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Insight Report
REF: 090115
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Figure 1: The Global Risks Landscape 2015
Spread of
Water crises
infectious diseases
Interstate
Failure of conflict
Weapons of climate-change
mass destruction Energy price adaptation
Critical information shock
infrastructure breakdown Fiscal crises
5.0
Unemployment
Biodiversity loss and
Cyber or underemployment
ecosystem collapse Terrorist attacks
attacks
Failure of financial Asset bubble
Failure of
national governance
State collapse
4.5
or crisis
Misuse of Extreme
technologies Data fraud weather events
Unmanageable Large-scale or theft
inflation involuntary migration
Natural catastrophes
Deflation
Failure of
critical infrastructure Man-made environmental
catastrophes
4.0
Likelihood Impact
Unmanageable inflation
Major natural catastrophes (e.g. earthquake, tsunami, volcanic eruption, geomagnetic storms)
Failure of national governance (e.g. corruption, illicit trade, organized crime, impunity, political deadlock, etc.)
State collapse or crisis (e.g. civil conflict, military coup, failed states, etc.)
Food crises
Societal
Water crises
Massive and widespread misuse of technologies (e.g. 3D printing, artificial intelligence, geo-engineering, synthetic biology, etc.)
Ageing population
Climate change
Environmental degradation
Rise of hyperconnectivity
Shifts in power
Urbanization
Environmental degradation
Urbanization
Unemployment or
underemployment
Interstate
Rise of conflict Asset bubble
hyperconnectivity Fiscal crises
State collapse
or crisis
Rising income disparity
Ageing population
Increasing national sentiment
Increasing polarization
of societies Shifts in power
Failure of climate-
change adaptation
Man-made environ-
mental catastrophes Extreme weather events
Large-scale
involuntary migration
Critical information
infrastructure breakdown Failure of critical infrastructure
Unemployment or
Cyber attacks underemployment
Interstate conflict
Asset bubble
Fiscal crises
State collapse
or crisis
Misuse of
technologies Terrorist attacks
Failure of financial
Weapons of mass destruction Deflation mechanism or institution
Data fraud or theft
Strategic Partners
Marsh & McLennan Companies
Zurich Insurance Group
Academic Advisers
National University of Singapore
Oxford Martin School, University of Oxford
Wharton Risk Management and Decision Processes Center, University of Pennsylvania
Contents
6 Preface
Klaus Schwab
7 Foreword
Espen Barth Eide
8 Executive Summary
10 Introduction
11 Box 1: How has the Global Risks report been
used?
12 Part 1: Global Risks 2015
14 Box 1.1: The evolution of the risks of highest
impact/likelihood
17 Box 1.2: The rising threat from non-state actors
18 Box 1.3: Asset bubbles a new old risk?
19 Box 1.4: Recent advances in the global regulation
of the financial system
20 Box 1.5: Black Sky risks to critical infrastructure
21 Box 1.6: The road to Paris is 2015 make or break
for climate change?
22 Box 1.7: Governing the Internet the need for
mechanisms to maintain a unified and resilient
network
26 Part 2: Risks in Focus
26 2.1 Introduction
27 2.2 Global Risks Arising from the Accelerated Interplay
between Geopolitics and Economics
29 Box 2.1: Global supply chains too lean?
30 Box 2.2: The World Economic Forums work on
geo-economics
31 2.3 City Limits: The Risks of Rapid and Unplanned
Urbanization in Developing Countries
32 Box 2.3: Life in the city how smart is smart?
33 Box 2.4: Health in cities robust plans are needed
to face the threat of pandemics
36 2.4 Engineering the Future: How Can the Risks and
Rewards of Emerging Technologies Be Balanced?
36 Box 2.5: Classifying emerging technologies
37 Box 2.6: Synthetic biology protecting mother
nature
39 Box 2.7: Gene drives promises and regulatory
challenges
40 Box 2.8: Artificial intelligence rise of the
machines
44 Part 3: Good Practices on Risk Management and Risk
Resilience
50 Conclusion
53 Appendix A: Description of Global Risks and Trends 2015
56 Appendix B: The Global Risks Perception Survey 2014
and Methodology
58 Appendix C: The Executive Opinion Survey and Views of
the Business Community on the Impact of Global Risks
on Their Business
62 Acknowledgements
Preface
issues, the ways they interconnect and
their potential negative impacts are
more relevant than ever. The shared
understanding of challenges is needed
as a base for multistakeholder
collaboration, which has seen
increasing recognition as the most
effective way to address global risks and
build resilience against them. To further
inspire action, in this years report we
include a new section sharing examples
of risk mitigation and resilience
practices.
10 Years of Risk
Awareness Building
Over the past decade, the Global Risks
report has seen both its readership
and its impact increase significantly.
The report has become a useful tool
for many governments and businesses
to assess their exposure to global risks
(see Box 1). It has also successfully
raised awareness on key risks, such as
the threat of increasing resistance to
Part 1: Introduction
The Global Risks 2015 report comes
Part 2
communities across different areas country and international levels to large-scale terrorist attacks. The
of expertise, geographies and age address this important risk (see Box 2.4 list for the longer term is dominated
groups. It was conducted between in Part 2). by risks related to physical and
July and September 2014 and environmental trends that have been
gathered the perceptions of almost In the geopolitical risks category, less prominent in recent headlines,
900 leading decision-makers from respondents identified weapons of such as water crises, failure of climate-
business, academia and the public mass destruction (WMDs), which change adaptation and food crises.
sector. A more detailed description include weapons containing nuclear,
of the sample and the surveys chemical, biological and radiological Interestingly, the risk of social
methodology is presented in Appendix technologies, as the third most instability scores high in both the
Part 3
B. Complementary to the Global impactful risk, albeit as the second short and long term. This trend
Risks Perception Survey data, the least likely risk. If deployed, they would towards social fragility is one of five
views of business executives were create an international crisis with threads that stand out from the 2015
also collected on the risks of highest huge human and economic costs. In survey along with growing concern
concern for doing business in their the coming decades, technological about geopolitics, the possible
country, presented in more detail in advancements, greater access to overshadowing of economic risks by
Appendix C. scientific knowledge and the increased other more imminent risks, concern
vulnerability of classified information about unaddressed environmental
The results provide a snapshot of to cyber threats enhance the risk risks, and persisting vulnerabilities in
current perceptions on global risks of WMDs proliferation, particularly in cyberspace which are explored in
and highlight priorities for action from fragile areas. This highlights the need more depth below.
three complementary angles: (1) the for greater international collaboration to
Global Risks Landscape, in which risks control the proliferation of WMDs.
are assessed according to likelihood
and impact, allowing a comparison of Among the economic risks, fiscal
how perceptions have evolved over the crises and unemployment are
years (Figure 1); (2) the Interconnections perceived as close to equally impactful
Maps of Risks (Figure 2) and of Risks and likely as in last years report,
and Trends (Figure 3); and (3) the level yet other risk categories take centre
of concern in the short and long terms stage this year (see Figure 1.4). While
(Figure 1.1). the world has made progress in
addressing and preventing financial
The Global Risks Landscape, as crises, and small improvements in fiscal
defined by the survey, highlights five issues and unemployment have been
global risks that stand out as both achieved, the danger of complacency
highly likely and highly potentially compared to other risks exists: experts
impactful (upper right quadrant remain concerned about significant
of Figure 1). Interstate conflict residual risks, which may have been
has significantly leaped up both overshadowed by other risks in the
dimensions since 2014, arguably survey.2
reflecting recent geopolitical conflicts
that are fuelling geopolitical and social The prominence of risks dominating
instability. As last year, concerns about recent headlines in our assessments
environmental and economic risks raises questions about the role of
remain, in particular around failure of the availability heuristic risks that
climate-change adaptation, water have manifested themselves recently
crises1 and unemployment and may be uppermost in peoples minds,
underemployment reflecting concern even if their recent occurrence does
about how little tangible action has not necessarily increase their impact
been taken to address them. At the or likelihood over a 10-year time
same time, cyber attacks remain horizon. To reveal more about the
among the most likely high-impact psychology behind the responses, the
risks. survey this year asked respondents
to nominate risks of highest concern
over two time horizons: 10 years, as
usual, and 18 months. The results are
financial crisis, giving way to concerns about the more immediate but slow-burning consequences of constrained fiscal
finances, a major systemic financial failure in the immediate post-crisis years, and income disparity. This year features a
radical departure from the past decade; for the first time in the reports history, economic risks feature only marginally in
the top five. In the 25th year after the fall of the Berlin Wall, geopolitical risks are back on the agenda. The dispute over
Crimea in March 2014 serves as a forceful reminder of the consequences of interstate conflicts with regional
consequences that seemed long forgotten and unfathomable, as further explored in this report. Similarly, together with
other events in 2014, such as the prominent rise of the Islamic State, it has brought state collapse and the failure of
national governance back into public consciousness. At the same time, health-related risks, such as pandemics last
considered impactful in 2008 have made it back into the unglamorous top, following the unprecedented spread of
Part 3
Ebola.
On a higher level, Table 1.1.1 also indicates a shift over past years away from economic risks in general to environmental
risks ranging from climate change to water crises. While this highlights a recognition of the importance of these
slow-burning issues, strikingly little progress has been made to address them in light of their far-reaching and
detrimental consequences for this and future generations.
T
Table 1.1.1: The Evolving Risks Landscape (2007-2015)
Table
Breakdown of Asset price collapse Asset price collapse Asset price collapse Storms and Severe income Severe income Income disparity Interstate conflict
1st critical information cyclones disparity disparity with regional
infrastructure consequences
Breakdown of critical information infrastructure
Chronic disease Middle East Slowing Chinese Slowing Chinese Flooding Extreme weather Extreme weather
2nd in developed instability economy (<6%) economy (<6%) imbalances imbalances events events
countries
Oil price shock Failed and failing Chronic disease Chronic disease Corruption Rising greenhouse Rising greenhouse Unemployment Failure of national
3rd states gas emissions gas emissions and governance
underemployment
Breakdown of
critical information
China economic Oil and gas price Global governance Fiscal crises
infrastructure Biodiversity loss Cyber attacks Water supply crises Climate change State collapse or
4th hard landing spike gaps crisis
Asset price collapse Chronic disease, Retrenchment Global governance Climate change Water supply crises Mismanagement Cyber attacks High structural
5th developed world from globalization gaps of population unemployment or
(emerging) ageing underemployment
Asset price collapse Asset price collapse Asset price collapse Asset price collapse Fiscal crises Major systemic Major systemic Fiscal crises Water crises
1st
Interstate and Slowing Chinese Oil and gas Oil price spikes Geopolitical Food shortage Water crises Weapons of mass
3rd civil wars economy (<6%) price spike crises imbalances destruction
Breakdown of
critical information
Pandemics Oil and gas Chronic disease Chronic disease
infrastructure Asset price collapse Unemployment Interstate conflict
4th price spike imbalances weapons of mass and with regional
destruction underemployment consequences
Oil price shock Pandemics Fiscal crises Fiscal crises Extreme energy Extreme volatility in Failure of climate Critical information Failure of
5th price volatility energy and change adaptation infrastructure climate-change
agriculture prices breakdown adaptation
Geopolitical risks 18 months 10 years Societal risks 18 months 10 years Economic risks 18 months 10 years
Part 2
State collapse or crisis 19.2% Profound social instability 23.3% Fiscal crises
Part 3
Failure of climate-change Unmanageable inflation
33.1% Cyber attacks 23.3% 20.2%
adaptation
Fragile Societies under people escaping extreme poverty, of control over their immediate
yet remaining poor. Widening income environment and hence their sense
Pressure inequality is associated with lower and of stability and security. A common
more fragile economic growth, which psychological response to insecurity
The fragility of societies is of increasing reduces the scope to meet rising social and perceived loss of control is the
concern, fuelled by underlying expectations in emerging markets.7 desire to turn inwards towards smaller
economic, societal and environmental groups that have a stronger sense of
developments (Figure 3 and Figure Rising structural unemployment identity. At the same time, increased
1.2). A major driver of social fragility is drives both inequality and social global connectivity allows people
rising socio-economic inequality pressures. Lower economic growth to make their voices heard and to
within countries, although it is and technological change are likely convene with like-minded individuals.
diminishing between countries. Among to keep unemployment high in the The growing risks of social extremism
the members of the Organisation future, also in developing countries. and isolationism are brought to
for Economic Co-operation and The spread of connectivity enables light through the rising influence of
Development (OECD), the average protest movements to mount more religious groups and in the separatist
income of the richest 10% has now quickly, increasing the risk of unrest movements in Catalonia and Scotland.
grown to about nine times that of the and violence that could easily spill
poorest 10%. In other countries, the over from individual countries to affect The effects associated with climate
ratio is even higher: for example, more the global economy. While inequality change will put further pressure on
than 25 times in Mexico.3 and unemployment contribute to societies. Its expected impact on
social instability, social instability in the ability to grow food and access
Income inequality is widening quickly turn impacts negatively on equality, water could prompt sudden and
in large emerging markets. The employment and wealth creation. uncontrolled population migrations,
Peoples Republic of China has seen The multidirectional cause-and-effect putting additional pressure on
its Gini Index rise from about 30 in relationship makes it harder to address receiving countries.8 Already in 2014,
the 1980s to over 50 in 2010.4,5 While the related risks. the number of refugees worldwide
extreme poverty (less than $1.25 per from environmental or conflict-related
day) was reduced from afflicting over Underlying social fragility is also the causes reached its highest level since
50% of the worlds population in 1990 accelerating pace of change, growing World War II.9
to 22% in 2010, the same reduction complexity and the deepening extent
did not take place in those earning of global interdependence, which
under $3 per day.6 The story is of together reduce peoples feeling
Figure 1.2: The Changing Global Risks Growing Worries about of mass destruction and the higher
Landscape 2014-2015, Societal Risks potential impact than in previous years
Conflict associated with large-scale terrorist
Societal Risks 2014 2015 attacks (Figure 1.3).
