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Global Risks to the Business Environment 2005

Global Risks to the Business Environment 2005



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Published by: World Economic Forum on Sep 30, 2008
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Global Risks to the BusinessEnvironment
 Aproject of the World Economic Forumin collaboration withMerrill Lynch
January 2005
World Economic Forum91-93 route de la CapiteCH-1223 Cologny/GenevaSwitzerland Telephone +41 (0)22 869 1212Fax +41 (0)22 786 2744E-mail: contact@weforum.orgwww.weforum.org© 2005 World Economic Forum All rights reservedNo part of this publication maybe reproduced or transmitted inany form or by any means,including photocopying orrecording, or by any informationstorage and retrieval system.
1Global Risks to the Business Environment
 This paper, the output of two workshops organized by theWorld Economic Forum in collaboration with Merrill Lynch,reviews major, global risks facing business leaders today,and examines how those risks differ from the challengesof the past. Some key points:
1) Global Risks and Business
– At a time when risksnot specific to business are having an unprecedentedeffect on the corporate world, it is crucial for businessleaders to understand the environment in which theirbusiness operates, in order to survive, remaincompetitive and grasp opportunities.
2)An Increasingly Turbulent and Complex World
 Today’s risks are much more interconnected than inthe past. They are much more volatile and can disruptmarkets throughout the world with almostinstantaneous precision. Such risks can be difficult toanticipate and respond to, even for the most seasonedbusiness leaders.
3)The Global Risks
– We identify 36 “global” risks,classified into four categories: economic, geopolitical,societal and environmental. This report details theprevailing consensus reached at our workshopdiscussions as to the ten risks most likely to have amajor or extreme impact on business:Instability in IraqTerrorismEmerging fiscal crisesDisruption in oil suppliesRadical IslamSudden decline in China’s growthPandemics – infectious diseasesClimate changeWeapons of mass destruction (WMD)Unrestrained migration and related tensions
4)Risk Mapping - Connecting the “Dots” andSpotting the Patterns
– In an interconnected world,global risks should not be considered on a stand-alonebasis; it is important to understand how they cantrigger, amplify or buffer one another.
5)Dealing with Global Risks
– Seldom can global risksbe addressed by a single business entity, industry orcountry, and many institutional mechanisms areproving fairly ineffectual as they struggle to cope withthe challenge. There is also a large discrepancybetween the immediate time horizon employed bymost business and political leaders and the long-termapproach required to tackle risks on a global scale. Asa result, our capacity to address risk is jeopardized; amyopic tendency – or worse: denial – prevails. Finally,of equal concern is the problem that some major risksare being passed on to those least able to solve them– or with least responsibility for creating them.
Executive Summary

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