 i'll remember that site from now on.

Fri, 02/22/2013 - 00:48 | Link to Comment Mike in GA
Mike in GA's picture

Sorry for the threadjack but anyone know what's going on with Ann Barnhardt?  Looks like she was in the midst of putting up a new post then nothing...Thanks for any info.

Thu, 02/21/2013 - 22:57 | Link to Comment disabledvet
disabledvet's picture

i think this site is spot on when it talks about "the collapse of the dollar." (didn't see that one on the list for some reason.) the other is "Syria having mixed the chemical agents" (a fact) "then launches an armed chemical munition." space debris? really? "causing a world wide cataclysm"? ("My God Google earth is down! CALL THE PRESIDENT!") i'll get my best men on it (yawwwwwn.)

Thu, 02/21/2013 - 22:58 | Link to Comment Cardinal Fang
Cardinal Fang's picture

I'm thinking an "Unprecedented Geophysical Destruction" event should be a little higher on the 'Impact' scale, but who am I to say that random cosmic bombardment would be a bad thing?

Thu, 02/21/2013 - 23:16 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Does the list include the risk that criminal too-big-to-fail bankers may be prosecuted and serve hard time for 10 years to life?  Probably not, since there is zero risk.

Does the list include the risk that a prosecutor will find the testicular fortitude or vaginal vigor to bring to trial the rampant Wall Street criminal activity and the criminal aiders and abettors in federal regulatory agencies and Congress?

Does the list include the risk of mass trials in style of the Maxiprocesso (Maxi Trials) of the Mafia in Sicily during the 1980s that resulted in hundreds of defendants convicted? 

 http://www.youtube.com/watch?v=_nPEgV1oqX0&feature=related

Thu, 02/21/2013 - 23:00 | Link to Comment Dead Canary
Dead Canary's picture

Dude, I'm gonna hurl chunks!

Thu, 02/21/2013 - 23:13 | Link to Comment newengland
newengland's picture

What do all these risks have in common? Exhaustion.

Ageing people in complacent lands have failed to equip the young with enough character and money to thrive, and manage finite world resources.

And so the world turns...from dust to dust...and rises again from the ashes. Twas ever thus.

Only this time it really is different. This is a global depression in the making at a time when the younger generation have been molly coddled, and think hardship is someone else's problem or fault. In that, they mirror the entitlement mentality of their elders: the baby boomers who are the first generation to leave their young worse off than they were.

End the Fed...in every sense of the phrase.

 

Thu, 02/21/2013 - 23:09 | Link to Comment gaoptimize
gaoptimize's picture

Man made global warming.  Really?  I guess they were going for a large audience of people with "policy" money to spend on subscriptions.

Thu, 02/21/2013 - 23:19 | Link to Comment newengland
newengland's picture

Amusing, isn't it? The lies told by those who profit.

For example, the pandemic of the 'Spanish Flu' still scares health policy makers, yet they are ignorant of latest research which shows that the use of a new medicine at that time - aspirin marketed by Bayer (Nazis with Jewish links) was responsible for most deaths as it depressed the respiratory system.

The global warming scam will also profit those who declare a cure for it.

Thu, 02/21/2013 - 23:18 | Link to Comment Michelle
Michelle's picture

Those elitists don't care about the ills of society and our planet, all they care about is how they can profit from it.

Who the hell cares, I'm going to bed now...

Thu, 02/21/2013 - 23:22 | Link to Comment newengland
newengland's picture

Those elitists are given a clear path to their plans because everyone else is watching TV, movies, main scream media...prefer entertainment to the serious matter of good governance and social responsibility. Just my opinion. Good night, Michelle. Tomorrow is another day.

Thu, 02/21/2013 - 23:26 | Link to Comment PUD
PUD's picture

While all these are real risks to be sure, the biggest risk of them all is not even on the list....the rise in radical religious fundamentalism specifically Islam but also including the rise in all faith based delusions. This is the seed from which many of these other risks arise.

