Businesses ignore climate, cyber threats at their own peril

Businesses ignore climate, cyber threats at their own peril
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Imagine seas, land and air fouled by industrial pollution, rising sea levels, raging wildfires and worldwide crop shortages. Imagine international cyber wars and digital “weeds” that choke the internet, making communications impossible.

While it may sound like the plot for a Hollywood movie about a dystopian future, these are just some of the worst-case scenarios outlined in Global Risks 2018.

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The annual report, released recently by the World Economic Forum, highlights an ever-evolving set of risks that threaten to upend society throughout the globe.

 

This year’s edition paints a particularly bleak picture of a chaotic future where humankind is waging battles on two fronts: preserving the environment and managing rapid advancements in technology.

Environmental and technological risks lead the WEF Global Risks Perception Survey, taking the top five spots in a list of most-likely risks: extreme weather events; natural disasters; cyberattacks; data fraud or theft; failure of climate-change mitigation and adaption.

In addition to identifying the most-likely risks, the Global Risks Report predicts which risks have the potential to do the most damage to society and envisions a world in which these risks are not adequately addressed. As you might expect, the scenarios they conjure are not pleasant.

As I read this report each year, I do so with one pervading thought: What does this distress call mean for North American businesses — in other words, our customers?

In an increasingly interconnected world, it means that business leaders in North America — and abroad — cannot afford to ignore the perils that threaten to tear at the fabric of society, even if they seem unrelated to the business at hand. In short, global risk is everyone’s risk.

The report highlights key areas of concern that include climate change, species’ extinction, income inequality, youth unemployment, privacy, cybercrime and cracks in the financial system.

The risks we face today are so structural in nature that without a systemic response, we face the prospect that our environment, the global economy, international relations or any other system could completely collapse.

The concern about environmental risks should come as no surprise after a year of record-breaking wildfires, droughts and one of the worst Atlantic hurricane seasons on record, likely exacerbated by climate change.

On the technological front, the WEF report highlights advances in automation, artificial intelligence and interconnectivity but warns that rising dependency on these technologies can increase risk.

Concerns over the security and privacy of Internet of Things (IoT) devices and over the use of personal data challenge the benefits of this new technology. IoT has given rise to computer hackers and cybercriminals who seek to take control of everything from household devices to autonomous vehicles.

Increasing cyber dependency also raises ethical concerns about the ability of machines to make decisions with direct impact on human lives.

There is hope amid the gloom of the WEF report, and it lies in the annual exercise of evaluating global risks, looking toward the future and offering solutions.

The environmental, technological and other risks outlined in the report may share a common cause — humans. But the fate of humanity is not sealed within its pages. 

Kathleen Savio is CEO for Zurich North America, a leading property and casualty insurance provider. Zurich is a strategic partner with the World Economic Forum.