The Global Risks Report 2023: Cost-of-living crisis and climate concerns raise tensions

Conflict and geo-economic tensions have triggered a series of deeply interconnected global risks, as highlighted in the World Economic Forum’s Global Risks Report 2023. These include energy and food supply crunches, which are likely to persist for the next two years, and strong increases in the cost of living and debt servicing. At the same time, these crises risk undermining efforts to tackle longer-term risks, notably those related to climate change, biodiversity and investment in human capital.

The Global Risks Report 2023 argues that the window for action on the most serious long-term threats is closing rapidly and concerted, collective action is needed before risks reach a tipping point.

The report, produced in partnership with Zurich Insurance Group and Marsh McLennan, draws on the views of more than 1,200 global risk experts, policymakers and industry leaders. Across three timeframes, it paints a picture of the global risks landscape that is both new and familiar, as the world faces many pre-existing risks that previously appeared to be receding.

At present, the global pandemic and war in Europe have brought energy, inflation, food and security crises back to the fore. These create cumulative risks that will dominate the next two years: the risk of recession; growing debt distress; a continued cost-of-living crisis; polarized societies enabled by disinformation and misinformation; a hiatus on rapid climate action; and zero-sum geo-economic warfare.

Unless the world starts to cooperate more effectively on climate mitigation and climate adaptation, over the next 10 years this will lead to continued global warming and ecological breakdown. Failure to mitigate and adapt to climate change, natural disasters, biodiversity loss and environmental degradation represent five of the top 10 risks – with biodiversity loss seen as one of the most rapidly deteriorating global risks over the next decade.

“The interplay between climate change impacts, biodiversity loss, food security and natural resource consumption is a dangerous cocktail,” said John Scott, Head of Sustainability Risk, Zurich Insurance Group. “Without significant policy change or investments, this mix will accelerate ecosystem collapse, threaten food supplies, amplify the impacts of natural disasters and limit further climate mitigation progress. If we speed up action, there is still an opportunity by the end of the decade to achieve a 1.5?C degree trajectory and address the nature emergency. Recent progress in the deployment of renewable energy technologies and electric vehicles gives us good reasons to be optimistic.”