Is it possible to prepare for all risks?
The Global Risk Report for 2013 published very recently by the World Economic Forum presents us with a spectrum of risks which all have the ability to disrupt our lives severely.
While I have to admit that I battled to understand fully the WEF methodology in the limited time I spent perusing the report, I have to state that I accept their credentials as an organisation, so fundamentally, the report should both be a representative risk overview, and a risk probability assessment.
Going into a year where the only certainty is uncertainty, the Global Risk Report also refers to underlying uncertainty, not only in the financial arena, but in many other spheres of ordinary life.
The WEF annually polls around one thousand risk experts world wide before the statisticians and analysts get a go on compiling this extensive analysis of risks, mitigation and resilience. This leads to several risk categories which, I assume, reflect consensus assessment, at least in the defined areas.
But looking at their results across regions and across categories I want to discuss five major risks as pointed out by the report, although I do not necessarily follow the same order.
Under the designation Digital Wildfires, it considers the potential for disruption induced by failures in our hyper-connected digital world. To me this is one of my pet risks which I have previously discussed at some length. All the fantastic advances we have made on the digital super highway are at risk, in my view, not so much from system failures, but from crime. Now whether that crime is a petty 419 scam or a serious terrorist attack on the systems that drive the civilised world, the threat is real and immediate. Criminals, to a large degree, spoil the benefits of the internet and the commensurate connectivity. They add an additional cost component and they put ordinary individuals and companies at risk of being swindled, either knowingly or unknowingly. Cyber terrorists, on the other hand, attack system vulnerabilities with the intention of destroying the system in the vague hope of destroying whoever they regard to be their enemy. To the ordinary user, this is not a direct threat but we can be seriously affected by the fall-out.
Interestingly, the report ranks the disruptive potential of disease much higher than I would. Perhaps this is because I operate in an environment where pandemic disease is regarded as commonplace. So, in a sense, our resilience to this threat is better, or we simply do not care that much. Yet, one has to take note of the concern that some very common diseases all have the potential to mutate to virulent strains immune to our existing medicine, and the practical reality that we simply may not be able to keep up the pace at which researchers need to develop new anti-biotics.
Income disparity is another key risk. This also rings an only too familiar bell for Africans as the concept has been on our radar for at least the past 30 years. The report obviously considers this risk in a much wider context, and on a more pronounced scale, but I think what motivates a desperate crowd in Athens, is exactly the same that forces a compatriot to steal, or a whole nation to split and start a civil war. Income disparity is a growing risk and the way the world goes now, mitigating factors are inconsequential. This may be the single reason why it is more realistic to expect the end of the world when the hungry masses set it alight, rather than some fanciful end-date on a calendar that is many thousands of years old.
Fiscal excesses, or as they put it, fiscal imbalances, also rank very high for most of their respondents. Personally, I do not view this such a serious threat, again as it is somewhat of a non-issue in Africa. Not that we do not have enough of our own fiscal imbalances across the continent, but rather that what we regard as unsustainable has been exceeded exponentially by all the big economies except China. There is still much room before we hit any significant debt ceiling, if we ever do.
And then finally, I can only agree with their assessment that water, or the lack of it, poses one of the more serious long-term risks to all societies. Whether a person is a resident of the third world or the developed world, water is a key factor not only to improve life, but to sustain a way of life. I still believe one day we shall go to war over water, but it may just be possible that technological advances enables us to turn the earth’s most abundant resource into one that we can actually use to improve quality of life.
Briefly, I consider X factors thrown at us by nature as something one has to keep an eye on. There is only one problem, they are not called X factors without reason, they are at this stage either unknown or obscure. Yet the report contains a number of thought-provoking “What If” scenarios that certainly caught my attention.