Thu, 02/21/2013 - 23:27 | Link to Comment laosuwan
laosuwan's picture

islam is a 1400 year old global risk factor. the fact that leaders are still in denial about it is an even bigger risk factor

Thu, 02/21/2013 - 23:33 | Link to Comment PUD
PUD's picture

All religious fundamentalism. Islam just happens to be the most current risk but even they don't exist in a vacuum. Fundamentalism turned political is toxic everywhere. Sarah Palin almost became president as did Santorum, perry, Bachman and a whole gaggle of delusional religious led wanna be jihadists

Fri, 02/22/2013 - 02:55 | Link to Comment fourchan
fourchan's picture

did our alien creators program us to be slaves to mysticism?

why are there so many with their minds slammed shut to thought?

Thu, 02/21/2013 - 23:26 | Link to Comment laosuwan
laosuwan's picture

unforseen consequences of nano technology.

 

this is a screaming red warning signal if coming from WEF

 

nobody is paying any attention to this and these particles are already everywhere in the water and air.

Fri, 02/22/2013 - 00:53 | Link to Comment chump666
chump666's picture

Risk? China via Pakistan via India (recent bomb attacks) just reminded the West that encircling China and pressuring their energy needs is probably not going to end well.  The denial over the South China Sea tensions is astounding, apart from ZH reporting and commentating, very little is given to the next major flash-point.  A Japan/China war.  Also, keep in mind that India and Vietnam have allied themselves over nat gas offshore Vietnam, Philippines is in there too.  So overall, a cold war between emerging superpowers has already started.  But if course the post empires of Europe and America are living in la la land of arrogant academic stupor

 

Fri, 02/22/2013 - 09:37 | Link to Comment DanDaley
DanDaley's picture

It really is all about the normalcy bias. So many of the otherwise intelligent people that I talk to about about the dollar implosion, etc., just don't want to hear about it.  The end really is near-ish.

Fri, 02/22/2013 - 00:56 | Link to Comment q99x2
q99x2's picture

Elitist Concerns and Solutions

Severe Income desparity: Imagine that. Fuck em.

Chronic fiscal imbalances: Scapegoat the politicians (we pay them too much as it is)

Rising greenhouse gas emissions: Implement Agenda 21 Tax them without representation through Global Carbon Taxes

Water supply crises: Make them pay when they get thirsty

Mismanagement of population aging: Give them planned obselance vaccines included with their flu shots. No extra charge. Have ObamaCare cover the costs.

Fri, 02/22/2013 - 03:48 | Link to Comment yt75
yt75's picture

Interesting that peak oil doesn't appear as such, only through euphemisms of the kind "mineral ressource supply vulnerability", "unilateral ressource nationalization", when it is one if not the prime reason of current crisis (and has been for a long time, the first oil shock was the direct consequence of US production peak).

 

Global peak is now, did you know for instance that the cumulated "production" of western majors has been decreasing since 2004 ?

http://petrole.blog.lemonde.fr/files/2013/02/5-Majors-Total-Oil-Producti...

from :

http://petrole.blog.lemonde.fr/2013/02/21/la-production-totale-des-5-maj...

Fri, 02/22/2013 - 04:39 | Link to Comment smacker
smacker's picture

 

 

Interesting. I've been on board about Peak Oil for quite a few years after doing a lot of reading and research. When the 2007-8 financial crash emerged, I know it was supposedly triggered by sub-prime debt (at least that's what we are told) and perpetuated by bank criminality.

But I have often wondered whether lurking in the background to sub-prime was the relentless, rising cost of energy, especially gasoline, which forced people to borrow more and more to keep their heads above water until they were drowning in debt and it all went tits up.

In the end people defaulted and the rest is history.

Of course, there's no material evidence available to prove this. It remains a theory.

Fri, 02/22/2013 - 08:02 | Link to Comment yt75
yt75's picture

Yes, one tend to forget that the barrel price was rising much before the July 2008 spike.

And energy price put "pressure" on the whole economy, not just a gallon price aspect.

Somehow something had to break and it did.

