The World Economic Forum (WEF) has called on world leaders for urgent global collaboration to tackle an “under-employed, under-inclusive and under threat” world in 2017. The call for unity comes after a year which saw a rise in anti-global sentiment and more inwards-looking national policies touted.
Ahead of its annual Davos meeting this week, in its annual Global Risk Report 2017, the organisation highlights three key findings – inequality, societal polarisation and intensifying environmental dangers – as the top three trends that will shape global developments over the next decade.
“Today’s world is a world were change is happening at unprecedented speed and scope. From production to mobility to communication to energy – this change is disrupting almost everything,” said Cecilia Reyes, chief risk officer at Zurich Insurance Group, at the launch of the report.
“From employment patterns to geographic mobility, [this change is] creating increasing polarisation in society and geopolitical instability. [And now] much of the populous anti-establishment sentiments are looking towards globalisation as the source of the problem.”
The report highlights that the complex transitions that the world is currently going through, from preparing for a low-carbon future and the fourth industrial revolution bringing unprecedented technological change, to adjusting to new global economic and geopolitical realities – all place greater emphasis on leaders to practice long-term thinking, investment and international co-operation.
“We live in disruptive times where technological progress also creates challenges. Without proper governance and re-skilling of workers, technology will eliminate jobs faster than it creates them,” said Reyes.
“An anti-establishment narrative has gained traction, with new political leaders blaming globalisation for society’s challenges, creating a vicious cycle in which lower economic growth will only amplify inequality. Co-operation is essential to avoid the further deterioration of government finances and the exacerbation of social unrest.”
The anti-trade and globalisation rhetoric that won Donald Trump the US presidential election and fuelled the UK’s decision to leave the EU has created shock waves globally and among the global elite who are gathered for the Davos meeting in the Swiss mountain resort.
Trump, who will assume office on Friday, has threatened trade wars with Mexico and China and recently described the European Union as a “vehicle for Germany” that is on the brink of collapse.
In its research, the WEF also finds that within technology developments, artificial intelligence (AI) and robotics both had the highest potential for negative consequences and the greatest need for better governance. While experts surveyed saw the potential to drive economic growth and solve complex challenges, they also named it as the top driver of economic, geopolitical and technological risks.
President of global risk and specialties at Marsh, John Drzik, who also worked on the report, pointed at three key risks associated with AI: cyber-attacks, legal liabilities and the impact on unemployment.
On cyber-attacks Drzik stated that the new technology is creating new avenues for potential attacks; whether through stealing data or disrupting industrial controls that are increasingly digitally controlled. On legal liabilities, he said black box decision making such as in self driving vehicles, would create a challenging legal environment in determining who owns the liability of when things go wrong.
Meanwhile, the new technology is already having a dramatic impact on employment. According to Drzik, 86% of manufacturing jobs in the US have been lost to tech and automation, and not to trade as is commonly cited.
“Artificial intelligence will enable us to address some of the great issues of our age, such as climate change and population growth, much more effectively. With investment into AI now 10 times higher than it was five years ago, rapid advances are already being made,” said Drzik.
“However, increased reliance on AI will dramatically exacerbate existing risks. In order to develop mitigation measures, there will be trade-offs in innovation versus regulation at the policy level, innovation versus security at the company level and a general risk reward trade off as we move forward.”
The WEF annual report surveyed 750 experts, assessed 30 global risks, as well as 13 underlying trends, and was developed together with Marsh & McLennan Companies and Zurich Insurance Group.