Sally, thank you so much for joining us, talk about the global risk report that
we're in 2023 and the crises have changed, sirs, I guess old school crises
coupled with the new ones that are coming as this crunch year, I think it
is playing out to be one. We have this risk of public crises
emerging because so many things are happening at once.
There's the currently unfolding risks. And that's where we look to sort of your
zero. Where are things today?
And it's very clear. Energy crises, food crisis.
Top of the list. Then we look two years out and the cost
of living crises is still expected to be the number one risk at that time.
And I think it's because people are not really expecting to come out of this
current situation very quickly. And then there's the tenure risks and
six out of the top 10, all about climate and the environment.
Is there a danger that we don't fix the climate of the environment because it's
so going to be so ugly in the next two years?
So this is exactly what we're pointing out, that leaders can no longer sort of
say, let's address the short term first and then we'll look at the long term,
because this is at the time the entire time horizon has to shift.
And if we're going to look for solutions, there have to be some
synergistic solutions that, for example, look at climate and food at the same
time that look at agriculture and energy at the same time.
If we don't do that, we don't quite come out of either the societal crises or the
environmental ones. So how much have these top 10 risks
actually changed in the last three to four years?
So it's very clear that climate is actually just continuing to grow in
severity, and that's really not changing in the 10 year time frame.
But in the shorter term, economic risks, the tides, societal risks are at the
very top. The last time inflation was at the top
or last time inequality was at the top was more than 10 years ago.
We're talking about at the time of the global financial crisis.
That's when these concerns were last there.
So this is all fully back at the moment. And I think this sort of crunch time
that leaders are facing, they're potentially unprepared for very few
leaders in today's generation have been through these kind of more traditional
risks around food and energy, while at the same time battling what's coming up
in terms of debt, what's coming up in terms of climate.
So we're going to need a sort of new type of leadership that is much more
agile and that can have the short and the long term timeframe.
Are chief executives and leaders actually underestimating the new
economic era that we'll see in the next couple of decades?
You know, every day there's sort of a new prediction around are we heading
into a recession or are we not heading into a recession?
I think the main point here is we have a few tools that leaders are continuing to
use, but those tools then have repercussions as interest rates get
higher. There is also a lot of concern around
what's happening in emerging markets. We could be entering a vicious cycle.
And so there has to be some medium term thinking, some thinking about the kinds
of investments that are non-inflationary, but will put in place
the basic resilience and the shift in our sort of economies and economic
structures, especially towards a more green area.
I know in the past we talked about how, you know, the private sector labs chief
executives had to do more to almost make out the liking governments because we're
talking about the cost of living crisis, inequality, geopolitics.
Do now governments need to step up. I think it's very clear that we are in
an era of a a need for bolder vision from governments,
but at the same time, there is a role for the private sector.
So we asked a number of experts that we surveyed who are really putting faith in
today. And it's true that national governments
need to be doing a lot more. It's true that international
organizations need to be doing much more.
But equally so, business leaders and public and private together came up as
still being a very legitimate way of solving some of these problems.
And I think that's where we need to concentrate geopolitics.
Is there any rapprochement and we saw with the war in Ukraine that actually
it's there, you know, blocs hold. So it's interesting.
The experts came out in the survey saying that they were expecting much
more geo economic warfare, but actually geopolitical conflict or armed conflict
was much further down the list. At the same time, though, cyber warfare
also went up. And so it's very clear that we're
looking at a different kind of economic and technological war and quite
different from traditional conflicts. That's not what's expected to be top of
the horizon in the next couple of years. So you go back to the poly crises.
So poly crises, especially the idea that there's a perfect storm because you have
all these crises that are what mishandled and so that make everything
worse. Could you give us in your top 10 risks,
worst case scenario and best case scenario?
So I think it's really back to this sort of you know, if leaders focus primarily
on, let's say, cost of living, they're looking primarily and providing basic
support on energy, basic support on food, OK.
That can be done, but there are ways to get that done that will then have
positive repercussions for climate. In the future, and there are ways to get
that done that will have very negative impacts for climate and the future.
That's the choice that I think leaders are facing today.
Do we forget to mean after two years of Covid and it is the first time that
we're back at the World Economic Forum in Davos.
Has it skewed any of either the surveys or some of the economic data?
And what's fascinating is how low infectious diseases came out in the
survey. And I think there is this risk of a sort
of panic neglect cycle that people look at what's happened in last couple of
years. Covid infectious diseases are at the
top. If this zero year last year was very
much about Covid and now it's so far down the list and I think that's exactly
the concern. Suddenly we're forgetting what is
happening in health systems. Suddenly they're forgetting what kind of
societal resilience we need to be able to deal with the next inevitable health
shock. And so that's, I think, something that
leaders government, public sector, private sector will have to look at,
because I feel like there's so much bad news and there's so many risks out
there. Could we see a year?
We're actually we're surprise to the upside.
We also in a different survey with chief economists, we asked them what do they
think are some of the strengths? And people have been remarkably
surprised by the strength of the labor market, the resilience of household
budgets. Of course, they've had a lot of support
from governments, but it is one of the positives.
I think one of the ways in which many areas of society have sort of held
together, but we can't continue to overload the system.
And I think that's one of the other findings coming out of the risks report
that in this particular moment where there's so many areas of weakness, so
many public crises, one more shock might become unmanageable.
What would you think will come out of Davos next week?
While we're trying to make sure that leaders are focused on these global
risks, very aware of the need for making some of those decisions today.
Very aware of the need for developing much better foresight for those future
shocks, but really recuperating. None of this is going to get sold in
silos. It's not going to work if people take
their own individual household decisions or if nations turn inwards.
This is only going to work if we go back to some form of collaboration.
Looking at the wind, winds, looking at the synergies, that's what we'll be
focused on across. Does that mean supply chain?
I mean, supply chains feel like they're getting better.
Is that a misnomer? So we're going to be looking at economic
issues, supply chains, understanding what that new geography of economics is,
trying to understand where some of those opportunities are.
And at the same time, bringing the focus back to.
Are we going excessively towards building resilience and what are the
costs going to be in the long term? Do we actually need this?
Is this a price worth paying or should we be thinking much more about some
level of efficiency, again, in supply chain?
So that's one key area. We're also going to be looking at
environmental issues, climate, nature, and then, of course, very much about
investing in human capital, because that's got to be key to future
resilience. So thank you so much for your time
today. Thank you.