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The crisis due to the increase in the cost of living is the greatest risk in the short term, according to the World Economic Forum

Climate change-related risks dominate longer-term concerns

The crisis caused by the increase in the cost of living represents the greatest risk in the short term, according to the ‘Global Risks Report 2023’ of the World Economic Forum, while the inability to mitigate climate change and adapt to it is the greatest long-term concern.

The document, produced in collaboration with Marsh McLennan and Zurich Insurance Group, warns that geo-economic conflicts and tensions have triggered a series of closely interconnected global risks, warning that the time frame to act against the most critical long-term threats “it is running out fast” and concerted and collective action is needed before reaching a tipping point.

Among the risks identified are shortages in energy and food supplies, which are likely to persist for the next two years, as well as the high increase in the cost of living and debt service.

At the same time, these crises could undermine efforts to address longer-term concerns, especially those related to climate change, biodiversity, and investment in human capital.

In this sense, he points out that governments will be forced in the coming years to make concessions around incompatible concerns in the areas of society, the environment and security, stressing that short-term geoeconomic risks “are already testing the commitments of net zero emissions” and highlight the gap between what is scientifically necessary and what is politically acceptable.

Likewise, there is the possibility that security considerations and increased military spending will reduce the room for maneuver in fiscal matters to cushion the repercussions of a prolonged cost-of-living crisis and warn that, “if it does not occur a change in trajectory, vulnerable countries could be in a perpetual state of crisis.

“The short-term risk landscape is dominated by energy, food, debt and disasters,” said Saadia Zahidi, director general of the World Economic Forum, for whom climate and human development must be the main concerns of world leaders, even as they battle current crises.

Thus, the report believes that unless the world begins to cooperate more efficiently on climate change mitigation and adaptation, there will be continued global warming and ecological collapse over the next ten years.

In fact, the inability to mitigate and adapt to climate change, natural disasters, biodiversity loss and environmental degradation represent five of the top ten risks in the next decade.

In addition, looking to the long term, he warns that crisis-based leadership and geopolitical rivalries could generate social distress at an unprecedented level, as investments in health, education and economic development disappear, further deteriorating cohesion. Social.

Thus, the report urges leaders to take action collectively and decisively, balancing short-term and long-term perspectives.

In addition to urgent and coordinated measures to combat climate change, it recommends making joint efforts between countries, as well as public-private cooperation to strengthen financial stability, technological governance, economic development, and investment in research, science, education, and Health.

“The interaction between the effects of climate change, the loss of biodiversity, food security and the consumption of natural resources is a dangerous combination,” warned John Scott, director of Sustainability Risks at Zurich Insurance Group, for whom if they accelerated measures, there would still be an opportunity to deal with emergencies due to natural disasters.

For her part, Carolina Klint, head of Risk Management in Continental Europe at Marsh, believes that 2023 will be marked by an increase in risks related to food, energy, raw materials and cybersecurity, which will cause new disturbances in global supply chains and will impact investment decisions.

“In the face of the most difficult geoeconomic conditions facing the last generation, companies should focus not only on navigating short-term problems, but also on developing strategies that allow them to face longer-term risks and structural change,” he added. she.

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