The Davos crystal ball: global risks in 2024 and beyond

Launching the annual prognostication season, and shaping much of the policy and political discussion at Davos, Switzerland, this month is the World Economic Forum’s annual Global Risks Report. Now in its 19th year, the 2024 edition was released on Jan. 11, and it details the top short-term risks (2024 and 2025) as identified by the nearly 1,500 global movers and shakers who participated in the annual survey. The predominate characterization of the global outlook ahead is turbulent and unsettled, and becoming more so over the decade. The report is “set against a backdrop of rapidly accelerating technological change and economic uncertainty, as the world is plagued by a duo of dangerous crises: climate and conflict.” Underscoring this, the top seven risks for this year and next are: misinformation and disinformation; extreme weather; societal and political polarization; cyber insecurity; interstate armed conflict; lack of economic opportunity; and inflation. Several were new to the risks hit parade, and reflect a growing unease about technological change and its disruptive powers. Hon. Kevin Lynch was clerk of the Privy Council and vice-chair of BMO Financial Group. Photograph courtesy of Kevin Lynch This is particularly evident with respect to concerns about misinformation and disinformation, and the enabling potential of artificial intelligence (AI) to exacerbate this risk. When combined with the astounding fact that at least 64 countries, with nearly half the world’s population, will have national elections in 2024—these include the United States, Taiwan, Mexico, India, Indonesia, Pakistan, South Africa, and the European Union—it amplifies the potential for an escalation of political and societal polarization with the widespread use of misinformation and disinformation during elections, and the possibility of undermining election legitimacy itself. As the report gloomily predicts: “the disruptive capabilities of manipulated information are rapidly accelerating, as open access to increasingly sophisticated technologies proliferates and trust in information and institutions deteriorates. In the next two years, a wide set of actors will capitalize on the boom in synthetic content, amplifying societal divisions, ideological violence and political repression.” Paul Deegan was a public affairs executive at BMO and CN. Photograph courtesy of Paul Deegan The risk of an expansion of interstate armed conflict was largely focused on the wars in Ukraine and Gaza-Israel spreading regionally, and tensions over Taiwan moving to a more dangerous level. It was noted that dual use technologies (drones and AI), cyberwarfare, and new tools to disseminate misinformation were reshaping these conflicts in unpredictable and dangerous ways. Inflation risks were front and centre, not surprisingly given the stubborn spike in inflation and the high interest rates employed to combat it, but deep cost-of-living concerns also joined the 2024 top risk rankings as a major concern of younger survey respondents. There are still some concerns that new supply chain disruptions may appear for critical goods and critical raw materials, as a result of geopolitical tensions, and this would hinder certain sectors and industries. The lack of economic opportunity risk is more nuanced: the report speculates that it may reflect an “anti-tech and anti-sustainability backlash which will be fuelled by workers threatened by these two transitions,” and “both white- and blue-collar displacement could feature heavily in political platforms during election cycles.” Extreme weather is not only near the top of short-term risks, it also dominates the ranking of global risks over the next decade. However, despite aspects of the environment dominating the risks landscape over both the near term and the longer term, survey respondents tended to disagree about the urgency, with private sector respondents treating it more of a longer-term risk while government and civil society ranked it as more urgent. What is not prominent in the risk ranking is also interesting. Fears of a recession and rising unemployment have receded as economies have weathered the shocks of conflict and inflation fighting better than expected. Strikingly absent from the top dozen risks for 2024 and 2025 are debt and deficits, despite extremely high levels of both in the United States and several other western countries, but bond markets may have more of a say in next year’s report. What do these risks suggest for the global order? In a word: fragmentation. The nature of conflicts is changing, with shifting alliances and objectives. A more transactional, rather than co-operative, approach to global affairs and risks is unfolding. Regionalism may supplant multilateralism as the great powers tussle in a multipolar world. As the report observes, “The next decade will usher in a period of significant change, stretching our adaptive capacity to the limit.” Countries will need to develop localized strategies to deal with some of these risks while others will require collective action as they are global public risks. Discussion and debate about these risks will be centre stage at this year’s Davos. And, despite calls for boycotts, Davos 2024 will still attract the global A-listers from business, government, think tanks, and media. It is much better for Canada to show up than tune out. The report also begs the question: should Canada name a chief national risk officer (CNRO)? The CNRO would not just take a whole-of-government perspective, but a whole-of-society view. Identifying risks and developing mitigation strategies are key to national preparedness and resiliency and vital to national security and prosperity. Hon. Kevin Lynch is a former clerk of the Privy Council and vice-chair of BMO Financial Group. Paul Deegan is a former public affairs executive at BMO and CN. The Hill Times