Having not featured prominently
Spread of
Water crises in previous editions of the report, Failure of national governance features
infectious diseases interstate conflict is this year
Part 2
Many observers believe that the world many forms of global crime and
Part 3
4.0 5.0
is entering a new era of strategic corruption and their impact on global
Likelihood competition among global powers. security, extremism, terrorism and
Disillusion about globalization is leading fragile states have only grown stronger,
to more self-interested foreign policies and it is critical to acknowledge and
in combination with a rise in national address them through more effective
sentiment (Figure 3) fuelled in part by policies that curb illegal financial
the social pressures described above. flows, foster transparent governance
Source: Global Risks Perception Surveys 2013 and Growing nationalism is evident around and build capacity around anti-crime
2014, World Economic Forum.
Note: See endnote 25
the world: in Russia, as seen in the efforts at the national and local levels.
Crimea crisis; in India, with the rising Absent a stronger response from both
popularity of nationalist politicians; the public and private sectors, the risk
As societies become less homogenous and in Europe, with the rise of far-right,
and less bound by common values, is of undoing hard-earned gains in
nationalistic and Eurosceptic parties in economic and political stability, and
and more polarized into the haves and a number of countries.
have-nots, they will become harder to further eroding trust in leadership.
govern effectively. This in turn increases In a number of countries, such as
Growth and employment creation are India, Indonesia and Romania, new
the risk of prolonged economic currently expected to remain below
stagnation, creating the potential for leaders have been elected in large
pre-crisis levels in both emerging part due to their public commitment to
a self-reinforcing downward spiral markets and advanced economies,
into social chaos. States will need to more transparent and corruption-free
suggesting that the drivers of governance models, underscoring an
mitigate this risk through policies to nationalism will remain strong, and
make growth more inclusive: providing ongoing shift in public expectations.
raising the possibility of more frequent
public goods and services such as and impactful conflicts among states. The growing interconnectedness of
social protection, hospitals, schools, Importantly, as can be seen in Figure 2, the global economy increases the
transport and telecommunications interstate conflict is no longer physical economic effects of any geopolitical
infrastructure. but uses economic means and cyber conflict. Supply chains that run
warfare to attack peoples privacy as across countries in conflict could be
well as intangible assets. interrupted, leading to disruptions in
the availability of goods or energy.
Geopolitical risks can have cascading Survey respondents considered the
impacts on other risks. As state risk of an energy price shock to the
structures are challenged by conflict, global economy as more impactful
the risk of the failure of national and more likely than in previous years,
governance and state collapse or crisis despite the increasing availability of
can increase in areas where current shale gas or alternative energy sources.
state boundaries do not necessarily The interplay between economic and
reflect popular self-identification. A geopolitical forces is further explored in
recent example is Iraq and Syria, Part 2 of this report.
where ISIS has claimed control of
territory and attracted 20,000 to
30,000 fighters from a near standing
start.10 The rapid rise and brutality of
ISIS as well as the response of the
international community may underlie
the increased likelihood and impact
attributed by respondents to the
risk of the deployment of weapons
Part 2
Weapons of Interstate conflict
background of further human rights abuse that includes arbitrary mass destruction
imprisonment and sexual enslavement. While its thirst for violence, blood and 5.0 Terrorist attacks
misery and especially the way it glories in these crimes mark it out from
other non-state armed forces of our age, this is really only a quantitative
distinction. Other groups many of them part of the global Al Qaeda franchise State collapse
do the same, only less. Al Nusra in Syria, Al Qaeda in the Islamic Maghreb or crisis
and the Nigerian group known in the West as Boko Haram all do some of what 4.0
Impact
Part 3
4.0 5.0
But what really marks ISIS out is that it has claimed statehood and with that
Likelihood
has established some of the machinery of state management. ISIS has not
only proclaimed the new Caliphate, the rule of the successors of the Prophet
Muhammad not that it has any theological credibility to do so but also
administers the area of northern Iraq and eastern Syria where it holds sway. It
handles law and order, some social services on a selective basis, and has an
Source: Global Risks Perception Surveys 2013 and
intelligence service and system of informers set up for it by former officials of 2014, World Economic Forum.
the overthrown Baathist regime of Saddam Hussein. Adding to the lavish Note: See endnote 25
funds it has raised from the Gulf region, it has also taken over and emptied the
central bank in Mosul, making it the richest non-state armed force in the world Rising nationalist sentiment and
and equipping it to be a non-state state. declining trust among global players
are contributing to a weakening
of international governance,
The phenomenon is not without precedent: the Provisional Revolutionary
undermining the international
Government in South Vietnam did much the same in the late 1960s and early communitys ability to act decisively
1970s, without the self-glorification of atrocity and terror. And it is not without on issues such as conflict resolution,
parallel today. The Taliban have effective control over parts of Afghanistan and Internet governance, climate change
was effectively the state in the late 1990s, until the US-led offensive overthrew and the management of oceans.
it in October 2001. Among other examples, for a long time FARC has been in Failure to collaborate and implement
control of large areas of Colombia, while the Seleka militia is in charge of common solutions in these areas could
significantly undermine future global
northern areas of Central African Republic. Having withdrawn from Bangui in
growth.
January 2014 under heavy international pressure, they are recuperating by
systematically taxing gold and diamond mining, livestock and other economic
activities behaving in part like a nascent state. Some groups have not based
themselves outside the territory over which they are fighting, but have waged
warfare that is not territorially limited. In the Al Qaeda mode, they have fought
what they perceive to be a global enemy. Today, perhaps the trend is in the
opposite direction: re-entry into an era of the non-state state.
Economic Risks: Out of institution especially as the shadow Figure 1.4: The Changing Global Risks
banking sector is less regulated yet Landscape 2014-2015, Economic Risks
the Spotlight? increasingly important.13 Likewise, in
many countries public debt levels are Economic Risks 2014 2015
The global economy is returning to still worryingly high so that the related
growth, albeit sluggishly, and there is risks are likely to persist over many Energy price
a feeling that significant progress has shock Fiscal crises
Unemployment or
Part 2
years. underemployment
been made in reducing the likelihood of 5.0
another financial crisis (as explored in Decision-makers focus on other Failure of financial
Box 1.4). This may reflect a false sense risks could lead to inaction at a time
mechanism or institution
Impact
The global unemployment rate is fiscal reforms will be crucial to avoid
Part 3
The global financial system is undergoing massive structural change as a result not only of the crisis but of the regulatory
changes in its wake. The very fact that the whole post-crisis regulatory overhaul has been spearheaded by the Financial
Part 2
Stability Board and G20, i.e. with explicit political backing by a global set of policy-makers, is very innovative and has not
been the case in setting international regulatory standards before. The past five years have witnessed a profound change
of international regulatory standards for banks and non-banks alike.
Banks regulatory rules have been revised (usually subsumed under the Basel III heading), resulting in stronger capital
requirements, the first-ever globally agreed liquidity standards (for a short-term liquidity and a structural funding
measure), and new standards for constraining large exposures and improving risk management. Also, supervisory
standards are being raised and the international standard setter (Basel Committee) has launched a programme to
assess national implementation, which exerts peer pressure on jurisdictions to implement the reforms in a consistent
Part 3
manner.
Cross-border resolution difficulties witnessed in the crisis are reflected in the new set of expectations with regard to
effective resolution regimes and a process of recovery and resolution planning for the largest banks, complete with
setting up cross-border crisis management groups composed of authorities from the (most prominent) jurisdictions
where these banks operate.
Regarding non-banks, the international community is finalizing a basic solvency requirement for global insurers who
are systemically important to date there has been no global solvency standard; over-the-counter derivatives
markets are undergoing major overhaul with measures aimed at mandating and/or incentivizing central clearing and
trading on organized platforms with reporting to trade repositories of all contracts. In terms of insurance regulation,
many countries in Europe, Latin America and Asia are adopting variants of the Solvency II regime. New insurance
regulation has a strong emphasis on corporate governance, disclosure and accountability. These measures are
relevant as they aim to change the broader corporate behaviour.
International accounting standards are being changed, in particular to make loss recognition more forward-looking
(newly issued IFRS9).
Some supervisory authority over the financial sector has been relocated to central banks, most notably in Europe,
where the European Central Bank has taken on additional responsibilities.
Still, of course, challenges remain. Addressing the issue of too-big-to-fail remains a key issue. Efforts are needed to: (i)
finalize living wills and identify and remove barriers to firms resolvability; (ii) reach consensus on banks loss-absorbing
capacity to ensure that they can be resolved; (iii) address obstacles to cross-border cooperation and recognition of
resolution measures; (iv) ensure recovery and resolution of non-banks; and (v) promote better regulation of the shadow
banking sector. Cross-border challenges persist also in over-the-counter derivatives reform. As regulatory regimes
developed in parallel in the two largest markets (European Union and United States), they resulted in a framework that
overlaps and is not completely consistent. Regulatory decisions allowing reliance on home regulatory regimes (known as
deference) are urgently needed. Trade reporting requirements have been adopted in key countries but legal barriers
frustrate implementation. Progress on trading standardized contracts on exchanges and electronic trading platforms
continues to slip. Political commitment is needed to advance reforms in all these areas.
Source: This box draws on the latest Global Financial Stability Report and related IMF work.
Note: In addition to the current regulatory reforms described above, some experts believe that profound changes in the corporate culture and incentive systems in the
financial sector are needed to reduce excessive risk-taking.
Environment High
Box 1.5: Black Sky risks to critical infrastructure Concern, Little Progress
Over the past decade, awareness has
The world has more to lose than ever before from massive failure of critical
grown regarding the threats posed
infrastructure. To improve efficiency and lower cost, various systems have
by environmental change to social,
Part 2
largest in history, affecting 670 million people, about 10% of the world Figure 1.5: The Changing Global Risks
population, and was partially triggered by high demand during a heat wave. Landscape 2014-2015, Environmental
Risks
In many countries, infrastructure has not been maintained well enough to
Environmental Risks 2014 2015
withstand the kinds of catastrophes that could spark such cascading effects.
This is often the result of procrastination, the perception that the risk is so
small that it is not worth considering or crowding out by other priorities, and Failure of
climate change
the fact that investing in preparedness is rarely immediately rewarded in the 5.0 adaptation
electoral process. The challenge is financial, and incentives are misaligned. For Biodiversity loss
and ecosystem collapse
example, in the United States, over 80% of infrastructure is owned or
Extreme
managed by private sector firms, which are not responsible for the negative weather
events
externalities that failure of their part of the infrastructure could have
Natural
elsewhere.1 To increase investment in infrastructure, a coordinated, global, Man-made
environmental
catastrophes
Likelihood
Note:
1
Auerswald, Branscomb, LaPorte and Michel-Kerjan, 2006.
Source: Global Risks Perception Surveys 2013 and
2014, World Economic Forum.
Note: See endnote 25
Part 2
causing either floods or droughts cause. Atmospheric concentrations is a risk-management approach
could cut crop yields by up to 25%.20 of three major greenhouse gases based on responsive measures that
(carbon dioxide, methane and nitrous assume things go back to normal
The nexus of food, water, energy and oxide) are at their highest level in after a crisis an approach that falls
climate change has been identified by 800,000 years. Strong evidence of the short with complex or slowly evolving
the US National Intelligence Council as effects of climate change is already environmental risks such as climate
one of four overarching mega trends apparent, in terms of sea level rise, change. Stakeholders have been slow
that will shape the world in 2030.21 The shrinking glaciers, warmer oceans and to address the underlying causes
risks interconnections map (see Figure the increasing frequency of weather of environmental risks or to address
2) shows how survey respondents extremes. their economic, social, political and
Part 3
perceived this nexus to be related also humanitarian consequences.
to other risks, including large-scale Even though all of these risks are
involuntary migration. well known, governments and
Technological Risks: Back The IoT is likely to disrupt business interconnectedness, shown in the
models and ecosystems across a Interconnections Map in Figure 2. It is
to the Future range of industries. While this will important to stress that risks cannot
deliver innovation, the prospect of be seen in isolation. The feedback
The risk of large-scale cyber attacks many large players across multiple loops between risks and the fact that
continues to be considered above industries being forced to change they are also driven by underlying
average on both dimensions of impact
Part 2
so radically at the same time raises trends (Figure 3) raise their complexity
and likelihood (see Figures 1 and potential systemic risks such as large- and make it more difficult to control
1.6) This reflects both the growing scale disruption in labour markets individual risks. Over past years, the
sophistication of cyber attacks and and volatility in financial markets. A speed of transmission and the strength
the rise of hyperconnectivity, with major public security failure could also of interconnections have increased.
a growing number of physical objects prevent the IoT from becoming truly
connected to the Internet and more widespread. The complexity of addressing risks,
and more sensitive personal data their likelihood and their potential
including about health and finances An important characteristic of global consequences raise the question of
being stored by companies in the risks, which transpires across the preparedness, on the global, regional,
Part 3
cloud. In the United States alone, cyber cases included in this report, is their national and local levels.
crime already costs an estimated $100
billion each year.23
4.0
Responsibility for the technical infrastructure of the Internet is dispersed among
several organizations, including the Internet Engineering Task Force (IETF) and the
Impact
World Wide Web Consortium (W3C), the Regional Internet Registries (RIRs), the
4.0 5.0
root servers operators, and the Internet Corporation for Assigned Names and
Likelihood
Numbers (ICANN). The solutions they propose policy models, standards,
specifications or best practices spread through voluntary adoption or ad hoc
conventions, regulations, directives, contracts or other agreements.
Part 2
at preparedness from a disaggregated North America identifies failure/ East Asia and the Pacific is
perspective. Figure 1.7 illustrates shortfall of critical infrastructure, perceived as least prepared for
for each world region those risks for large-scale cyber attacks and failure interstate conflict and failure of
which survey respondents indicated of climate-change adaptation as urban planning. It is also the
their region is the least prepared. the three risks for which it is least only region that reported being
Preparedness reflects a combination prepared. Major breakdowns least prepared for man-made
of exposure to a risk and the measures of infrastructure in the wake of environmental catastrophes
that have already been taken to Superstorm Sandy and the sheer following the 2011 Fukushima
mitigate or prepare for it. number of cyber attacks illustrate incidence.
Part 3
the low level of preparedness.
