Global leaders rank ‘misinformation and disinformation’ as top risk

Global decision makers rank disinformation, extreme weather, economic woes and social unrest among the biggest risks for the next two years, according to a World Economic Forum report.

Cyber security is ranked as one of the top risks by global executives, according to the latest World Economic Forum report.

Australian executives, policy makers, and risk experts are worried about the prospects of an economic downturn, persistent inflation, and high household debt levels, according to the latest World Economic Forum Global Risks Report.

But other global decision makers surveyed are more concerned about issues of disinformation, social polarisation, cyber security, wars, and lack of economic opportunity for some sections of society.

The survey of some 1,400 global risk experts, policy makers and industry leaders — in partnership with Zurich Insurance and Marsh McLennan — is being released ahead of the next World Economic Forum meeting in Davos, Switzerland, next week.

It shows that the risk of extreme weather events is a highly ranked concern of risk experts and decision makers around the world, ranking second over a two year scenario globally and fifth for executives in Australia.

“An unstable global order, characterised by polarising narratives and insecurity, the worsening impacts of extreme weather and economic uncertainty are causing accelerating risks — including misinformation and disinformation — to propagate,” World Economic Forum managing director Saadia Zahidi said.

“World leaders must come together to address short term crises as well as lay the groundwork for a more resilient, sustainable, inclusive future,” she said.

Releasing the report, the WEF said the survey’s results “highlight a predominantly negative outlook for the world in the short term, which is expected to worsen over the long term.”

“While 30 per cent of global experts expect an elevated chance of global catastrophes in the next two years, nearly two thirds expect this in the next 10 years.”

It warns of a “global risks landscape in which progress in human development is being chipped away slowly, leaving states vulnerable and individuals vulnerable to new and resurgent risks.”

“Against a backdrop of systemic shifts in global power dynamics, climate, technology and demographics, global risks are stretching the world’s adaptive capacity to its limit,” it warns.

The report comes as world share markets have responded positively to expectations that inflationary pressures are easing, raising hopes that global interest rates could come down later this year, with expectations of recessions and hard landings fading.

But the survey shows that issues around economic uncertainty – the risk of an economic slowdown, persistent inflation, high household debt levels and energy shortages are the key areas of concern for decision makers in Australia.

Cyber security is ranked as the fourth largest risk by global executives over the next two years but it ranked lower for Australian executives, as did concerns about armed conflict which is ranked fifth in the global survey.

Concerns about the potential role of misinformation and disinformation and its impact on society -which is listed as a major area of concern globally appears to be linked with the upcoming US election and political developments in other countries.

Concerns about this issue ranked high with executives, decision makers and risk analysts in the US, India and Europe.

The report paints a gloomy outlook, with increasing concerns that the climate change problem may reach a tipping point with the post war global order under pressure with increasing risk of conflict and social divisions.

“The aftermath of the Covid-19 pandemic and the ongoing Russia-Ukraine war has exposed cracks in societies that are being further strained by episodic upheaval,” it says.

But it concedes that “the global political system has thus far proved to be surprisingly resilient.”

“A widely anticipated recession failed to materialise last year, and financial turbulence was quickly subdued.”

But it warns that the “outlook remains uncertain due to domestic factors in some of the world’s largest markets as well as geopolitical developments.”

It warns that “continued supply side pressures and demand uncertainty could contribute to persistent inflation and high interest rates.”

Cyber security is ranked as one of the top risks by global executives, according to the latest World Economic Forum report.

“Small and medium sized companies and heavily indebted countries will be particularly exposed to slowing growth and elevated interest rates.”

The report says there are two different narratives around the outlook for the world economy.

One argues that it has shown surprising resilience in the face of the most aggressive global tightening of monetary policy in decades with fears of recession being replaced by a “soft landing.”

The other warns that “persistently elevated inflation in many countries and high interest rates are weighing heavily on economic growth.”

In this scenario, “an already visible economic downturn is likely to spread, with a risk that new economic shocks would be unmanageable in such fragility and debt passes the tipping point of sustainability.”

“With contrasting views about the future, the risk of miscalculation by central banks, governments and companies will rise accordingly, potentially deepening and prolonging economic risks,” the report says.

“Continued trade conflicts are geoeconomic rifts between the United States, the European Union and China add to the significant economic uncertainty ahead.”

The report shows there is widespread concern on the potential impact of “critical change to earth systems” as a result of rising temperatures including melting ice poles and severe weather events which it warns could have follow on effects for food, water and health security.

While only 10 per cent of those surveyed expected a catastrophic climate change related or weather events in the next two years, 48 per cent were worried that they could happen over the next ten years.

The report notes that advanced economies will “not be insulated” from some of these impacts of climate change developments, citing the example of the situation in Australia leading to a situation where more than 520,000 homes could become uninsurable “due to the risks of extreme weather.”

Jaimie Sach, the chief risk officer for Zurich Australia & New Zealand said the report showed that there was an “array of diverse risks” facing the global economy.

“This is to be expected given the complex risk environment we have seen in recent years, defined by rapid acceleration of technology – heightening risks relating to misinformation and cyber security – as well as significant geopolitical conflict and threats to social cohesion,” he said.

“The tight interconnection between these immediate risks underlines the importance that decision making is underpinned by strong risk management and heightened monitoring of the risk landscape.”

He said the report showed that the next decade would see new risks emerge combined with major structural forces – climate change, continued technological acceleration, social shifts and ongoing geopolitical tensions.

“In an Australian context, the impacts of these global risks will be equally substantial,” he said.

“Climate change in particular will drive a worsening natural peril environment combined with an urgency for national energy transition, leading to significant risks relating to energy supply and reliability unless appropriate resilience considerations are actioned.”

“This grid fragility will present a core opportunity and central challenge to energy policy in the near and long-term.”

“Likewise, as other nations seek to achieve climate targets and accelerate investments in renewable energy technology, the demand for finite and geographically-concentrated critical minerals – such as graphite, lithium and cobalt – will present both a risk and opportunity for Australia given its key role in the global supply chain.”