Reflections on the WEF’s Global Risk Report
The COVID-19 pandemic has drastically altered the understanding and approach to the risk landscape within many organizations. Risks that we have long been warned about have emerged over the past year and other risks have increased in their intensity. Under these circumstances, the recently published 2021 World Economic Forum’s Global Risk Report is one of the most important Global Risk Reports in the organization’s history.
The Report in question offers a reflection on global and operational resiliency in its first chapter — urging countries and organizations alike to prepare and act, rather than react, in the face of emerging risks. Many of the lessons in this chapter include implementing an integrated and analytical framework to risk management, executive sponsorship of risk management as a critical business/operational function, as well as consistent and reliable communication and reporting to key stakeholders.
Organizations have faced many changes within the past year. Work-from-home policies have turned the governance of an organization on its head, while the interconnectivity of everything and internet of things (IoT) have left organizations increasingly exposed to cyber threats while employees work from insecure networks at home.
Although the impact of the pandemic is duly noted in the Report, environmental risk permeates the top risks facing the globe. In an article written in December of 2019 by Michael Rasmussen, CEO of GRC 20/20 Research — a firm that analyzes and consults on governance, risk management, and compliance trends globally — he stated that organizations need to pay attention to the WEF Global Risk Reports as global macro risks will have a direct impact on organizations. In 2020, he was proved right.
“ERM and ORM programs need to be balanced and monitor risks both internally and externally.” Rasmussen stated while talking to Brookfield Brief recently. “One of those critical data feeds into an ERM strategy should be the WEF annual report on risks. In 2021, there will be a restructuring of risk management programs to address ESG (environmental, social, & governance) reporting and specifically the integrated array of environmental, health and safety, digital risks, and other disruptions to the organization.”
Extreme weather, climate action failure, and human-caused environmental damage were considered to be the most likely risks over the next decade, as well as digital power concentration, digital inequality, and cybersecurity failures, according to the Report. This is a continued trend from last year’s report, in which all five of the top long-term global risks were about environmental concerns.
The report, issued in Davos, Switzerland, is the result of consultations among world leaders, economists, scientists, and top business executives, and is based on WEF’s Global Risks Perception Survey, completed by more than 650 members of the forum’s “diverse leadership communities.”
Brookfield Brief is a weekly newsletter covering the most relevant stories in business and tech news.
Like our stuff? Give us a clap and Subscribe here for free. Every Monday direct to your inbox.