It is striking that every region presents a Failure of urban planning is among
wholly different set of issues for which it Sub-Saharan Africa is considered the first three risks in East Asia and
is least prepared. For example: least prepared for infectious the Pacific, Latin America and
diseases and unemployment. Both the Caribbean, and South Asia.
are of key importance given recent In such regions, urbanization is
High structural unemployment events and the fact that strong
or underemployment is seen especially rapid and the failure of
population growth is expected to urban planning can lead to a wide
as the risk for which Europe is
exacerbate unemployment in the range of catastrophic scenarios
least prepared, followed by large-
coming years, despite expected from social unrest to pandemic
scale involuntary migration and
economic growth. outbreak (Part 2).
Figure 1.7: For Which Global Risks Is Your Region Least Prepared?
3rd
1 st Ranking position
in each region
2nd
Europe Profound
social Central Asia
instability
Large scale including Russia
involuntary
Failure of migration
climate change Interstate
adaptation conflict
Terrorist
Unemployment attacks
or under- Energy
employment price
shock
Cyber attacks Profound
Failure social
North America of critical instability Failure
infrastructure of urban
planning
Interstate
conflict
Man-made
environmental
Middle East Water crises Interstate conflict catastrophes
and North Africa
East Asia
and the Pacific
Failure of
Profound urban planning
social instability
Unemployment
Failure of
national
or under
employment
governance
Terrorist South Asia
attacks
Failure Sub-Saharan Risk category
of urban Food Water
Latin America planning crises Africa crises
Economic
and the Caribbean
Environmental
Spread of
infectious Geopolitical
diseases
Societal
Technological
Conclusion Endnotes
1
Drawing on the perceptions of almost The risk of water crises is classified as a societal risk for the purpose of this report. However, it has an important
environmental dimension.
900 survey respondents, this chapter
2
focuses on the threats of social fragility IMF, 2014a.
11
ILO, 2014.
12
IMF, 2014b.
The section highlights the 13
IMF, 2014c.
interconnections between global risks
14
World Economic Forum, 2014.
and trends. A better understanding of
global risks and the interconnections 15
As mentioned above, the risk of water crises is classified as a societal risk for the purpose of this report. However, it
has an important environmental dimension.
between them is key to prompting
16
discussion about how to prepare, 2030 Water Resources Group, 2009.
Part 2
org/publications/freepublications/publication/english.pdf.
International Labour Organization (ILO). 2014. Global Employment Trends. Geneva: ILO; http://www.ilo.org/wcmsp5/
groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_233953.pdf.
International Monetary Fund (IMF). 2014a. World Economic Outlook: Legacies, Clouds, Uncertainties. Washington
DC: IMF; http://www.imf.org/external/pubs/ft/weo/2014/02/
International Monetary Fund (IMF). 2014b. Peoples Republic of China, 2014 Article IV ConsultationStaff Report;
Press Release; and Statement by the Executive Director for the Peoples Republic of China. IMF Country Report No.
14/235. Washington DC: IMF; http://www.imf.org/external/pubs/ft/scr/2014/cr14235.pdf.
International Monetary Fund (IMF). 2014c. Global Financial Stability Report: Risk Taking, Liquidity, and Shadow
Banking: Curbing Excess While Promoting Growth. Washington DC: IMF; https://www.imf.org/external/pubs/ft/
gfsr/2014/02/index.htm.
National Intelligence Council (NIC). 2012. Global Trends 2030: Alternative Worlds. Washington DC: NIC; http://www.
Part 3
dni.gov/files/documents/GlobalTrends_2030.pdf.
Organisation for Economic Co-Operation and Development (OECD). 2011. Divided We Stand: Why Inequality Keeps
Rising. Paris: OECD.
Ostry, J. D., A. Berg and C. G. Tsangarides. 2014. Redistribution, Inequality, and Growth, IMF Staff Discussion Note.
Washington DC; http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf.
Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M. Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso. 2014.
Food security and food production systems. Climate Change 2014: Impacts, Adaptation, and Vulnerability.
Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea,
T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R.
Mastrandrea, and L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY,
USA, pp. 485-533.
The 2030 Water Resources Group. 2009. Charting Our Water Future: Economic frameworks to inform decision-
making. Washington DC; http://www.2030wrg.org/wp-content/uploads/2014/07/Charting-Our-Water-Future-Final.
pdf.
United Nations. 2014. The Millennium Development Goals Report 2014. New York; http://www.un.org/
millenniumgoals/2014%20MDG%20report/MDG%202014%20English%20web.pdf.
United Nations Refugee Agency (UNHCR). 2014. Global Trends 2013. Geneva; http://www.unhcr.org/5399a14f9.
html.
World Economic Forum. 2014. The Global Competitiveness Report 2014-2015. Geneva: World Economic Forum;
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf.
Risks in Focus
report presents deep-dives into
three risks in focus the interplay
between geopolitics and economics,
Part 2
Part 2
society. the risk of unintended consequences.
Geopolitics traditionally focuses The interplay between geopolitics and
From artificial intelligence to synthetic on military might, resources and economics can create, reinforce and
biology, the need for governance on demographics as measures of national alter the nature of the interconnections
a global scale comes into focus when influence, while economics focuses on between global risks, affecting many
considering emerging technologies, growth, productivity and prosperity. areas of public policy and international
given the many uncertainties about how However, geopolitics and economics cooperation.
emerging technologies evolve and their have been intertwined through history
far-reaching economic, societal and for example in the rise of British political Governments and businesses alike
Part 3
environmental implications. The data power on the back of the economic need to conduct geopolitical due
also point to strong interconnections Industrial Revolution, the era of British diligence to not be caught off guard.
with man-made and natural and French colonialism, or the Cold The focus below is on three areas where
environmental catastrophes (see Figure War, when a deep geopolitical divide direct effects are likely disruptions to
2). The coming years are likely to see separated economies. When the Cold international trade, and threats to political
rapid advances in such fields as artificial War ended, an era of common norms cooperation and the international rules-
intelligence and synthetic biology and ushered in a global economy; now, based system.
while many of their impacts are likely to more than 25 years after the fall of the
be beneficial, negative effects will spread Berlin Wall, strategic competition is How Is this Situation Manifested?
quickly in todays hyperconnected world. returning. The world is grappling with
Some of those negative effects may a seemingly accelerating dynamic In a retreat from the prevailing logic
be difficult to anticipate and safeguard between geopolitics and economics. of globalization that characterized
against. Todays realpolitik is not ideologically the 1990s and early 2000s, todays
driven, includes new players and takes international environment is in large
In many cases, by addressing the place in the context of deep economic part marked by self-interested nation
trends underlying most of the risks, the integration. states trying to gain relative power over
vulnerability to risks can be reduced others, even at the expense of economic
significantly. In addition, understanding Will the global economy, the efficiency of considerations. Rising unemployment
the context and possible trajectories of a the international system and the win- and more difficult fiscal situations
significant nexus of risks and trends can win logic of commerce be undermined are contributing to the more inward
help to clarify ways to address them and by geopolitics? How will economic orientation of economies. The growth
to capitalize on opportunities presented decisions and spheres of influence of trade along global value chains and
by the trends. That is the aim of the impact the global balance of power? intensifying financial linkages have
analysis that follows. What global risks could emerge when increased the economic cost of rising
countries use economic rather than protectionist policies, such as tariffs,
military tools to advance their ends? sanctions and trade wars, as described
These questions have been brought in Box 2.1.
into focus by trends including the
recent heightened tensions in East As states turn inwards, their international
Asia, the acceleration of regional economic policies tend to focus on
integration in South-East Asia and the collaboration with smaller groups of like-
rise of preferential and regional trade minded countries that would allow them
agreements more generally, the shale to better pursue their economic goals.
gas and oil revolution in the United Countries have always sought to achieve
States, turbulence in the Middle East both geopolitical and economic aims
and Ukraine, competing integration through regional economic integration
mechanisms in Latin America, Chinas the European Economic Community,
assertion of leadership in the global for example, was established to stabilize
economy, and acts of terrorism and relations and raise the stakes in case
violent strife that are redrawing borders of war as well as to increase market
and sending economies backwards. size and economic opportunities. Many
regional groupings are established as
Global interconnectedness and the rising they allow countries to gain relative
speed of information transmission have power over others. This type of thinking
reinforced the interdependence between is currently why the Association of
geopolitics and economics, with Southeast Asian Nations (ASEAN) is
cyberspace representing an important seeking to create a unified market by
Australia
Part 2
Brunei
Cambodia
Indonesia
Japan
Part 3
Korea, Rep.
Malaysia
New Zealand
Philippines
Singapore
Thailand
Vietnam
Source: ASEAN, Ministry of Foreign Affairs of the Republic of Korea, The Economist and Oliver Wyman analysis.
Notes: 1 RCEP, promoted by ASEAN, would also include Cambodia, India, Laos and Myanmar.
2
TPP, promoted by the US, would also include Canada, Chile, Mexico and Peru as well as the US.
3
FTAAP, promoted by China, would also include Hong Kong SAR, Papua New Guinea, Russian Fed. and Taiwan, China.
4
Planned or achieved. Koreas free trade agreements (additionally with Brunei, Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) are
______ through its agreement with ASEAN.
2015 and pursuing an agreement on A driver of the intensifying interplay To strengthen their geopolitical
a Regional Comprehensive Economic between economics and geopolitics position, countries have also reverted
Partnership (RCEP). It is also one of the is the growing direct role of the state in to measures that control access
drivers of the United States efforts to the world economy, which is affecting to economically important national
pursue discussions on two major free traditional trade and investment flows resources or the prices of commodities
trade and investment agreements the and potentially enabling countries to over which they exert monopoly
Transatlantic Trade and Investment exert geopolitical influence through power to undermine other economies
Partnership (TTIP) and the Trans-Pacific economic dependency. This trend performance. These potential ways to
Partnership (TPP). is manifested in increasing state- leverage power over other countries
led investments in other countries through economic links are increasingly
However, in some cases competing infrastructure, such as in the case becoming an explicit part of foreign
integration agreements are creating of Chinese investment in Africa or policy thinking.
strategic competition: in Latin America, Latin America; strategic investments
the Pacific Alliance and Mercosur by sovereign wealth funds and In todays interdependent global
provide different models of integration; in state-owned enterprises in land and economy, whenever countries focus
Ukraine, the country was torn between businesses in other countries, as on their domestic market even if
the European Union and the Eurasian seen in the case of Gulf economies the decisions are taken by central
Economic Union; and Asian countries investments in Africa, and government banks rather than politicians there
need to assess the US-led TPP and the purchases of other governments debt. is potential for unintended effects on
ASEAN-led RCEP. As illustrated by Table In August 2014, China and Japan held other countries to spill over into the
2.1, the current situation is a complex mix 7.2% and 7% of US debt, respectively. geopolitical sphere. For instance, one
of overlapping and competing regional side effect of Japans expansionary
negotiations. monetary policies to restart its domestic
Part 2
worldwide and the reduction of sanctions can include slow growth,
Global Risks Emerging from the unemployment and fiscal pressures.
barriers to the flow of goods and
Interplay between Geopolitics and Taken together, the slowdown in
capital, the creation of value has
Economics globalization, the rise in protectionism
become a complex process
and the increasing prevalence of
spanning countries and continents. Opinion polls show that the public in sanctions could give rise to a scenario
The far-reaching global supply chains countries such as Japan, Germany of slower growth in advanced and
set up by multinational corporations and the United States are increasingly emerging economies. Slower growth
are more efficient, but the complexity sceptical about the benefits of trade in emerging economies could translate
and fragility of their interlinkages and foreign investment, even as their into social unrest and political instability
Part 3
make them vulnerable to systemic governments push for increased if the aspirations of large portions of the
risks, causing major disruptions. liberalization. Despite progress on the population cannot be met.
These comprise natural disasters, trade facilitation agreement, the larger
including those related to climate Doha Round of trade negotiations has The Increasing Risk to the
change; global or regional stalled, costing an estimated $180 Architecture of Global Governance
pandemics; geopolitical instability, billion per year at the global level.
Negotiations of regional agreements Much of the interplay between
such as conflicts, disruptions of
are also being questioned (one example economic and geopolitical interests
critical sea lines of communication
is TTIP in Germany). Although growing plays out not in the trade arena but
and other trade routes; terrorism;
again, global flows of foreign direct in the Bretton Woods institutions.
large-scale failures in logistics; investment remain down by more than Countries inability to agree on an
unstable energy prices and supply; a quarter from their 2007 peak, and institutionalized, closer coordination
and surges in protectionism leading international trade growth has slowed of macroeconomic policies to reduce
to export/import restrictions. since 2012. It has yet to be determined, global imbalances provides an
however, whether this is merely a interesting example. Some observers
Recent specific examples of threats cyclical or structural phenomenon see the failure to mitigate these
to the smooth functioning of global heralding a phase of de-globalization imbalances, combined with the return
supply chains include the Ebola in which globalized markets give way of strategic competition in an era
outbreak in West Africa, tensions in to regional groupings and to a rise in defined by an erosion of trust, as raising
the Middle East and the dispute protectionist measures.2 a tail-risk possibility of undermining the
between Ukraine and the Russian Bretton Woods institutions themselves
When confronted with political and and the international rule-based system
Federation. The latter has caused
economic volatility at home, countries more generally.
disruptions in the supply of gas to
often revert to protectionism under the
European countries, while sanctions
guise of policies to reduce risk. A recent These developments are reflected in
imposed by the European Union and the recent alternative structures being
OECD report shows that despite their
the Russian Federation have professed commitment to free trade, established by selected countries.
restricted access to specific sets of G20 economies have increasingly Brazil, Russia, India and China in 2014
goods and forced some companies reverted to protective measures since set up the New Development Bank,
to review the architecture of their growth slowed in 2012 in the wake of the so-called BRICs Bank, which
supply chains. One effect is the global financial crisis.3 Protectionism is intended to lend up to $34 billion
Germanys exports to Russia were can take different forms. It can be globally, particularly for infrastructure
reduced by 26.1% in comparison to related, for example, to the protection projects. In the same year, together
the year before, as reported in August of strategic sectors, local content with 20 other countries, China created
2014. requirements in the case of external the Asian Infrastructure Investment
investment, or state bailouts. Bank for the Asia-Pacific region. Much
as a retreat from global multilateralism
Economic sanctions are another type is worrisome, stronger regional
of punitive geo-economic measure, multilateralism is not necessarily a bad
such as the tit-for-tat engaged in by thing, as regional solutions to regional
Russia and the West, which indicates problems can be consistent with global
that some countries are ready to governance structures. As already
countenance a long period of economic noted, although economic integration
hardship and diplomatic woe to achieve is not often explicitly targeted, it binds
their political goals. The risk is thus nations more closely together politically.
