July 5, 2011

World Economic Forum Global Risks 2011 Report (Jan 2011)

This past January 2011, the WEF released a report which detailed out what they see as the global risks in 2011(http://riskreport.weforum.org/). The report is called Global Risks 2011 Sixth Edition: An Initiative of the Risk Response Network

It's an interesting read especially for those of us who deal with risk regularly in our profession. They identified two cross-cutting global risks, focused on 3 risk clusters, and noted 5 risks to watch.

The two cross-cutting global risks are Economic Disparity and Global Governance Failures. They note that these influence many other global risks and are a result of the globalization. Quote from the report:

"Globalization has generated sustained economic growth for a generation. It has shrunk and reshaped the world, making it far more interconnected and interdependent. But the benefits of globalization seem unevenly spread – a minority is seen to have harvested a disproportionate amount of the fruits. Although growth of the new champions is rebalancing economic power between countries, there is evidence that economic disparity within countries is growing."

The 3 risk clusters they focus in on are "macroeconomic imbalances" nexus, "illegal economy" nexus, and the "water-food-energy" nexus.

Illegal Economy Nexus:
This nexus examines state fragility, illicit trade, organized crime, and corruption. Quote from the report:

"A networked world, governance failures and economic disparity create opportunities for such illegal activities to flourish. In 2009, the value of illicit trade around the globe was estimated at US $1.3 trillion and growing. These risks, while creating huge costs for legitimate economic activities, also weaken states, threatening development opportunities, undermining the rule of law and keeping countries trapped in cycles of poverty and instability.
International cooperation – both on the supply side and on the demand side – is urgently needed."

For those of us who are constantly fighting cyber criminals it's nice to see a validation of what we've been saying about how it's growing rapidly, threatens our economies, and we are lacking the legal tools (policies, cooperation between countries) to help with deterrence and prosecution.

Speaking of cyber security, it's identified as one of the 5 risks to watch. Interestingly survey respondents assessed them with low levels of confidence while experts consider they may have severe, unexpected or under-appreciated consequences. The specific text in the report was:

"Cyber-security issues ranging from the growing prevalence of cyber theft to the little-understood possibility of all-out cyber warfare."

They note 4 distinct global risk-related activities as stand outs:
* Cyber theft
* Cyber espionage
* Cyber war
* Cyber terrorism

I'm particularly concerned with cyber theft. From the report:

"Cyber theft has become a growing industry with a long tail, particularly in countries where economic disparity has recently been combined with access to global communication technologies. Actors in this field range from entrepreneurial individuals to shell corporations built with the hope of economic gains offset by acceptable risks. Interestingly, some assessments indicate that cyber thieves experience a substantially lower feeling of guilt than is apparent in other criminal activities."

They spell out the potential for disruption causing a large impact:

"The pervasiveness of the Internet and importance of related technologies to everyday life and business means that should a major disruption occur, it is likely to have high impact globally."

I agree wholeheartedly!

I recommend checking out the report (link below). It's an interesting read.

Main site: