The Week: Risk managers deliver a gloomy prognosis

The 2022 World Economic Forum Global Risks Report suggests a difficult few years ahead. Investors will need to lean in to these risks.


  • Only one in ten risk managers believe the global recovery will accelerate
  • The global income gap has been significantly widened by the pandemic
  • Cyber security, climate change and involuntary migration are other key risks for the year ahead

It is perhaps in the nature of risk experts to be gloomy, but even with that in mind the latest World Economic Forum Global Risks Report makes for uncomfortable reading. Just one in six are optimistic about the year ahead and only one in ten believe the global recovery will accelerate.

There are some obvious problems. Climate change is an existential risk. It threatens all countries and all businesses, but there remains real doubt as to whether policymakers will act with sufficient vigour to address it.

The uneven recovery from the pandemic is also a concern. The WEF points out that by 2024, developing economies, with the exception of China, will have fallen 5.5% below their pre-pandemic expected GDP growth, while advanced economies will have surpassed it by 0.9%. This significantly widens the global income gap.

Cybersecurity is a less obvious source of risk, but nevertheless leaves democratic governments vulnerable. Although the war in Ukraine appears on the surface to be a more old-fashioned stand-off, cyber-attacks are an important part of Russia’s armoury. Ukraine says it has clear evidence that Russia was behind attacks that took down key government websites. US enterprises are braced for attacks as the conflict escalates.  

The report also paints a tough picture on economic growth. Certainly, it is difficult to see an acceleration in growth against a backdrop of higher interest rates and inflation. The best that can be hoped is probably that growth continues at a steady pace. Either way, most risk experts believe a global recovery will be volatile and uneven over the next three years.

In the longer term, the WEF highlights the problem of involuntary migration. It may be that climate change or increased conflict over resources renders certain areas inhabitable or forced people to move for economic opportunities. This promises be significantly destabilising for the existing world order.

Investors need to lean into these risks. There are opportunities both in swerving the difficulties and in tackling these risks – cyber security groups and AI can help mitigate risks, ESG investing can prevent environmental and social harms. Investors do not have to accept their fate.

However, it is difficult to disagree with one of the report’s key conclusions: “Most respondents expect the next three years to be characterized by either consistent volatility and multiple surprises or fractured trajectories that will separate relative winners and losers.” Be prepared for a rocky ride.