significant that if the use of punitive Some observers see the current push
achieve this goal. Yet, increasingly, different regions, actors and sectors. Issues that will be examined in more
negotiating countries question the depth include the next phase of economic warfare, the next wave of state
benefits of these mega regional capitalism (including the rise of central banks as drivers of geo-economics
agreements. and the rise of strategic sectors), the idea of gated globalization, the role of
infrastructure in building alliances, and the weakening of peripheral countries
Any weakening of global governance
by regional agreements. The Forums work will also include an assessment of
could weaken collective resilience to
impact on selected industries. It will be developed over the coming years and
global risks, which respect no national
borders and require multilateral the findings will be integrated into the work of the Forum and its communities.
responses. These include climate
change, where an inability to agree
on carbon reductions could result in
rising sea levels, more frequent storms
and stress to water supplies; migration is therefore key to ensuring effective competing powers to build strategic
flows, where pressures on societies collaboration at a time when strategic trust, which could minimize the
and resources could result in conflict; competition dominates international detrimental effects of geo-economic
and Internet governance, where a relations. Without trust, no decisions competition on growth and prosperity.
tendency towards fragmentation can at the international level will be taken.
already be observed through some However, the responsibility extends
large economies efforts to put into beyond the political level: multinational
place measures to protect their national companies and consumers also have a
networks. Should a global governance role to play to strengthen the argument
solution to the Internet not be found, in favour of global collaboration in the
further fragmentation could significantly face of growing pressures to prioritize
reduce the benefits of communication national economic self-interest.
and information networks that the
world has come to take for granted. Conclusion
% of total population
6 60
Countries 5 50 Urban population
(left scale)
billions
4 40
Part 2
The world is experiencing a historically
3 30
unprecedented transition from Share of urban
2 20 population in total
predominantly rural to urban living. population (right
In 1950, one-third of the worlds 1 10 scale)
population lived in cities; today the 0 0
number has already reached more 1950 2000 2050
than one-half, and in 2050 city
dwellers are expected to account for Source: World Economic Forum calculation based on World Urbanization Prospects (2014 revision) data.
more than two-thirds of the worlds
population (see Figure 2.1).4 This rapid
Part 3
and occurs in a context of widespread make them particularly vulnerable
rise will mainly take place in developing poverty.8 Estimates suggest that 40% to chain reactions and amplify the
countries (see Figure 2.2).5 Africa and of the worlds urban expansion is taking interconnection between global risks.
Asia both still comparatively less place in slums, exacerbating socio- Better knowledge of how such risks
urbanized than other regions will economic disparities and creating interconnect in their materialization at
be the fastest urbanizing regions with unsanitary conditions that facilitate the the city level is the first step towards
the urban population projected to spread of disease.9 The example of the helping cities build resilience. Three
reach 56% in Africa and 64% in Asia 1994 outbreak of pneumonic plague in regions South Asia, East Asia and
by 2050 (currently at 40% and 48%, the Indian city of Surat suggests how, the Pacific, and Latin America and the
respectively).6 These developments in a worst-case scenario, poverty and Caribbean have identified this risk
imply an unprecedented shift of the a pandemic in a large-scale informal as among those for which they are
urban world away from the north-west settlement could potentially lead to a the least prepared (Figure 1.7 and for
to the south and east.7 breakdown in urban order.10 more details see: www.weforum.org/
risks).11 The following sections consider
If managed well, urbanization can bring Rapid urbanization can alter the nature four selected and particularly daunting
important benefits for development. of almost every global risk considered urban challenges: infrastructure, health,
Cities are an efficient way of organizing in this report by influencing its likelihood climate change and social instability.
peoples lives: they enable economies and impact. In addition, cities are points
of scale and network effects, and of convergence of many risks, which
reduce the need for transportation,
thereby making economic activity more
environmentally friendly. The proximity Figure 2.2: Forecasted Urban Population Growth 2010-2050
and diversity of people can spark
innovation and create employment
as exchanging ideas breeds new
ideas. The diversity of cities can also
inculcate social tolerance and provide
opportunities for civic engagement.
Already today, the linkages between
cities form the backbone of global
trade, and cities overall generate a large
majority of the worlds GDP.
The Infrastructure Challenge income to meet the basic needs of their projects and dissuades investors. In
population.14 Consequently, cities are addition, the key enablers of public-
The quality of a citys infrastructure looking for public-private collaboration private collaboration at the city level
its housing, electricity, roads, to involve the private sector in the include factors such as transparency
airports, public transport, drinking design, construction and maintenance (in such matters as partner selection
water, sanitation, waste management, of infrastructure. However, to promote and contract execution) and the
successful public-private collaboration, availability of accurate data to allow
Part 2
and quality of infrastructure are at service innovations. While these investments often deliver rapid improvements in
the core of many of the challenges efficiency and operational continuity, they also create unexpected new risks:
faced by rapidly urbanizing cities bugs and brittleness.
in developing countries, which are
developed further in this section of the
The growing amount of software used to manage urban infrastructure increases
report.
the likelihood of coding errors that can cause catastrophic failures, especially in
highly-centralized control systems. For instance, in 2006, San Franciscos Bay
As cities in developing countries
are expanding rapidly, it is likely Area Rapid Transit network was laid low for days when initial efforts to fix a bug
that infrastructure will not be able inadvertently triggered a larger and longer outage.
to keep pace with their growth nor
the increased expectations of their Smart city systems also rely on many underlying technology platforms that are
populations. Action to close the surprisingly brittle. For example, the Global Positioning System (GPS) is not only
infrastructure gap is urgently needed relied on for navigation services but also serves an irreplaceable time
and will strongly influence the potential synchronization function. Likewise, thousands of smart city apps and websites
of risks to have catastrophic cascading rely for their core computational capability on the cloud computing infrastructure
effects. of companies such as Amazon, which have experienced several major outages
in recent years.
To provide adequate global
infrastructure for electricity, road and
The brittleness of mobile cellular networks presents a special challenge to
rail transport, the OECD estimates that
resilience for large cities. Unlike the Internet which, at least in theory,
telecommunications and water will cost
possesses significant resilience through its multiple, redundant linkages
approximately $71 trillion by 2030 an
enormous challenge as it represents cellular networks have several choke points. Cell sites themselves can be
about 3.5% of forecasted global GDP.12 damaged physically. More importantly, the supporting wired infrastructures for
Most of this investment will be needed electrical power and backhaul connections to the communications grid can
in emerging economies. For instance, fail: both the Japanese tsunami in 2011 and Superstorm Sandy in 2012 caused
the Programme for Infrastructure damage to cellular networks that took weeks to repair. The most dangerous
Development in Africa estimates that failure mode for cellular networks is due to congestion during crises, panic
Africa will need to invest up to $93 dialling frequently overwhelms the carefully-managed wireless spectrum these
billion annually until 2020 for both networks depend on.
capital investment and maintenance;
currently only $45 billion is financed, All levels of government will need to be more assertive in auditing and stress-
which leaves an infrastructure gap of testing vital digital infrastructures. The sudden and unexpected failure of these
$48 billion per year to be financed.13
systems during crises has crippling knock-on effects across official and civilian
In addition to the provision of
response and relief efforts. Even during peacetime, the economic and social
infrastructure, it is critical to consider
its location as risks can emerge if effects of bugs and brittleness can be devastating, with potential for long-lasting
developed in the wrong location relative impacts. Assessments must go beyond cybersecurity, as the risks are not just
to the needs of the population. about external threats but also about the fundamentally unstable dynamics of
digital infrastructures and the complex, chaotic and unpredictable ways they
Where will the money come from? can interact with civic, social and economic systems.
Most governments are under tight
budget constraints and many
developing countries already spend
a large proportion of their national
Part 2
advanced countries and applying the
Much discussion revolves around the lessons learned from the development Cities and Health
potential for technology to increase of smart city infrastructure. However,
the efficiency with which urban while smart cities should work better, In most countries, the health of city
infrastructure can be managed. they may also be more vulnerable dwellers has improved through better
The use of big data, the Internet of to cyber error or terror (see Box access to education and healthcare,
Things and ubiquitous smartphones 2.3). When discussing smart cities better living conditions and targeted
promise to revolutionize aspects it is important to note the human public-health interventions.15
Part 3
Box 2.4: Health in cities robust plans are needed to face the threat of pandemics
Dense urban living facilitates the spread of infectious diseases. Particular vulnerabilities exist in countries where rapid
urbanization results in informal settlements that make it difficult to control transmission and can therefore increase the risks of
mosquito-transmitted epidemics, such as malaria, tuberculosis, dengue and yellow fever.
Various examples highlight the impact of urbanization on pandemics. In the Democratic Republic of the Congo, 83% of
people with tuberculosis live in cities1 (around 40% of the population lives in urban areas).2 In 2009, Mexico City shut down
schools, libraries, museums and nightclubs to halt the spread of H1N1 flu. A 2009 cholera epidemic in Zimbabwe heavily
affected Harare city, Chitungwiza and Kadoma, also stressing the influence of slums and the lack of urban infrastructure as
key igniting factors for the speed and severity of disease outbreaks.3
In todays hyperconnected world, it is easier for pathogens to be carried from one city to another and quickly scale up the
impact of most outbreaks. The presumed introduction of the virus to the informal settlements of Kenema and Freetown in
Sierra Leone has undoubtedly augmented its spread. Sierra Leone is urbanizing at a rate of 3% each year, and in 2005 more
than 97% of its urban population lived in slums.4 The economic impact of Ebola is enormous for the affected countries and
their neighbouring countries. The estimated economic cost is $32 billion in the worst-case scenario.5
Another aggravating factor to the 2014 Ebola crisis was the lack of a governance mechanism that would allow an effective link
between what was being observed at the country and city levels and the alert mechanisms necessary to trigger an
emergency response. Looking into the future for an adequate response across geographies, the existence of such a
governance mechanism would: (i) allow collaboration between local and national governments, civil society and the private
sector across borders; (ii) coordinate the surveillance, collection, sharing and analysis of infectious disease data in real time;
(iii) incentivize the private sector to develop and scale up the production and distribution of affordable drugs, vaccines and
diagnostics; (iv) establish a network of centres for research into microbial threats; and (v) promote international standards for
best laboratory, regulatory and ethical practice.6
The vulnerability of urban centres to pandemics points to the need for strong public-private coordination involving
organizations beyond the traditional healthcare sector. The ability to mobilize a response from sectors as diverse as food
production, telecommunications and corporate supply chains will determine how epidemics are fought in the future. Local,
national and cross-border government agencies need to build bridges with all stakeholders and learn from what worked in
the past to shape systems with the capacity to respond to pandemics and build the resilience to bounce back afterwards.
Coordinating responses and developing global governance mechanisms are critical to contain future outbreaks, which will
inevitably occur.
Notes:
1
WHO, 2010.
2
United Nations DESA, 2014.
3
WHO, 2009.
4
Gire et al., 2014.
5
World Bank Group, 2014.
6
Rubin and Saidel, 2014.
One excellent case study is the city as high as 23%; even in a low-income The concentration of people, assets,
of Surat in India. Hitting rock bottom country such as Burundi, it reached critical infrastructure and economic
due to a public health disaster in 1994, 4.5%.22 Although a formal link between activities in cities exacerbates the
it introduced measures to drastically diabetes and urbanization has not potential of natural catastrophes
raise hygienic standards, making it one been established, the number of urban to cause unprecedented damage:
of the cleanest cities in India today.16 dwellers with diabetes in low- and heatwaves, extreme rainfall and
Part 2
However, when urbanization is rapid middle-income countries is projected drought-related shortages of water and
and unplanned, a combination of high to almost double from 181 million today food will increasingly test the resilience
population density, poverty and lack to 347 million people in 2035.23 In of infrastructure in these and other
of infrastructure especially water and India for example, diabetes prevalence cities. The effects of shortfalls are likely
waste management can create the is close to epidemic proportion and to be felt mostly by the poor, whose
conditions for communicable diseases is attributed - at least partially - to informal settlements tend to be on land
to flourish. urbanization.24 This will put huge at especially high risk from extreme
pressure on already fragile healthcare weather.30 Making cities more resilient
Almost 700 million urban dwellers systems, the collapse of which could to extreme weather events should be a
currently lack adequate sanitation.17 have devastating cascading effects priority for both local governments and
Part 3
The problem is particularly acute with dramatic economic losses. the private sector.
in Sub-Saharan Africa and south-
central Asia, where 62% and 43%, Addressing non-communicable Cities not only need to adapt to climate
respectively, of the urban population diseases will require efforts to tackle change, they also have a major role
live in slums.18 Such conditions create the causes of air pollution, which is to play in mitigating its impact. While
increased risks of illnesses, worm estimated to have caused 7 million established cities with efficient mass
infections, cholera and diarrhoea a deaths in 2012.25 Air pollution tends to transit systems have relatively low
leading cause of preventable death in be more of a problem in developing carbon footprints, the early phases of
children and help spread emerging than developed countries, in part due urbanization tend to generate massive
infectious diseases, such as Severe to coal-fired power plants and the use greenhouse gas emissions as the
Acute Respiratory Syndrome (SARS) of biomass for cooking and heating, construction of infrastructure uses
and H1N1 influenza.19 With the but mostly due to private transport concrete and metals that are carbon-
projected huge increase of populations vehicles.26 Over 90% of air pollution in intensive to manufacture.31 Developing
living in slums and the growing developing world cities is attributed to countries already account for around
sophistication of transport networks old, poorly-maintained vehicles running two-thirds of annual greenhouse
between cities, the spread of infectious on low-quality fuel and to roads prone gas emissions, caused in part by
diseases could happen extremely to traffic jams.27 The rapid rise of non- their economic growth and rapid
quickly and could be difficult to contain, communicable diseases in low-income urbanization.32 The rapid expansion
creating the risk of global disease countries could jeopardize poverty of their cities means that mitigation
outbreaks. reduction and limit inclusive outcomes measures have to be taken today to
from growth. help tackle climate change.
