WORLD ECQNOMIC FQRUM The Global Risks Report 2021 16th Edition INSIGHT —— ie teal Dee) Un ea Sec ue rene Lee) al oe = 4The Global Risks Report 2021 16th Edition Strategic Partners Marsh McLennan SK Group Zurich Insurance Grown Academic Advisers National University of Singapore Oxford Martin School, University of Oxford Wharton Risk Management and Decision Processes Center, University of PennsylvaniaThe Giobal Risks Report 2021, 16” Eaition, is published by the World Economic Forum. The information inthis report, or on which this report is based, has been obtained from sources that the authors believe to be reliable and accurate. However has not been independently veriied and no representation or warranty, express or Implied. is made as to the accuracy or completeness of any information obtained from third parties. In addition, the statements in this report may provide current exoectations of future events based (on certain assumptions and include any statement that does not directly relate to a tistorical fact or a current fact. These statements involve known and unknown risks, uncertainties and other factors which are not exhaustive, The companies contributing to this report operate in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reiance Con these statements. The companies ‘contributing to this report undertake no obligation to publicly revise or update any statements, whether as a result of new information, future events or otherwise and they shall in no event be liable for any loss cr damage arising in connection with the Use of the information in this repo World Economic Forum® Cover artwork: Patrik Svensson © 2021 ~ Allrights reserved, Al rights reserved. No part of this publication may be reproduced, stored ina retrieval system, or transmitted, in any form or by any means, electronic, ‘mechanical, photocopying, or otherwise without the prior permission of the World Economic Forum. The report and an interactive data platform are available at hip:/wef.chrisks2021Contents Preface By Klaus Schwab and Sadia Zahiai Executive Summary Global Risks Perception Survey 2020 Results 10 CHAPTER 1 Global Risks 2021: Fractured Future 15 CHAPTER 2 Error 404: Barriers to. Digital inclusivity 29 conarren s Pandemials: Youth in an Age of Lost Opportunity 39 CHAPTER 4 Middle Power Morass: Navigating Global Divides 52 CHAPTER 5 Imperfect Markets: A Disorderly Industrial Shakcout ea Hindsight: Reflections on Responses to COVID-19 2 on Frontier Risks 82 Appendices Appendix A: Descriptions of Global Risks 2021 87 ‘Appendix B: Global Risks Perception Survey and Methodology 90 Acknowledgements 94 ‘The Global isks Roport 20214Preface Klaus Schwab, Founder and Executive Chairman Saadia Zahid, Managing Director In 2006, the Global Risks Report sounded the alarm on pandemics and other health-related risks. That year, the report warned that a“ethal fu, ts spread facilitated by global rave pattems and uncontained by insufficient warning mechanisms, would present an acute threst” impacts would include *severe impairment of travel, tourism and other service industries, a8 well as manufacturing and retall supply chains" whi “global trade, investor risk appetites and consumption demand” could see longer-term harms. A year later, the report presented a pandemic ‘scenario that illustrated, among other effects, the amplifying role of “nfodemics” in exacerbating the core risk, Subsequent exitions have stressed the need for global collaboration i the face of antimicrobial resistance (8" edition, 2013), the Ebola crisis (11" ection, 2016), biological threats (14% edition, 2019}, and overstretched health systems (15" edition, 2020), among other topics. |n.2020, the risk of a global pandemic became reality ‘As governments, businesses and societies survey the damage inflicted over the last year, strengthening strategic foresight is now more important than fever. With the world more attuned to risk, there is ‘an opportunity to leverage attention and find more effective ways to identity and communicate risk to decision-makers. Itis in this context that we publish the 16" edtion of the World Economic Forum's Global Risks Report (Our analysis centres on the risks and consequences of widening inequalities and societal fragmentation. in some cases, disparities in health outcomes, technology, ‘or workforce opportunites are the direct result of the dynamics the pandemic created. In others, alrosdy- present societal dvisions have widened, straining weak safety nets and economic structures beyond capacity. Whether the gaps can be narrowed will depend on the: factions taken in the wake of COVID-19 to rebuild with @ view towards an inclusive and aocessible future. Inaction on economic inequalities and societal divisiveness may further stall action on climate change—stil an existential threat to humanity. Growing societal fragmentation—manifested through persistent and emerging risks to human health, rising unemployment, widening digital divides, and youth disilusionment—can have severe consequences in an era of compounded economic, environmental, geopolitical and technological risks. ‘The gap between the “haves” and “have-nots” will widen further if technology access and ability remain disparate. The world's youth have faced exceptional pressures in the past decade and are particularly vulnerable to missing out altogether on the opportunities of the next. For business, the economic, technological and reputational pressures of the present moment risk a disorderly shakeout, threatening to create a large cohort of workers and companies that are left behind in the markets of the future. Governments, 100, ‘must balance between managing the pandemic and ‘economic contraction, while at the same time creating ew opportunities that are fundamental to social ‘cohesion and the viabilty oftheir populations, Most critically, if environmental considerations—the top long-term risks once again—are not confronted in the short term, environmental degradation wil intersect with societal fragmentation to bring about dramatic ‘consequences, if managed poorly, these disruptions. will hamper the ablity of potey-makers and other leaders to act on different areas of risk. ‘The Global isks Roport 20215