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Published by: Pearltrees2 on Feb 06, 2011
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1 | Global Risks 2011
Drivers that increase riskDrivers that could both increase orreduce riskDrivers that reduce risk The symbols in the “Drivers and indicators” denote the ollowing
 The global risks barometer 
 The global risks barometer assesses the inuencing actors, global impact and riskperceptions o the 37 risks in the fve risk categories: economic, geopolitical, societal,environmental and technological at a global level. In Global Risks 2011, Sixth Edition,the inuencing actors and global impact have been generated and refned though the18 workshops with experts in each risk category. The risk perception characteristics,which include key interconnections, likelihood, severity, and variation in perception andconfdence level are data extracted rom the Global Risks Survey 2010. The barometer is designed to trigger discussions on global risks at multiple levels:at an individual risk level to understand the actors that inuence the risk and itsconsequences described as global impact, in relationship with the highly interconnectedrisks to understand the directionality and the eedback loop with other risks, and at asystemic level as it has been illustrated in the Global Risk Landscape. The barometer is a living document or several reasons. First, the risks that have beencaptured at a global level do not necessarily play out at a local level in a similar mannerhence there is a need or urther discussion. Second, the risk characteristics evolveas the world moves on. Lastly, there are many interpretations on how the risks maybe inuenced and impacted; hence there is a broader need to continually improve thework. Readers are encouraged to provide constructive contribution to urther elaboratethis living document that will eed into uture Global Risks reports.
 
2 | Global Risks 2011
Drivers that increase riskDrivers that could both increase orreduce riskDrivers that reduce risk The symbols in the “Drivers and indicators” denote the ollowing
 The global risks barometer 
Figure 1Figure 1
 
Sharp increase and volatility in the prices o nancial assets
 including mortgages, asset-backed securities and debt instruments
Sharp increase and volatility in prices o real assets
 (commercial and private real estate)Excessive
capital fows to emerging markets
, inducing asset pricebubbles
New arbitrage opportunities
, causing currency carry tradesrom low-to high-interest rate countriesChanges in
central bank policy rameworks
which allocate moreweight to overall fnancial stability rather than just price stabilityPolicy shits encouraging
domestic consumption
and creatingurther
productive investment opportunities
in emerging economiesGreater
transparency and stronger nancial regulation
regardingsurveillance, capital and liquidity ratios, risk retention and counterpartyrisk management in over-the-counter derivative markets
Reversals o global economicgrowth
as collapse in asset pricesundermines consumer confdenceand the allocative efciency o thefnancial system (the current fnancialcrisis reduced world output byroughly 2% and contracted advancedeconomies by roughly 4%).Possible
collapse o bankingsystems
as investors lose trust infnancial markets and governanceinstitutions. 
Perceived impact
in Billion US $
Drivers and indicatorsGlobal impact
 Asset pricecollapse
 A collapse o real and fnancial asset prices leads to the destruction o wealth, deleveraging, reduced householdspending and impaired aggregate demand.
Perceived likelihood
to occur in the next ten years
lowmedhigh
Figure 1
Economic Risks
 
3 | Global Risks 2011
Drivers that increase riskDrivers that could both increase orreduce riskDrivers that reduce risk The symbols in the “Drivers and indicators” denote the ollowing
 The global risks barometer 
Figure 1Figure 1
 
Government policies
such as price ceilings on ood prices, lead toreallocation o production and ood shortagesFluctuating
economic growth
in emerging market economiesFluctuations as a unction o the
global business cycleCurrency devaluation
should a number o countries attempt to shitthe relative strength o their currencies to spur exports
Climate change and extreme weather events
which increaseproduction uncertainty
Retrenchment rom globalization
, through e.g. protectionist barriersand “resource nationalism” rom countries possessing rare metals Advances in new
inormation and communication technologies
 that smooth price uctuations by improving inormation ow betweensellers, buyers and middlemen Advances in
agricultural technologies
that create more resilientcrops Advances in
nancial instruments
that allow consumers andproducers o commodities to manage better risks associated withvolatile production levels
Lower growth
as volatility causesuncertainty or investments byindividuals and companies (such asarmers and mining companies) Volatile and rising ood prices lead to
hunger and malnutrition
among thepoor where ood accounts or a largeproportion o household spending orearnings.
The global business cycle may beexacerbated
by commodity priceuctuations.
Perceived impact
in Billion US $
Drivers and indicatorsGlobal impact
Extremecommodityprice volatility
 Volatile mineral, metal and agricultural commodity prices create uncertainty or governments and business as wellas costs or producers and consumers.
Perceived likelihood
to occur in the next ten years
lowmedhigh
Economic Risks

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