In addition to communicable diseases,
rapid and unplanned urbanization is a Cities and Climate Change With adequate land-use planning and
key driver in the increased prevalence in coordination with the private sector,
of non-communicable diseases (NCDs) In many developing countries, cities can develop infrastructure in
and their key risk factors, such as migration from rural areas to cities is at more sustainable, low-carbon ways
unhealthy diets, physical inactivity, least partially driven by the increasing but this requires governance, technical,
tobacco consumption, harmful use of prevalence of extreme weather, such financial and institutional capacities
alcohol and pollution.20 NCDs, including as land degradation and desertification, that are often lacking in developing
cardiovascular diseases, diabetes, making agriculture more difficult. For countries.33 Leadership within local
cancer and chronic respiratory example, many people are migrating governments is at the heart of both
diseases, are the leading cause from dry land areas in north-east Brazil urban mitigation of and adaptation to
of death globally. These diseases to favelas in Rio de Janeiro.28 The climate change.34 Well-governed cities
affect high-, middle- and low-income rapid, inadequate and poorly planned with universal provision of infrastructure
countries. Every year 38 million people expansion of cities in developing and services have a strong base for
die from NCDs; over 14 million die countries can also leave urban building resilience to climate change
prematurely before they reach the populations highly exposed to the if processes of planning, design and
age of 70 and 85% are in low- and effects of climate change. For example, allocation of human capital and material
middle-income countries.21 cities tend to be located near the sea resources are responsive to emerging
or natural waterways, where they are climate risks.
The prevalence of diabetes in emerging more at risk of flooding. Indeed, 15 of
economies is rising: in China, it is the worlds 20 megacities those with Social Instability
already comparable to that in the over 10 million inhabitants are located
United States: in 2013, the figures in coastal zones threatened by sea- Cities capacity to generate prosperity
were 9% and 9.2%, respectively. In level rise and storm surges.29 already largely determines global
Kuwait, diabetes prevalence has been growth: just over half the worlds
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our capacity to plan and adapt. This
economic value than they would have is particularly true in developing
in the countryside. However, even economies. For rapid urbanization to
when cities are successful, the process provide opportunities to all, carefully
of absorbing migrants into urban considered urban planning and good
economies is not necessarily smooth. governance with effective regulatory
While moving to a city offers individuals frameworks are required. However,
more opportunities to improve their governments of rapidly-growing cities
living conditions, the high cost of living often have little time for adjustment
and competition for livelihoods can also and learning. As a consequence,
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trap people in poverty.36 inadequate planning and ineffective
governance can bring significant
Many of the risks described above can economic, social and environmental
lead to social instability. It is the rapid costs, threatening the sustainability of
and unplanned nature of urbanization, urban development.
rather than urbanization itself, that is
linked by many researchers to such The inability of governments to provide
risks as urban violence and social appropriate infrastructure and public
unrest.37 Rapid urbanization in the services is at the core of many urban
developing world can quickly bring challenges in developing countries,
together large numbers of unemployed which range from the incapacity
youth, a common ingredient of social to contain infectious disease to
unrest. Widening inequalities also tend the challenges of building climate-
to be more starkly visible in urban than resilient cities. At the same time, these
rural areas, with the most wealthy areas challenges have worsened due to
of cities often neighbouring quickly- the rapid and chaotic development of
expanding slums. The combination cities. City leaders from government,
of inequality, competition over scarce civil society and the private sector
resources such as land, impunity from are ideally positioned to plan rapid
the law and weak city governance urbanization and must act to sustain
increases the risk of violence and metropolitan growth.
potential breakdowns in law and order.
Some cities in developing countries What is more, as the world continues
are already extremely dangerous, to urbanize, power will increasingly
such as for example San Pedro Sula in be concentrated in cities. This power
Honduras, with 169 killings per 100,000 ranging from economic to social
residents in 2011.38 not only makes cities the centre of
gravity, but offers greater scope to
Rapid urbanization and the related find practical solutions to the most
growing demand for housing are pressing challenges. Indeed, many
creating pressure on the housing observers and organizations are now
market and social tensions are focusing on cities and the connections
expected to increase. The shortage of between them rather than directing
affordable housing not only contributes their attention at the national level.
to social exclusion, it can also threaten The strength of city-level institutions
to destabilize the wider economy if the in addition to national institutions
housing price increase fuels property their capacity to be flexible, innovative
bubbles. Making housing more and dynamic, and effectively involve
accessible, affordable and adequate multiple stakeholders in governance
for urban dwellers is therefore of critical will largely determine whether
importance. A wide portfolio of policies, urbanization makes the world more
from limiting excessive credit to resilient or more vulnerable in the face
optimizing land use and development of global risks.
activity in cities, is crucial to mitigate
these risks and equitably distribute the
benefits of urban growth.
which include artificial intelligence, the Internet of Things and big data; second,
From networked medical devices to biological technologies, such as the genetic engineering of drought-resistant
the Internet of Things, from drought- crops and biofuel, lab-grown meat, and new therapeutic techniques based on
resistant crops to bionic prosthetics, RNA1, genomics and microbiomes; and third, chemical technologies, those
emerging technologies promise to involved in making stronger materials (such as nanostructure carbon-fibre
revolutionize a wide range of sectors composites) and better batteries (through germanium nanowires, for example),
and transform traditional relationships.39 recycling nuclear waste and mining metals from the by-products of water
Their impacts will range from the desalination plants.
economic to the societal, cultural,
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environmental and geopolitical. However, any attempt to categorize emerging technologies is difficult because
many new advances are interdisciplinary in nature. In particular, information
Emerging technologies hold great and technology underlies many, if not all, advances in emerging technology. A final
unprecedented opportunities. Some category of cross-over technologies would include smart grids in the electricity
examples are explored in detail in three
supply industry, brain-computer interfaces and bioinformatics
boxes presented in this section:
the growing capacity to use technology to model and understand biology.
Synthetic biology could create
Note:
bacteria that turn biomass into 1
RNA stands for ribonucleic acid; it is one of the three major biological macromolecules that are essential
diesel (Box 2.6). for all known forms of life (along with DNA and proteins). A central tenet of molecular biology states that the
flow of genetic information in a cell goes from DNA through RNA to proteins: DNA makes RNA makes
Gene drives could assist in the protein. Proteins are the workhorses of the cell; they play leading roles in the cell as enzymes, as structural
components, and in cell signalling, to name just a few. For more information see the RNA Society at http://
eradication of insect-borne diseases www.rnasociety.org/about/what-is-rna/.
such as malaria (Box 2.7).
Artificial intelligence is behind
advances from self-driving cars to highlighted technological risks as highly human transplants42, or chemical or
personal care robots (Box 2.8). connected to man-made environmental biological warfare. The establishment
catastrophes. of new fundamental capabilities, as is
Discoveries are proceeding quickly in happening for example with synthetic
the laboratory, and once technologies Emerging technology is a broad and biology and artificial intelligence,
demonstrate their usefulness in the real loose term (see Box 2.5), and debate is especially associated with risks
world, they attract significantly more about potential risks and benefits is that cannot be fully assessed in the
investments and develop at an even more vigorous in some areas than in laboratory. Once the genie is out of
greater pace. others. In the examples that follow, the bottle, the possibility exists of
the focus is on technologies that are undesirable applications or effects that
However, how emerging technologies considered to have wide benefits and could not be anticipated at the time of
evolve is highly uncertain. Their for which there is strong pressure for invention. Some of these risks could
potential second- or third-order effects development, as well as high levels be existential that is, endangering the
cannot easily be anticipated, such that of concern about potential risks and future of human life (see Boxes 2.6 to
designing safeguards against them safeguards. 2.8).43
is difficult. Even if the ramifications of
technologies could be foreseen as Causes for Concern Both foreseen and unforeseen risks
they emerge, the trade-offs would are amplified by the accelerating
still need to be considered. Would Risks of undesirable impacts of speed and complexity of technological
the large-scale use of fossil fuels for emerging technologies can be development. Exponential growth
industrial development have proceeded divided into two categories: the in computing power implies the
had it been clear in advance that foreseen and the unforeseen. Some potential for a tipping point that
it would lift many out of poverty examples of foreseen risks are could significantly amplify risks, while
but introduce the legacy of climate leakage of dangerous substances hyperconnectivity allows new ideas
change? Would the Haber-Bosch through difficulties of containment and capabilities to be distributed more
process have been sanctioned had (as is sometimes the case with trials quickly around the world. The growing
it been evident it would dramatically of genetically-modified crops) or complexity of new technologies,
increase agricultural food production storage errors (as with 2014 security combined with a lack of scientific
but adversely impact biodiversity?40 failures in US disease-control labs knowledge about their future evolution
A range of currently emerging handling lethal viruses);41 the theft or and often a lack of transparency,
technologies could have similar or illegal sale of emerging technologies; makes them harder for both individuals
even more profound implications for computer viruses, hacker attacks on and regulatory bodies to understand.
mankinds future. Survey respondents
For thousands of years, humans have been selectively breeding crops and animals. With the discovery of DNA hybridization in
the early 1970s, it became possible to genetically modify existing organisms. Synthetic biology goes further: it refers to the
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creation of entirely new living organisms from standardized building blocks of DNA. The technology has been in development
since the early 2000s, as knowledge and methods for reading, editing and designing genetics have improved, costs of DNA
sequencing and synthesis have decreased, and computer modelling of proposed designs has become more sophisticated.
(see Figure 2.6.1)
In 2010 Craig Venter and his team demonstrated that a simple bacterium could be run on entirely artificially-made DNA.1
Applications of synthetic biology that are currently being developed include producing biofuel from E. coli bacteria; designer
organisms that act as sensors for pollutants or explosives; optogenetics, in which nerve cells are made light-sensitive and neural
signals are controlled using lasers, potentially revolutionizing the treatment of neurological disorders; 3D-printed viruses that can
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attack cancer;2 and gene drives as a possible solution to insect-borne diseases (as discussed in Box 2.7).
Alongside these vast potential benefits are a range of risks. Yeast has already been used to make morphine;3 it is not hard to
imagine that synthetic biology may allow entirely new pathways for producing illicit drugs. The invention of cheap, synthetic
alternatives to high-value agricultural exports such as vetiver could suddenly destabilize vulnerable economies by removing a
source of income on which farmers rely.4 As technology to read DNA becomes more affordable and widely available, privacy
concerns are raised by the possibility that someone stealing a strand of hair or other genetic material could glean medically-
sensitive information or determine paternity.
The risk that most concerns analysts, however, is the possibility of a synthetized organism causing harm in nature, whether by
error or terror. Living organisms are self-replicating and can be robust and invasive. The terror possibility is especially pertinent
because synthetic biology is small tech it does not require large, expensive facilities or easily-tracked resources. Much of its
power comes from sharing information and, once a sequence has been published online, it is nearly impossible to stop it: a
DIYbio or biohacker community exists, sharing inventions in synthetic biology, while the International Genetically Engineered
Machines competition is a large international student competition in designing organisms, with a commitment to open-sourcing
the biological inventions.
Conceivably, a single rogue individual might one day be able to devise a weapon of mass destruction a virus as deadly as Ebola
and as contagious as flu. What mechanisms could safeguard against such a possibility? Synthetic biology and affordable
DNA-sequencing also opens up the possibility of designing bespoke viruses as murder weapons: imagine a virus that spreads by
causing flu-like symptoms and is programmed to cause fatal brain damage if it encounters a particular stretch of DNA found only
in one individual.5
204
5 192
5
Other Asia/Oceania Europe USA
127
61 57
7 6
28
17 16 17
1 6
7
2009 2013 2009 2013 2009 2013 2009 2013 2009 2013 2009 2013
University Company Research Policy and Government Other
institution governance centers lab
Synthetic biology is currently governed largely as just another form of genetic engineering. Regulations tend to assume large
institutional stakeholders such as industries and universities, not small and medium-sized enterprises or amateurs. The
governance gap is illustrated by the controversy surrounding the very successful 2013 crowdsourcing of bioluminescent plants,
which exploited a legal loophole dependent on the method used to insert genes.6 The Glowing Plants project, which aims
ultimately to make trees function as street lights, was able to promise to distribute 600,000 seeds without any oversight by a
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regulatory body other than the discretion of Kickstarter. The project caused concern not only among activists against genetically-
modified organisms, but also among synthetic biology enthusiasts who feared it might cause a backlash against the technology.7
Differences can already be observed in the focus of DIYbio groups in Europe and the United States due to the differing nature of
regulations on genetically-modified organisms in their regions, with European enthusiasts focusing more on bio-art.8 The
amateur synthetic biology community is very aware of safety issues and pursuing bottom-up options for self-regulation in various
ways, such as developing voluntary codes of practice.9 However, self-regulation has been criticized as inadequate, including by
a coalition of civil society groups campaigning for strong oversight mechanisms.10 Such mechanisms would need to account for
the cross-border nature of the technology, and inherent uncertainty over its future direction.11
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Notes:
1
Gibson, D. et al., 2010. Creation of a bacterial cell controlled by a chemically synthesized genome. Science 329 (5987): 526
2
See 3dprint.com article Autodesk Genetic Engineer is Able to 3D Print Viruses, Soon to Attack Cancer Cells; http://3dprint.com/19594/3d-printed-virus-fights-
cancer/.
3
See Scientific American article Yeast Coaxed to Make Morphine; http://www.scientificamerican.com/podcast/episode/yeast-coaxed-to-make-morphine/.
4
See Inter Press Service News Agency article Synthetic Biology Could Open a Whole New Can of Worms; http://www.ipsnews.net/2014/10/synthetic-biology-could-
open-a-whole-new-can-of-worms/.
5
See The Atlantic article Hacking the Presidents DNA; http://www.theatlantic.com/magazine/archive/2012/11/hacking-the-presidents-dna/309147/.
