The Global Risks Report 2023 of the World Economic Forum in Davos
It is worth noting that 5 of the 10 risks are environmental, three social, one technological, and one geopolitical.
The high cost of living, natural disasters, extreme weather events and failure to effectively address the climate crisis are among the world's top 10 risks, according to the World Economic Forum's Global Risks Report 2023 in Davos.
Analyzing the report, Vicki Owen, Schroders' content strategy and sustainability expert, estimates that cost of living will top the list two years down the line, followed by natural disasters, extreme weather events, and geoeconomics. controversies.
A new regime in market politics and behavior is coming, which investors need to understand
It is worth noting that 5 of the 10 risks are environmental, three social, one technological, and one geopolitical.
Top 10 risks two years down the line
1. High cost of living
2. Natural disasters and extreme weather events
3. Geo-economic confrontations
4. Failure to address the climate crisis
5. Erosion of social cohesion and social polarization< /p>
6. Manifestation of large-scale environmental problems
7. Failure to adapt to climate change
8. Widespread crime and lack of cyber security
< p> 9. Depletion of natural resources
10. Large-scale involuntary migration
Top 10 risks in 10 years
1. Failure to address the climate crisis
2. Failure adaptation to climate change
3. Natural disasters and extreme weather events
4. Biodiversity loss and ecosystem collapse
5. Large-scale involuntary migration
6. Depletion of natural resources
7. Erosion of social cohesion and polarization
8. Wide spread of crime and lack of cyber security
9. Geo-economic confrontations
10. Large-scale environmental problems manifest
What does this report mean for investors?
At the end of 2022, Schroders' financial and investment teams released five key macroeconomic trends , which they consider crucial for the coming years, during the transition to a new economic regime.
As Azad Zangana, Senior European Economist and Strategic Analyst at Schroders and Johanna Kyrklund, Head of Group Investment Office and Head of Investments at Schroders, report in the article Regime shift: investing into the new era: “As this economic cycle ends, we will not we should expect to see a repeat of the patterns of the previous decade. A new regime in market politics and behavior is coming, which investors must understand if they want to spot opportunities and secure their portfolios.”
Among other things, Kyrklund refers to changes in the way how fixed income will be treated and how assets will be valued, increasing divergence in interest rate cycles, increased borrowing costs and lower price indices.
The fact that the rising cost of living and inadequate management of the climate crisis are ranked as the most serious global risks for the coming years does not surprise Andy Howard, Head of Sustainable Investments at Schroders.
He himself, in Outlook 2023, Sustainability: five key trends to watch, states: “While the planet recovers from the pandemic crisis of Covid-19, its effects on economies, societies and the environment are becoming more and more apparent. Looking to the future, the impact of the pandemic seems to have limited the ability of governments to support societies. Business is expected to play an essential role in addressing critical issues – from climate challenges and threats to biodiversity – to life-threatening crises.”
Finally, Samuel Thomas, Analyst of Sustainable Investment in Schroders' Sustainable Investment Research Group, comments on both the rise in cybercrime and the lack of security, which are ranked 8th among the top risks globally, over two years and a decade.
The he notes: “Cyberattacks are an emerging threat to business and society around the world. The investment community recognizes that these attacks are a real threat to businesses, as they become more and more noticeable every year. In 2022, the average cost of a data breach increased by 3% to $4.35 million.