What is amazing is that in the seventies we were still able to spell "oil shock" as the prime reason of the crisis of the time, today we are in something like the "mother of all oil schocks" (and the barrel in constant $ is  higher than 79 highest point), but we aren't even able to consider it (I mean the labels used remain "subprime crisis" "financial crisis", "debt crisis", "euro crisis", etc ...)

But true that there are also the mountains of debt, mountains which basically have been started after the first oil shocks and dropping of Bretton Woods ...

Fri, 02/22/2013 - 09:01 | Link to Comment smacker
smacker's picture

 

 

Exactly so. I predicted back in 2008 that if/when the global economy began to recover, we would once again see the price of oil/other energy rise inexorably to the point where a recovery is killed off or at least held back. I still see that happening despite all the talk about fracking et al.

Unless and until the world gets itself off oil and replaces it with something new and equally cheap (and also green for the environmentalists!), we will not see the sort of economic activity that the political elites keep telling us will happen with their current policies. ho-ho. They remain in flat denial or are lying to us because they don't have a solution.

I also proposed a crash program in 2008 to get America and the developed world off oil. I had in mind something akin to the get a man on the moon in 10 years but I see little govt pressure for this. QEternity is not an alternative to finding new energies.

Fri, 02/22/2013 - 05:51 | Link to Comment dog breath
dog breath's picture

How can rising greenhouse gas emmisions be higher risk and likeyhood than unmanageable inflation?

Fri, 02/22/2013 - 07:07 | Link to Comment negative rates
negative rates's picture

They can be one in the same. The water issue, or lack of it, causes prices to rise from no crops. it was caused by the growing of the atmosphere, if managed properly it is no problem, if not, it becomes a crisis. Our leaders are not competent enough to make the correct decisions, they always get conned, or vote purposefully for greed in the name of jobs.

Fri, 02/22/2013 - 09:31 | Link to Comment CJHames
CJHames's picture

"Global Warming" and "Climate Change" are fabricated lies designed by politicians and other elite people to control every aspect of our lives, and make a whole helluva lot of money off of it in the process.

Complete bullshit. Anyone who believes it is a moron.

Fri, 02/22/2013 - 07:35 | Link to Comment falak pema
falak pema's picture

1° deconsumerism...

2° Local networking....

3° Alternative energy planning coupled with fossil fuel conservation...to maintain postive economic head for alt energy...

4° Dismantling of networked financial networks, curtailing of financialisation, deleveraging/nationalisation of failed banks, separation of deposit/investment banks, overhaul of Fracntl  res. banking/and fiat non PM linked propagation. No naked hedging and primacy of real economic transactions... 

5° Deleveraging of nuclear arsenals and of the MIC small arms trade to third world...

6° Make Balanced budgets golden rule and decentralise regional political structures compatible with overall peacekeeping objectives; aka no multiplication of armed forces on decentralised basis. 

7° Find a harmonious balance between social/private sector entrepreneurship and statist centralised socio-admin-legal functions requiring distributive taxation mechanism and entitlements. At all levels, global, nation state and regional. Ensure local cohesion as a prime social target; aka give with reason local preference, except where innovation or strategic survival requires exogenous inputs; aka skills and RM imports... 

8° Don't fukk up the environment any more... 

9° Ensure unpoisoned food, water, minimal clothing and shelter for all, in each state via safety nets. Ensure minimal education and freedom of access to Internet. That is minimal. It can be done by public or private sector funding under public surveillance. Encourage individual mobility that is assumed economically, not subsidised; aka free circulation laws for self supporting.

I don't know how to count upto ten! 

 

Fri, 02/22/2013 - 09:56 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

The World Economic Forum is nothing more than social engineers and think tanks trying to sell their "wares" to the elite.  Just think, maybe new life will be breathed into "climate change".  Maybe Bill Gates will find a new crusade to improve life in Africa.  Maybe the "world" will finally get serious about reducing the population.

I'm tingling with anticipation.

It's a committee to save the world.

Tue, 02/26/2013 - 14:07 | Link to Comment Global Hunter
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.

Do NOT follow this link or you will be banned from the site!