Global Risk Report 2016–Qualitative Analysis (1)


1.  INTRODUCTION

In my previous posts on the World Economic Forum’s Global Risk Report 2016, I have concentrated on

  • the methodology of the report (corresponding to the Plan Risk Management process of Project Management),
  • the identification of risks (corresponding to the Identify Risks process of Project Management)

and now in this third series of posts, I am concentrating on the next topic,

  • the qualitative analysis of risks (corresponding to the Perform Qualitative Risk Analysis process of Project Management)j

This qualitative analysis is called “qualitative” because it does not fix a specific dollar amount to each risk (that would be “quantitative analysis”), but instead analyzes each risk according to some qualitative variable, such as likelihood and impact.

The three questions that the respondents were asked about the 29 global risks were:

  1. Which ten of the global risks have the highest probability of occurring in the next decade?
  2. Which ten of the global risks would have the greatest potential impact if they were to occur in the next decade?

In yesterday’s post, I discussed the result of asking the respondents to the survey the first question.   In this post, I discuss the result of asking them the second question, on those risks which have the highest probability of occurring.

2.   HIGHEST PROBABILITY RISKS

The respondents were asked to assess each of the 29 risks (these risks are listed on the post dated 3/29/2016) based on the probability of occurrence on a scale from 1 to 7, with a “1” meaning that the risk is not likely to happen, and a “7” meaning that the risk is very like to occur.

Those 10 risks that rated as having the highest probability of occurrence were as follows:

1. Large-scale involuntary migration Societal
2. Extreme weather events Environmental
3. Failure of climate-change mitigation and adaptation Environmental
4. Interstate conflict Geopolitical
5. Natural catastrophes Environmental
6. Failure of national governance Geopolitical
7. Unemployment or Underemployment Economic
8. Data fraud or theft Technological
9. Water crises Societal
10. Illicit trade Economic

Here are some things to notice about these risks.

a.  Most of the highest probability risks are environmental

Three out of the ten risks are environmental:

  • Risk #2 Extreme weather events
  • Risk #3 Failure of climate-change mitigation and adaptation
  • Risk #5 Natural Catastrophes

Of the remaining seven risks, two are societal:

  • Risk #1 Large-scale involuntary migration
  • Risk #9 Water crises

Two are geopolitical:

  • Risk #4 Interstate conflict
  • Risk #6 Failure of national governance

Two are economic:

  • Risk #7 Unemployment or Underemployment
  • Risk #10 Illicit trade

and the last one is technological:

  • Risk #8  Data fraud or theft

b.   Highest-probability trends

For 2015, the number one highest-probability risk was Interstate Conflicts.    This has fallen down to #4 in 2016, having been superseded by the environmental risks #2 Extreme weather events and #3 Failure of climate-change mitigation and adaptation, and being followed by #5 Natural Catastrophes.

Clearly environmental crises are perceived as increasingly likely to occur.

3.  CONCLUSION

On the societal front, large-scale involuntary migration is the highest probability risk, followed by a series of environmental risks.

Okay, it’s one thing to say that a risk is likely to happen.   What about when it does happen?   What will be its impact?   The respondents were asked about that question as well, and that will be the subject of my next post.

 

 

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