6
See A. Evans article Glowing Plants: Natural Lighting with no Electricity; https://www.kickstarter.com/projects/antonyevans/glowing-plants-natural-lighting-with-no-
electricit, and Scientific American article Glowing Plants: Crowdsourced Genetic Engineering Project Ignites Controversy; http://www.scientificamerican.com/article/
glowing-plants-controversy-questions-and-answers/.
7
See Crowdfund Insiders article Kickstarter Bans GMOs In Wake Of Glowing Plant Campaign; http://www.crowdfundinsider.com/2013/08/20031-kickstarter-bans-
gmos-in-wake-of-glowing-plant-fiasco/.
8
See NCBI literature European do-it-yourself (DIY) biology: Beyond the hope, hype and horror; http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4158858/.
9
See for example BioScience article Biosafety Considerations of Synthetic Biology in the International Genetically Engineered Machine (iGEM) Competition; http://
www.biofaction.com/wp-content/uploads/2012/04/igem-biosafety-2013.pdf; A Biopunk Manifesto; https://maradydd.livejournal.com/496085.html; and DIYbio Codes;
http://diybio.org/codes/.
10
See The Principles for the Oversight of Synthetic Biology; http://www.biosafety-info.net/file_dir/15148916274f6071c0e12ea.pdf.
11
Zhang, J.Y. et al., 2011.
Safeguards and Challenges further complicated by the need to adopt a laissez-faire approach for
translate regulations into rules that too long, and rapid developments
As illustrated by the boxes on synthetic can be implemented nationally to may have irrevocable consequences.
biology, gene drives and artificial be fully enforceable. Undesirable Different kinds of regulatory oversight
intelligence, governance regimes that consequences have the scope to cross may be needed at different stages:
could mitigate the risks associated with borders, but cultural attitudes differ when the scientific research is being
the abuse of emerging technologies widely. For example, public attitudes conducted, when the technology
from formal regulations through private are more accepting of genetically- is being developed, and when the
codes of practice to cultural norms modified produce in the United States technology is being applied. At the
present a fundamental challenge that than the European Union; consequently same time, the natural tendency to
has the following main aspects.44 the EU has institutionalized the think short term in policy-making
precautionary principle, while needs to be overcome. Compared
The current regulatory framework there is more faith in the US that a with Internet technology, notably
is insufficient. Regulations are technological fix will be available the physical and life sciences have
comprehensive in some specific for most challenges.45 Safeguards, longer cycles of development and
areas of emerging technology, while regulations and governance need to need governance regimes to take a
weak or non-existent in others, even combine consistency across countries long-term approach. History shows
if conceptually the areas are similar. with the strength to address the that it can take a long time to reach
Consider the example of two kinds worldwide impacts of potential risks international agreements on emerging
of self-flying aeroplane: the use of and the flexibility to deal with different threats 60 years for bioweapons, 80
autopilot on commercial aeroplanes cultural preferences. years for chemical weapons so it is
has long been tightly regulated, never too early to start discussions.46
whereas no satisfactory national and The timing issue is that decisions need
international policies have yet been to be taken today for technologies that The question of who regulates
defined for the use of drones. have a highly uncertain future path, becomes significant when it is
the consequences of which will be unclear where a new device fits
Spatial issues include where to visible only in the long term. Regulate into the allocation of responsibility
regulate, whether at the national too heavily at an early stage and a across existing regulatory bodies.
or international level. The latter is technology may thus fail to develop; This is an increasingly difficult
In sexually reproducing organisms, most genes have a 50% chance of being inherited by offspring. However, natural
selection has in some cases favoured certain genes that are inherited more often. For the past decade or so, research has
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been exploring how this could be triggered.1 The gene drives method drives a gene through a population, stimulating a
gene to be preferentially inherited. This gene then can spread through a given population, whose characteristics could thus
be modified by the addition, deletion, editing or even suppression of certain genes.
Gene drives present an unprecedented opportunity to cure some of the most devastating risks to health and the
environment. Applications are foreseen in the fight against malaria and other insect-borne diseases, which the
reprogramming of mosquito genomes could potentially eliminate from entire regions. They are also foreseen in combating
herbicide and pesticide resistance, and in eradicating invasive species that threaten the biodiversity of ecosystems.
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Technical challenges remain, relating mainly to the difficulty of editing genomes for programming drives in a way that is
precise (with only the targeted gene affected) and reversible (to prevent and overwrite possible unwanted changes). A team
at Harvard University, MIT and the University of California at Berkeley is making huge progress, such that the development
of purpose-built, engineered gene drives is expected in the next few years.2
However, gene drives carry potential risks to wild organisms, crops and livestock: unintentional damage could possibly be
triggered and cascade through other connected ecosystems. No clear regulatory framework to deal with gene drives
currently exists. The US Food and Drug Administration would consider them as veterinary medicines, requiring the
developers to demonstrate they are safe for animals that need to be protected. So how are they defined? Both the US policy
on Dual Use Research of Concern, which oversees research that has clear security concerns, and the Australia Group
Guidelines, a form of private regulations on transfers of biological material, rely on lists of infectious bacterial and viral
agents.3 They do not have the functional approach that would be needed, for example, to regulate genetic modifications to
sexually reproducing plants and animals.
Scientists and regulators need to work together from an early stage to understand the challenges, opportunities and risks
associated with gene drives, and agree in advance to a governance regime that would govern research, testing and release.
Acting now would allow time for research into areas of uncertainty, public discussion of security and environmental
concerns, and the development and testing of safety features. Governance standards or regulatory regimes need to be
developed proactively and flexibly to adapt to the fast-moving development of the science.4
issue as innovations become more of risk. For example, a new organism technologies where institutions are
interdisciplinary and technologies may escape into the environment weak or non-existent may seek to
converge. Examples include and cause damage. Weighing risks respond to a governance gap by
Google Glass, autonomous cars against benefits involves attempting demonstrating their responsibility
and M-healthcare: while all rely on to anticipate the issues of tomorrow through self-regulating as the
Internet standards, they also have and deciding how to allocate scarce biohacker community is attempting in
ramifications in other spheres. Often no regulatory resources among highly synthetic biology. Another example of a
mechanism exists for deciding which technical fields. private player highlighting a governance
existing regulatory body, if any, should gap is the way Facebook effectively
take responsibility for an emerging When a gap in governance exists, exerts regulatory power in online
technology. it may create a vacuum of power identity management and censorship,
that could be filled by religious through policies such as forcing
Striking a balance between precaution movements and action groups users to display their real names and
and innovation is an overall dilemma. exerting more influence and potentially removing images that it believes the
Often potentially-beneficial innovations stifling innovation. With that risk in majority of users might find offensive.
cannot be tested without some degree mind, industry players in emerging
Artificial Intelligence (AI) is the discipline that studies how to create software and systems that behave intelligently. AI scientists
build systems that can solve reasoning tasks, learn from data, make decisions and plans, play games, perceive their
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environments, move autonomously, manipulate objects, respond to queries expressed in human languages, translate between
languages, and more.
AI has captured the public imagination for decades, especially in the form of anthropomorphized robots, and recent advances
have pushed AI into popular awareness and use: IBMs Watson computer beat the best human Jeopardy! players; statistical
approaches have significantly improved Googles automatic translation services and digital personal assistants such as Apples
Siri; semi-autonomous drones monitor and strike military targets around the world; and Googles self-driving car has driven
hundreds of thousands of miles on public roads.
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This represents substantial progress since the 1950s, and yet the original dream of a machine that could substitute for arbitrary
human labour remains elusive. One important lesson has been that, as Hans Moravec wrote in the 1980s, It is comparatively
easy to make computers exhibit adult level performance on intelligence tests or playing checkers, and difficult or impossible to
give them the skills of a one-year-old when it comes to perception and mobility.1
These and other challenges to AI progress are by now well known within the field, but a recent survey shows that the most-cited
living AI scientists still expect human-level AI to be produced in the latter half of this century, if not sooner, followed (in a few years
or decades) by substantially smarter-than-human AI.2 If they are right, such an advance would likely transform nearly every sector
of human activity.
If this technological transition is handled well, it could lead to enormously higher productivity and standards of living. On the other
hand, if the transition is mishandled, the consequences could be catastrophic.3 How might the transition be mishandled?
Contrary to public perception and Hollywood screenplays, it does not seem likely that advanced AI will suddenly become
conscious and malicious. Instead, according to a co-author of the worlds leading AI textbook, Stuart Russell of the University of
California, Berkeley, the core problem is one of aligning AI goals with human goals. If smarter-than-human AIs are built with goal
specifications that subtly differ from what their inventors intended, it is not clear that it will be possible to stop those AIs from using
all available resources to pursue those goals, any more than chimpanzees can stop humans from doing what they want.4
In the nearer term, however, numerous other social challenges need to be addressed. In the next few decades, AI is anticipated
to partially or fully substitute for human labour in many occupations, and it is not clear whether human workers can be retrained
quickly enough to maintain high levels of employment.5 What is more, while previous waves of technology have also created new
kinds of jobs, this time structural unemployment may be permanent as AI could be better than humans at performing the new
jobs it creates. This may require a complete restructuring of the economy by raising fundamental questions of the nature of
economic transactions and what it is that humans can do for each other. Autonomous vehicles and other cases of human-robot
interaction demand legal solutions fit for the novel combination of automatic decision-making with a capacity for physical harm.6
Autonomous vehicles will encounter situations where they must weigh the risks of injury to passengers against the risks to
pedestrians; what will the legal redress be for parties who believe the vehicle decided wrongly? Several nations are working
towards the development of lethal autonomous weapons systems that can assess information, choose targets and open fire
without human intervention. Such developments raise new challenges for international law and the protection of non-
combatants.7 Who will be accountable if they violate international law? The Geneva Conventions are unclear. It is also not clear
when human intervention occurs: before deployment, during deployment? Humans will be involved in programming autonomous
weapons; the question is whether human control of the weapon ceases at the moment of deployment. AI in finance and other
domains has introduced risks associated with the fact that AI programmes can make millions of economically significant
decisions before a human can notice and react, leading for example to a May 2012 trading event that nearly bankrupted Knight
Capital.8,9
In short, proactive and future-oriented work in many fields is needed to counteract the tendency of technological advance to
outpace the social control of technology.10
Notes: 7
Human Rights Watch, 2012
1
Moravec, 1988, p. 15. 8
Johnson et al., 2013.
2
Mller and Bostrom, 2014. 9
See Reuters, Error by Knight Capital rips through stock market;
3
Bostrom, 2014. http://www.reuters.com/article/2012/08/01/us-usa-nyse-tradinghalts-
4
Omohundro, 2008. idUSBRE8701BN20120801.
5
Brynjolfsson and McAfee, 2014. 10
Posner, 2004, p. 20.
6
Calo, 2014; http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2402972.
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unemployment and underemployment, Regulators face the dilemma to fields of enquiry, two common themes
and even a temporary adjustment due design regulatory systems that are emerge: the importance of governance
to technological advancement could predictable enough for companies, and the need for proactivity.
undermine social stability. In ethical investors and scientists to make
terms, advances in transhumanism, rational decisions, but unambiguous The analysis of the interplay between
using technology to enhance human enough to avoid a governance gap that geopolitics and economics focuses
physiology and intelligence, will require could jeopardize public consent or give attention on the need to find ways
finding a definition for what people too much room to non-state actors. to minimize incentives for national
mean by human dignity: are enhanced Against this backdrop, evolving and governments to engage in negative
human capabilities a basic human adaptive regulatory systems should tactics, including by making the
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right, or a privilege for those who can be designed in a flexible manner to mechanisms of global governance
pay, even if that exacerbates and take into account changing socio- more effective in resolving tensions
entrenches inequalities? At the same economic conditions, new scientific among nation states. As this interplay
time, governance regimes for emerging insights and the discovery of unknown leads to regional institutions gaining
technologies are strongly influenced by interdependencies. in significance, proactive attention to
the perceptions, opinions and values the quality and effectiveness of their
of society whether people are more In light of the complexities and governance also becomes more
enthusiastic about a technologys rapidly changing nature of emerging important in creating the capacity to
potential benefits than fearful about its technologies, governance should be address risks.
risks. This is very domain-related, and designed in such a way as to facilitate
not always rational or proportional: it dialogue among all stakeholders. There is no doubt that urbanization
can lead to some technologies being For regulators, to dialogue with will continue, so improving the
over-regulated and others under- researchers at the cutting edge of governance of cities will be relevant
regulated. Many biological technologies developing these technologies is the to a broad spectrum of global risks.
that touch on beliefs about religion only way to understand the potential An opportunity also exists to be
and human life, for example, are future implications of new and highly- proactive in fostering more effective
regulated relatively stringently, as technical capabilities. For the scientific links between city governments around
evidenced by the worldwide prohibition community within and across certain the world, for mutual learning and
on human cloning.47 On the other fields, a safe space is needed to collaboration on risks that affect them.
hand, the human propensity to coalesce around a common language
anthropomorphize means that robotic and have an open discussion around Emerging technologies promise to
prototypes in some empathic form of both benefits and risks. At the same play a leading role in improving the
assistive technology (such as Paro, a time, given that risks tend to cross governance of smart cities, but also
baby harp seal lookalike robot assisting borders, so must the dialogue on how present risks. Proactivity is especially
in the care of people with dementia and to respond. And given the power of crucial here given that the risks that
other health problems) easily capture public opinion to shape regulatory might emerge from entirely new fields
public sympathy, which may ease responses, the general public must of knowledge are impossible to predict.
safety, ethical or legal concerns.48,49 In also be included in an open dialogue Effective governance at all levels, from
other areas, such as lethal autonomous about the risks and opportunities industry codes of conduct to national
weapons, it would probably be easier of emerging technologies through regulations and global cooperation,
to get close to unanimous public carefully-managed communication will determine how well risks from
support to prohibit them as has been strategies. Governance will be emerging technologies are foreseen
the case for landmines. As such, these more stable and less likely either to and minimized.
societal implications constitute an overlook emerging threats or to stifle
important risk in themselves, as it is innovation unnecessarily, if the various
difficult to anticipate their impact on the stakeholders likely to be affected are
use and path of emerging technologies. involved in the thinking about potential
regulatory regimes and given the
Thoughts for the Future knowledge to enable them to make
informed decisions.
