Climate change poses the greatest risk to the economy both in the short and long term, and nations need to act together to avert disaster.
That was the stark message to come out of the World Economic Forum’s 2016 Global Risk Report, released in London on Thursday.
“Failure of climate change mitigation and adaptation” became the top risk for the first time in the report’s 11-year history, ahead of second-place weapons of mass destruction, and water crises, the Risk Report showed.
Large-scale involuntary migration was the fourth greatest risk, followed by energy price shocks.
The prominent place of climate risk in this year’s report suggested growing mainstream concern about the issue, with economists and businesses joining most governments around the world in recognising the dangers posed by climate change.
Climate change dangers
Speaking at the launch of the report, Zurich Insurance Group chief risk officer Cecilia Reyes made no attempt to downplay the dangers.
“Climate change is unequivocal,” she said. “There is no debate whether there is in fact climate change or not. It’s unequivocal. And human activity is one of the biggest drivers for the global warming that we’re experiencing today.”
Reyes said that, while the United Nations Paris conference last month resulted in an international agreement over climate change mitigation, not enough attention is yet being paid to adaptation.
“So far mitigation efforts for climate change are not having any kind of discernible impact,” she said.
While the Paris agreement was a good start, she said there is a good chance targets will not be fully met.
“And therefore, we have to adapt. We already have to take actions today to adapt to the impact of climate change.”
She urged companies to take this risk seriously, and prepare to adapt to the likely effects of a changing climate.
All in all, the mood on a panel of experts who were on hand for the release of the World Economic Forum’s latest risk report was sober. John Drzit, chief risk officer at Marsh, said: “You look at the broader risk landscape, most risks are rising. You look at social, political, cyber, economic risk are up from last year.
“I do think it’s a riskier world right now.”