Expert opinion suggests that levels of risk are rising in almost all of the 23 risks on which the Global Risk Network has been focussed over the last year – but mechanisms in place to manage and mitigate risk at the level of businesses, governments, and global governance are inadequate.
Global Risks 2007, World Economic Forum
In addition to identifying 23 core global risks of an economic, environmental, geopolitical, societal, and technological nature that no global organization can afford to ignore in its risk planning and risk mitigation efforts, this report also offered the “5 Pathways” to mitigation.
- Improving Insight
Move risks from the unknown to known through research.
- Enhancing Information Flow
Allow information to flow effectively between decision-makers and those experiencing the risk first hand to provide early warning, inform the public, and exchange best practice.
- Refocus Incentives
Create incentive frameworks that allow decisions to be made to reduce risks.
- Improve Investment
Provide the investments necessary to mitigate risks.
- Implement Through Institutions
Improve the framework needed to mitigate risks for which an institutional response is required.
The report also pointed out which risks are reduced by each of these mitigations.
|Oil Price Shock / Energy Supply Interruption||X||X||X|
|US Account Deficit||X||X|
|Chinese Economic Hard Landing||X||X|
|Fiscal Crisis Due To Demographic Shift||X||X|
|Loss of Freshwater Services||X||X||X|
|Proliferation of WMD||X||X|
|Interstate and Civil Wars||X||X|
|Retrenchment from Globalization||X||X||X|
|Middle East Instability||X||X||X|
|Infectious Diseases (Developing World)||X||X||X|
|Chronic Diseases (Developed World)||X||X|
|Critical Information Infrastructure (CI) Breakdown||X||X|
They also provide two possible institutional innovations for managing global risks.
- Country/Chief Risk Officer
In the public sector, governments would appoint a single Country Risk Officer, prioritize risks on a cross-sectional basis, and explore private sector techniques of risk assessment, management, and transference. In the corporate sector, the Chief Risk Officer would be responsible for all categories of risk, risk reporting, consolidation, and aggregation.
- “Coalition of the Willing”
Different groups of countries / corporations would come together in a non-exclusive fashion to create a system of flexible geometry to mutually mitigate risks.
Lastly, although not specifically mentioned in the report, you can address each risk on an individual basis using reason, logic, and common sense to develop appropriate mitigations, which will be the subject of Part III.