Emerging technologies are developing
rapidly. Their far-reaching societal,
economic, environmental and
geopolitical implications necessitate
a debate today to chart the course
for the future and reap the many
benefits but avoid the risks of emerging
Endnotes
1
United Nations DESA, 2014.
2
See the IMF Finance and Development Slow Trade article,; http://www.imf.org/external/pubs/ft/fandd/2014/12/constant.htm.
3
See the reports on G20 trade and investment measures; http://www.oecd.org/daf/inv/investment-policy/12th-G20-Report.pdf; see also the Global Trade Alert report, The
Global Trade Disorder,; http://www.globaltradealert.org/16th_GTA_report.
4
United Nations DESA, 2014.
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5
Forecasts show that over four-fifths of the worlds urban population will live in less-developed regions by 2050.
6
United Nations DESA, 2014.
7
McKinsey Global Institute, 2011.
8
Glaeser, 2013.
9
United Nations Water, 2013.
10
World Economic Forum, 2014.
11
World Economic Forum Global Risks Perception Survey 2014.
12
OECD, 2007.
13
See Improved Infrastructure to Support Africas Competitiveness at http://www.afdb.org/en/blogs/afdb-championing-inclusive-growth-across-africa/post/improved-
infrastructure-to-support-africas-competitiveness-11755/ and Strategic Infrastructure in Africa at http://www3.weforum.org/docs/AF13/WEF_AF13_African_Strategic_
Infrastructure.pdf.
Part 3
14
McKinsey Global Institute, 2013.
15
Alirol et al., 2011.
16
World Economic Forum, 2014.
17
Hawkins et al., 2013.
18
See UN Water, Water for Life Decade at http://www.un.org/waterforlifedecade/water_cities.shtml.
19
Alirol et al., 2011.
20
Alirol et al., 2011.
21
World Health Organization, 2014b.
22
IDF, 2013.
23
IDF, 2013.
24
Ramachandran et al., 2008.
25
WHO, 2014a.
26
Seto et al., 2014. See also WHOs 7 May 2014 news release Air quality deteriorating in many of the worlds cities; http://www.who.int/mediacentre/news/releases/2014/air-
quality/en/.
27
See UNEP, Urban Air Pollution; http://www.unep.org/urban_environment/Issues/urban_air.asp.
28
See WHO Bulletin The Impact of Climate Change: Migration and Cities in South America; https://www.wmo.int/pages/publications/bulletin_en/Bulletin632-2014_southamerica.
html.
29
World Bank, 2010.
30
Revi et al., 2014.
31
Seto et al., 2014.
32
New Climate Economy, 2014.
33
Seto et al., 2014.
34
Revi et al., 2014.
35
McKinsey Global Institute, 2011.
36
OECD, 2014.
37
Muggah, 2012.
38
See The Guardian article Murder capitals of the world: how runaway urban growth fuels violence; http://www.theguardian.com/global-development/2014/nov/01/murder-
capitals-world-city-violence.
39
Emerging technologies are defined as contemporary advances and innovation in various fields of technology. See Emerging Technologies: From Hindsight to Foresight (page
3); http://www.ubcpress.ca/books/pdf/chapters/2009/emergingtechnologies.pdf.
40
Synthetic nitrogenous fertilizers now provide over half of the nutrients received by the worlds crops: see http://www.engineeringchallenges.org/cms/8996/9132.aspx. See also
the Nature Education article The Nitrogen Cycle: Processes, Players, and Human Impact; http://www.nature.com/scitable/knowledge/library/the-nitrogen-cycle-processes-
players-and-human-15644632.
41
See The Guardian article From anthrax to bird flu the dangers of lax security in disease-control labs; http://www.theguardian.com/world/2014/jul/18/anthrax-bird-flu-
dangers-lax-security-disease-control-labs.
42
See the University of Reading archive article Attacking human implants: a new generation of cybercrime; http://centaur.reading.ac.uk/35672/.
43
See Nick Bostroms article Superintelligence: Answer to the 2009 EDGE QUESTION; WHAT WILL CHANGE EVERTYTHING?; http://www.nickbostrom.com/views/
superintelligence.pdf.
44
Governance regime here is defined as the set of actors and processes that together determine how rules are made and applied. This includes regulation (such as top-down laws
and regulatory frameworks made by governments or regulatory authorities) but also other approaches (such as private regulation, codes, standards and even practices determined
by culture and history).
45
Wallach, 2011.
46
Based on an interview with University of California, Berkeley professor Stuart Russell, conducted by the Risks team on 12 November 2014.
47
Wallach, 2011.
48
See The Economist article Seal of approval: A robot around the house doesnt just have to be handy. It has to be likeable too; http://www.economist.com/news/special-
report/21599528-robot-around-house-doesnt-just-have-be-handy-it-has-be-likeable-too-seal.
49
Wallach, 2011.
Part 2
Bostrom, N. 2014. Superintelligence: Paths, Dangers, Strategies. Oxford University Press.
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Calo, R. 2014. Robotics and the Lessons of Cyberlaw. California Law Review, 103, University of Washington School of Law Research Paper No. 2014-08.
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Garcia, C. Andrews-Pfannkoch, E.A Denisova, L. Young, Z.Q Qi, T.H Segall-Shapiro, C.H Calvey, P.P Parmar, C.A Hutchison, H.O Smith, J.C Venter. 2010. Creation of a bacterial
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Hawkins, P., I. Blackett and C. Heymans. 2013. Poor-Inclusive Urban Sanitation: An Overview. Washington DC: International Bank for Reconstruction and Development and The
World Bank; http://www.wsp.org/sites/wsp.org/files/publications/WSP-Poor-Inclusive-Urban-Sanitation-Overview.pdf.
Human Rights Watch. 2012. Losing Humanity: The Case against Killer Robots. New York; http://www.hrw.org/reports/2012/11/19/ losing-humanity-0.
International Diabetes Federation (IDF). 2013. IDF Diabetes Atlas. Sixth edition; http://www.idf.org/sites/default/files/EN_6E_Atlas_Full_0.pdf.
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Moravec, H. 1988. Mind Children, the Future of Robot and Human Intelligence. Cambridge, MA: Harvard University Press.
Ministry of Foreign Affairs of the Republic of Korea. 2014. FTA Status of ROK; http://www.mofa.go.kr/ENG/policy/fta/status/overview/index.jsp?menu=m_20_80_10.
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Mller, V. C. and N. Bostrom. 2014. Future progress in artificial intelligence: A Survey of Expert Opinion. Mller (ed.), Fundamental Issues of Artificial Intelligence. Synthese Library;
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New Climate Economy. 2014. Better Growth Better Climate. The New Climate Economy Report; http://newclimateeconomy.report/.
New Zealand Ministry of Foreign Affairs & Trade. 2014. Regional Comprehensive Economic Partnership; http://www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-
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Office of the United States Trade Representative. 2014. Trans-Pacific Partnership (TPP); http://www.ustr.gov/tpp.
Omohundro, S. M. 2008. The basic AI drives. P. Wang et al. (Eds), Artificial General Intelligence 2008: The proceedings of the first AGI Conference. Amsterdam: IOS Press.
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Posner, R. 2004. Catastrophe: Risk and Response. New York: Oxford University Press.
Ramachandran, A., S. Mary, A. Yamuna, N. Murugesan, C. Snehalatha 2008. High prevalence of diabetes and cardiovascular risk factors associated with urbanization in India.
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Revi, A., D.E. Satterthwaite, F. Aragn-Durand, J. Corfee-Morlot, R.B.R. Kiunsi, M. Pelling, D.C. Roberts and W. Solecki. 2014. Urban Areas. Climate Change 2014: Impacts,
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Part 3: Introduction
Mitigating, preparing for and building
Good Practices on
resilience against global risks is a long
and complex process, a necessity
often recognized in theory but difficult
Part 2
Risk Management
borders, meaning that often no single
entity has the capacity and authority
to address them. Multistakeholder
collaboration is required but made
and Risk
difficult by misaligned incentives and
uncertainties those with the most to
lose from a risk are often not those with
the most power to address it. And the
Resilience
highly interconnected nature of global
Part 3
Part 2
that must be managed locally, proven understand their risk interconnections significant flooding (ZRS Public).
local initiatives that can be adapted and and design resilience strategies against
replicated elsewhere are needed. The risks, including extreme weather events. The examples showcased here are
initiative described here was developed It is hoped that the lessons learned will not intended to be exhaustive; they
in Australias Murray-Darling Basin and enable many more communities to do are selected sources of inspiration and
has been transferred in other regions of the same. a base for continuing this work in the
Asia. future.
Part 3
Figure 3.1: Global Risks for Which Most Progress Has Been Made within the Last 10 Years
%
20.2
Societal risks
%
24.3
% 16.6
Spread of infectious diseases
%
23.8
Economic risks Food crises %
11.3
Asset bubble %
10.6
Technological risks
%
10.8
Deflation
5.7%
Critical information infrastructure breakdown
Unemployment or underemployment 6.8%
5.2%
Cyber attacks
Failure of critical infrastructure
5.4%
Data fraud or theft
%
21.3
4.1%
Misuse of technologies
Geopolitical risks
%
16.9
Terrorist attacks Environmental risks
6.5%
Weapons of mass destruction Failure of climate-change adaptation
6.5%
3.8%
Failure of national governance Man-made environmental catastrophes
Practice 1: Interdisciplinary Climate change will increase the The complexity of modelling an entire
frequency and severity of droughts river system which requires handling
Science for Managing and floods and will lead to overall drier vast amounts of often incomplete
Water Resources and conditions in some world regions.5 This data from multiple sources of varying
Improving Long-Term may heighten the risk of geopolitical accuracy and reliability had been
destabilization and armed conflict: insurmountable until recently. But prior
Water Security countries that share rivers have a investments in fields such as hydrology,
Part 2
Water use is growing at twice the provides water for over 2 million people, surface water inflows and outflows had
pace of population growth. By 2025, including much of the city of Adelaide, to be developed, for different parts of
two-thirds of the world population as well as 40% of Australias agriculture. an area larger than France. Then these
will be experiencing water stress Unsustainable rates of water extraction individual models had to be brought
conditions. had been decreasing flow volumes: in together into a single, integrated model.
2007, the car ferry at the River Murray Starting in 2006, a team of around 100
One in nine people lacks access to mouth was grounded for the first time in people from 15 organizations developed
improved sources of drinking water its 71-year history.8 ways to handle the uncertainties and
and one in three lacks improved link the models. The resulting system
sources of water sanitation. This There was a growing sense that incorporated 70 individual ground and
causes around 3.5 million deaths something had to be done to ensure surface water models and over a century
each year. that the river system was not destroyed. of climate data into a 61,000 gigabyte
Policy-makers realized that they database roughly the size of the US
Between 2000 and 2006, droughts, urgently required a model that could Library of Congress.
floods and storm surges killed provide credible and robust estimates
almost 300,000 people and caused of current and future water availability, The project combined both blue-sky
an estimated $422 billion worth of to enable them to set equitable and and applied research. It involved the
damage. efficient allocations for competing uses. development of new techniques for
However, such a model had not yet been hydrological, environmental and climate
designed, let alone built. modelling, with transparency and expert
review to validate methods and build
Figure 3.2: The Murray-Darling Basin in Australia stakeholder trust. The project is the first
rigorous attempt worldwide to estimate
the impacts of catchment development,
changing groundwater extraction,
climate variability and anticipated
climate change, on water resources at
a basin-scale, explicitly considering the
connectivity of surface and groundwater
systems.9
Part 2
features of each. This is now happening cost billions of dollars in the United steps, the first two of which have been
for the Mekong River Basin, one of the States each year. The factors that make implemented. First, a Roundtable
a community resilient against these subcommittee makes visits to engage
largest in the world, which covers China,
threats able to protect against, absorb, different community groups including
Myanmar, Lao PDR, Thailand, Cambodia
mitigate, respond to or recover from the business community local corner
and Vietnam: over 60 million people
them differ greatly according to local stores as well as multinational chains;
depend on the Mekong for their water
circumstances. But many communities local government agencies; emergency
supply, and many hydropower plants are
have not even begun to think about how managers and first responders; and
planned or under construction.
to assess their resilience, let alone the local chapters of community-based
build it.
Part 3
The science of river basin planning is non-governmental organizations such
also advancing to incorporate social as the American Red Cross, the United
Started in January 2014, the Resilient Way, Points of Light and the Boys & Girls
science alongside the physical sciences
America Roundtable initiative by Clubs of America. Separate discussions
in efforts to improve the resilience of
the National Academy of Sciences are held with each about their views
social, economic and environmental
aims to work with communities in a on resilience and what elements of
systems. In a 2010 study with funding
bottom-up way. Over a three-year time quality of life must be maintained during
from the Australian overseas aid
horizon, the purpose of the initiative emergency. Around 70-100 people have
agency, the Commonwealth Scientific
is to initiate, nurture and learn from participated in these conversations so
and Industrial Research Organisation
local efforts to measure and improve far in Iowa and South Carolina.
(CSIRO) and the Mekong River
resilience. It emerged from interest
Commission developed six scenarios
in testing ideas included in the 2012 Second, 70 people are invited to play a
for the Mekong Basin to the year 2050.
US National Research Council report specially-developed Extreme Events
The Mekong Futures Project sought to entitled Disaster Resilience: A National
understand the complex transboundary game, in which everyone chooses a
Imperative on reducing vulnerability role (first responder, individual, elected
regional dynamics to improve decision- to extreme events, decreasing their
making, ensure participatory processes official, etc.) in a fictional Coastal City and
costs and mitigating their impacts. The makes decisions as a scripted scenario
and develop shared future visions. The Resilient America Roundtable has a
CSIRO team working on the project unfolds that involves a hurricane and
strong multistakeholder component: other surprises. The game takes the
had both physical and socio-economic initiated by nine federal agencies, it
science backgrounds.10 players through the efforts of finding,
convenes experts from the academic, sharing and distributing resources. Its
public and private sectors. The science purpose is to break the ice and build
Another project will see yet more community is represented by the
advanced techniques applied to model trust among the members of each
National Academy of Sciences. community. The game will also be made
water availability, ecosystems and
livelihoods for the Koshi River Basin, available online.
