Worsening Wealth Gap, Unemployment Biggest Risk Facing the World in 2014

The widening gap between the incomes of the richest and poorest citizens and unemployment is seen as the biggest risk that is most likely to cause serious damage globally in the coming decade. Other risks of significant concern include extreme weather events, unemployment and fiscal crises. This was contained in the 2014 Global Risks Report released recently by the Global Economic Forum. The report includes special in-depth investigations into youth unemployment, digital disintegration and geopolitical risks. Taking a 10-year outlook, the report assessed 31 risks that are global in nature and have the potential to cause significant negative impact across entire countries and industries if they take place. The risks were grouped under five classifications – economic, environmental, geopolitical, societal and technological – and measured in terms of their likelihood and potential impact. After income disparity, experts see extreme weather events as the global risk next most likely to cause systemic shock on a global scale. This is followed by unemployment and underemployment, climate change and cyberattacks. In particular, the report considered the twin challenges facing those coming of age in the current decade of reduced employment opportunity and the rising cost of education, and also considered the impact on political and social stability as well as economic development. With over 50 percent of young people in some developed markets currently looking for work and rising informal employment in developing regions where 90 percent of the world’s youth live. However, the report offered insight into how technological and other measures can be deployed to mitigate some of this risk. Speaking on the challenges on unemployment, Group Chief Risk Officer of Swiss Re, David Cole, said: “Many young people today face an uphill battle. As a result of the financial crisis and globalisation, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an ageing population. While in the emerging markets there are more jobs to be had, the workforce does not yet possess the broad based skill-sets necessary to satisfy demand. It’s vital we sit down with young people now and begin planning solutions aimed at creating fit-for-purpose educational systems, functional job-markets, efficient skills exchanges and the sustainable future we all depend on.” The report also noted that the deepening reliance on the internet to carry out essential tasks and the massive expansion of devices that are connected to it, make the risk of systemic failure – on a scale capable of breaking systems or even societies – greater than ever in 2014. “Recent revelations on government surveillance have reduced the international community’s willingness to work together to build governance models to address this weakness. The effect could be a balkanization of the Internet, or so-called “cybergeddon”, where hackers enjoy overwhelming superiority and massive disruption is commonplace,” it added.