For the second year running, business and political leaders think the world’s biggest threat is natural disasters brought on by extreme weather, according to the latest Global Risks Report by the World Economic Forum (WEF).
In recent years, economic risks such as market collapses, fiscal crises, and systemic financial failures, have dropped down the list of concerns, replaced with fears about the environment.
“We have been pushing our planet to the brink and the damage is becoming increasingly clear,” the WEF says in the report. “A trend towards nation-state unilateralism may make it more difficult to sustain the long-term, multilateral responses that are required to counter global warming and the degradation of the global environment.”
The world was struck—seemingly relentlessly—by hurricanes, floods, bushfires, and earthquakes in 2017 and economic losses from natural and man-made disasters reached $306 billion, almost double the previous year’s cost, according to Swiss Re.
Aside from the environment, there are many other risks that business bosses and political leaders are worried about. More than 90 per cent of survey respondents said they expect an increase in frictions between major global powers, while 80 per cent said they also expect an increase in risks stemming from state-on-state military conflict and large-scale cyber attacks.
Cyber threats are deemed to be growing in prominence in the report, with large-scale cyberattacks now ranked third in terms of likelihood, while rising cyber dependency ranked second among significant drivers shaping the landscape of global risks for the next decade.
NIBA CEO, Dallas Booth says, “For example, with greater reliance on cloud computing across business, accessing the cloud is now a much greater risk than in previous years. This really raises the need for all businesses to be well informed about the strength of the protection mechanisms for their data and business systems. From an insurance perspective, business interruption cover becomes paramount.”
The report found that some of the biggest risks facing Australia are actually uninsurable, such as energy price shock and the asset bubble. It is important that brokers focus on the content of this report as it offers them a chance to gain a better understanding of their clients and the wider risks they face doing business.