Pandemic risks creating economic winners and losers

The pandemic risks creating economic winners and losers and will stunt progress on climate action over the next five years, the World Economic Forum (WEF) said.

In particular, vaccine inequality will make economic recover uneven globally, which threatens to deepen geopolitical tensions and social differences. The WEF The global risks report 2022 is in its seventeenth year.

Longer-term, climate risk moves centre stage. “Environmental risks are perceived to be the five most critical long-term threats to the world as well as the most potentially damaging to people and planet,” it said. For example, climate action failure, extreme weather and biodiversity loss rank as its top three risks by severity.

Short-comings

Respondents to the survey said that risks mitigations fall short in key areas. For instance, risk mitigation efforts in artificial intelligence, space exploration, cyber attacks and migration often did not exist or had only just started.

On a wider level, vaccine inequality risks slowing international collaboration on key issues. “Short-term domestic pressures will make it harder for governments to focus on long-term priorities and will limit the political capital allocated to global concerns,” the report said.

In addition, countries that continue to rely on carbon-intensive technologies risk losing competitive advantage. That could lead to a spiral of decline for poorer nations, it said.

Digital dependency

While digital innovation made working during the pandemic a reality, it also increased the risk of cyberattacks. WEF warned that such attacks on strategic infrastructure can have real-world consequences.

But while the stakes have increased, barriers to becoming a hacker have decreased. ” Lower barriers to entry for cyberthreat actors, more aggressive attack methods, a dearth of cybersecurity professionals and patchwork governance mechanisms are all aggravating the risk,” it said.

Resilience

The pandemic taught the world what resilience meant. WEF said this highlighted two interlinked factors that are crucial to effective risk management. “First, the readiness of governments to adjust and modify response strategies according to changing circumstances,” it wrote. “And second, their ability to maintain societal trust through principled decisions and effective communication.”

It said governments must balance costs, regulation and data sharing arrangements to ensure sharper crisis management. Businesses could also benefit. Setting national resilience strategies could help improve supply chain and workforce management.

But survey respondents were pessimistic about the coming three years. They expected it to be “…characterised by either consistent volatility and multiple surprises or fractured trajectories that will separate relative winners and losers,” it said.

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