The Resilient America Roundtable has
which stretches from China across designed and is currently catalysing
the Himalayas, through Nepal and into Third, a set of interactive table top
pilot projects in communities in South exercises will be developed to
the Ganges in India. In 2013, CSIRO Carolina, Seattle/Tacoma and Iowa, thus
commenced a collaborative four-year understand and map the specific
offering a geographic representation interdependencies in each community.
project with the International Centre for by ranging from the west (Seattle/
Integrated Mountain Development to The pilots have identified certain
Tacoma) to the middle (Iowa) to the east community priorities as a basis for
inform transboundary water reforms.11 (South Carolina). The communities were
Reliable information about how much this exercise: in Charleston and Iowa,
selected based on criteria including their economic drivers have emerged as
water can be safely extracted from a size, ethnic and economic diversity, community priorities; in Charleston,
river system is vital to help countries the range and type of natural hazard priorities include cultural identity and
reach agreements on long-term water risks they face and the presence of tourism and, in Iowa, the thrust is on
security. motivated community leadership to own grain production and export.
and maintain the resulting community
As the models increase in sophistication, resilience strategy in the long term. Fourth, the community participants will
the challenge is to plug them into real- The pilot projects are structured be helped to work through a scenario
world decision-making processes. around four pillars: (i) understanding of a disrupting event in which critical
Building the models is hard, but so too is and communicating risk; (ii) identifying infrastructure fails. The goal is to highlight
convincing policy-makers to act on them measures or metrics of resilience, critical nodes, networks and functions
when they point towards the need to including baseline conditions, milestones that act as amplifiers or dampeners as
make difficult choices. and definitions of the acceptable the effects of a disrupting event cascade
or unacceptable consequences of through the system. Finally, the resulting
the identified risks; (iii) building or disruption map will identify the nodes
that require hardening or redundancy Practice 3: ZRS Public available in Saxony, Lower Saxony and
and that will be used as a basis to design Saxony-Anhalt. The GDV is working to
the communitys resilience strategy. Increasing Awareness of develop it into a standardized tool for all
Flood Risk in Saxony A of Germany. Currently the tool is being
In terms of barriers, the initiative relates Practice on Risk developed in Rhineland-Palatinate and
to two overarching objectives: to build Bavaria.15 Flood risk calculations are
resilience at the community level; and, Communication12 presented in four groups:
Part 2
the same basic approach (the four 548 flood risk maps for all communities very low threat: statistically, floods
pillars) in each community and seeing at risk. A statewide risk awareness occur less frequently than once every
which elements of the framework play campaign was also launched. 200 years
out, it is possible to understand the
similarities and differences in how to To better communicate on flood risks, in The initiative aligned the interests of
build resilience and whether there are collaboration with the Ministry of Saxony, all stakeholders and illustrates the
enough common issues that could be the German Insurance Association importance of risk communication.
used as a basis to transfer the project (GDV) developed an online geographic Citizens benefit by understanding more
to other communities. The big barrier information system, ZRS Public, where about their individual risk exposure.
for transferability would be if one were homeowners, tenants and businesses The insurance industry is incentivized
to find through the small sample that can see an exact calculation of the risk to participate as the tool encourages
each community builds resilience in its exposure to flooding, backflow, torrential households and businesses to think
own ways and that few or weak ties bind rain and earthquakes of their individual about their need for insurance. The
communities together. address.13 While similar to other systems, state also benefits from individuals and
such as Tiris in the Austrian region of businesses taking greater responsibility
Project-wise, the experience has shown Tyrol, it is innovative in its triangulation of for risk prevention, both through private
so far that one of the main enabling data from insurers, the government and insurance and investment in physical
factors for building community resilience some 200 water management agencies prevention measures, as it reduces their
to all kinds of risks is for the community across the federal states.14 The results of potential liability in the event of disasters.
to be functional and for the different this online risk information tool are easy To raise awareness further, the state
pieces of that community to work to understand and free of charge. government transparently publishes
together in a productive way. While a information online about applications
collegial and cooperative approach Since its establishment in 2001, the for and disbursements of public
prevails in some communities from the ZRS Public online risk assessment compensation for private damages.
outset, in others more time needs to tool has covered some 20 million home
be spent to build trust among different addresses, 200,000 km of rivers, and is
sectors and stakeholders. In addition,
the key to maintaining momentum is
local leadership: having somebody Figure 3.3: The Rivers in Saxony, Germany
whether an individual, an agency or
an organization take ownership of
the community resilience strategy in a
way that allows it to be resourced and
maintained over time.
Part 2
can progress through a broad-based 4
UN Water, 2013. UN-Water Thematic Factsheets.
multistakeholder coalition. From an 5
Sheffield, Wood and Roderick, 2012.
6
Barnett and Adger, 2007.
emphasis on data collection and
7
Gleditsch et al., 2006.
analysis in the case of the Murray-Darling 8
See David Jeans article Mannums spirit returns as River Murray flows in The Australian, 18 March 2013; http://
Basin, to community building around www.theaustralian.com.au/news/mannums-spirit-returns-as-river-murray-flows/story-e6frg6n6-1226600145938?nk=
resilience in the United States and risk ad67eceb8ab2d2391ee90a020efde1a1.
communication in Germany, they show 9
CSIRO, 2008;
how responses to environmental risks 10
Smajgl, A. et al., 2011.
can be based at the community, regional 11
CSIRO, 2013.
or national levels, and highlight the 12
OECD, 2014.
Part 3
13
See https://www.zuers-solutions.de/platform/resources/apps/ZUERS_public/index.html?lang=de.
importance of knowledge and capability
14
See https://www.tirol.gv.at/statistik-budget/tiris/.
transfer. 15
See http://www.gdv.de/2013/06/zuers-public/.
Global Risks
A global risk is defined as an uncertain event or condition that, if it occurs, can cause significant negative impact for several
countries or industries within the next 10 years.
Energy price shock to the global economy Sharp and/or sustained energy price increases that place
further economic pressures on highly energy-dependent
industries and consumers
Failure of a major financial mechanism or institution Collapse of a financial institution and/or inefficient
Economic Risks
Failure/shortfall of critical infrastructure Failure to adequately invest in, upgrade and secure
infrastructure networks leads to a breakdown with
system-wide implications
Fiscal crises in key economies Excessive debt burdens generate sovereign debt crises
and/or liquidity crises
Extreme weather events (e.g. floods, storms, etc.) Major property, infrastructure and environmental damage
as well as human loss caused by extreme weather events
Major biodiversity loss and ecosystem collapse Irreversible consequences for the environment resulting
(land or ocean) in severely depleted resources for humankind as well as
industries such as fishing, forestry, pharmaceuticals
Major natural catastrophes (e.g. earthquake, Major property, infrastructure and environmental damage
tsunami, volcanic eruption, geomagnetic storms) as well as human loss caused by geophysical disasters
such as earthquakes, volcanic activity, landslides,
tsunamis or geomagnetic storms
Man-made environmental catastrophes (e.g. oil Failure to prevent major man-made catastrophes causing
spill, radioactive contamination, etc.) harm to lives, human health, infrastructure, property,
economic activity and the environment
Failure of national governance (e.g. corruption, illicit Failure of national governance (e.g. corruption, illicit trade,
trade, organized crime, impunity, political deadlock, organized crime, impunity, political deadlock, etc.)
etc.)
Interstate conflict with regional consequences A bilateral or multilateral dispute between states escalates
into economic (e.g. trade/currency wars, resource
nationalization), military, cyber, societal or other conflict
Geopolitical Risks
State collapse or crisis (e.g. civil conflict, military State collapse of geopolitical importance due to internal
coup, failed states, etc.) violence, regional or global instability and military coup,
civil conflict, failed states, etc.
Failure of urban planning Poorly planned cities, urban sprawl and associated
infrastructure create social, environmental and health
challenges
Food crises Access to appropriate quantities and quality of food and
nutrition becomes inadequate, unaffordable or unreliable on
a major scale
Large-scale involuntary migration Large-scale involuntary migration due to conflict, disasters,
Societal Risks
Trend Description
Ageing population Ageing of populations in developed and developing countries driven by declining fertility
and decrease of middle- and old-age mortality
Climate change Change of climate attributed directly or indirectly to human activity that alters the
composition of the global atmosphere and which is in addition to natural climate
variability
Environmental Deterioration in quality of air, soil and water from ambient concentrations of pollutants
degradation and other activities and processes
Growing middle class in Growing share of population reaching middle-class income levels in emerging
emerging economies economies
Increasing national Increasing national sentiment among populations and political leaders affecting
sentiment countries national and international political positions
Increasing polarization of Inability to reach agreement on key issues within countries due to diverging or extreme
societies values, political or religious views
Rise of chronic diseases Increasing rates of non-communicable diseases, also known as chronic diseases,
leading to long-term costs of treatment threatening recent societal gains in life
expectancy and quality, placing a burden on economies
Rising geographic Increasing mobility of people and things due to quicker and better performing means of
mobility transport and lowered barriers
Rising income disparity Increasing socio-economic gap between rich and poor in major countries or regions
Shifts in power Shifting power from state to non-state actors and individuals, from global to regional
levels, and from developed to emerging market and developing economies
Urbanization Rising number of people living in urban areas, resulting in the physical growth of cities
Weakening of Weakening or inadequate global or regional institutions (e.g. the UN, IMF, NATO, etc.)
international governance agreements or networks, and loss of trust in them, increasing the global power vacuum
and preventing effective solutions to global challenges
As discussed in Part 1, the Global Risks The Global Risks In 12 cases, the respondent did not
2015 methodology was reviewed last provide any information about gender,
year for this edition. A number of Perception Survey but it was possible to infer this
workshops, interviews and discussions information from the other records
were held with experts and with the The Global Risks Perception Survey, provided (first and last names).
Advisory Board, taking into account discussed in Part 1, is the main Similarly, 101 respondents did not
lessons from past editions as well as instrument for assessing global risks indicate the region in which they are
developments in the global risks and trends in this report. The survey based and were manually assigned to
landscape. The concept of trends was was conducted between mid-July and one on the basis of their country of
introduced in both the survey and the the end of September 2014 among the residence. Among the respondents,
report and some of the global risks World Economic Forums 43% completed the survey last year.
analysed in the past were relabelled multistakeholder communities of Details of the sample composition are
and classified under a different leaders from business, government, reported in Figure B.1.
category or better defined as trends. academia and non-governmental and
international organizations.1 The graph below shows the profile of
The Global Risks Perception Survey the 896 survey respondents. To
(GRPS or survey) was adjusted Raw responses were cleaned to capture the voice of youth, the survey
accordingly to capture the main improve overall data quality and also targeted the World Economic
aspects of both risks and trends and to completeness. All questionnaires with a Forums community of Global
assess their interconnectedness and completion rate of below 50% were Shapers.2 Those under 30 years of age
impact on societies. The following dropped, reducing the number of accounted for approximately one-fifth
section describes the survey and available responses from 1,120 to 896. of respondents.
methodology in greater detail.
896
type
Geopolitics Academia
12.5% 18.0%
Government
Society Business NGO 8.0% 1.23%
Central Asia
Europe including Russia
Age distribution Region 33.4% 3.7%
North America
21.6% East Asia
and the Pacific
10.7%
Middle East
and North Africa
6.5%
% preparednes s i= ri,n
connected trends and risks, N
n=1
disregarding directions of causality.
This question read: In your view, which with ri,n equal to 1 if respondent N
selected risk i, and 0 otherwise.
Every year since 1979, the World the present report, although a majority For these reasons, the results of the
Economic Forum conducts the of risks on the former list do appear on GRPS and EOS are not strictly
Executive Opinion Survey (EOS). This the latter, albeit slightly reformulated in comparable. Instead, the EOS results
survey captures invaluable information some cases. The EOS list was provide a complementary perspective
on a broad range of socio-economic established before the Global Risks that of businesses on the impact of
issues. In the 2014 edition, over 13,000 Perception Survey (GRPS) global risks on their businesses.
executives in 144 economies were methodology was reviewed and a
surveyed.5 number of risks were redefined or To rank the 19 risks based on the level
excluded and others were introduced. of concern, each received a score
The 2014 edition of the EOS, conducted In addition, whereas the GRPS was derived from the rank assigned by
between February and May 2014, for agnostic about the impact of global respondents, from 5 for the risk the
the first time included a question on the risks on a particular group, the EOS respondent ranked first, to 1 for the risk
risks of biggest concern. More question specifically asked about the ranked fifth (all non-cited risks were
specifically, respondents were asked to impact on the ability to do business in assigned a score of zero). As a second
select the five global risks that they the respondents country. Furthermore, step, for each economy the sum of
were most concerned about for doing the EOS did not specify any time points obtained by each risk across all
business in their country and to rank horizon, unlike the GRPS which responses from that economy was
these five risks from 1 (for the one of considered a 10-year horizon. Finally, divided by the total of points distributed
highest concern) to 5 (for the one of the size and nature of the two samples across all risks in the economy. The risk
lowest concern). of respondents differed significantly: a score thus obtained was used to
multistakeholder group of experts in the establish a country-level ranking.6
This list of 19 global risks (Table C.1) in case of the GRPS and business
the EOS is different from that used in executives in the case of the EOS.
Figure C.1: Global Risks of Highest Concern for Doing Business, Per Country
Fiscal crises in key economies
Failure
Failure of major
financial mechanism
or institution
Liquidity crises
Figure C.1 shows a snapshot of the Greater incidence of environmentally related events (weather, natural
data on a map. Based on the results, catastrophes, man-made catastrophes)**
fiscal crises is the risk of highest Water crises*
concern for doing business in 93 (65%)
of the 144 economies covered by the Failure of climate-change mitigation and adaptation**
survey, well ahead of oil price shock Major escalation in organized crime and illicit trade
and profound political and social
instability, both of which come first in 13 Large-scale terrorist attacks*
economies (9%). The map in Figure C.1 Violent interstate conflict with regional consequences**
is shaded according to the risk of
highest concern. Within a troubled Escalation of economic and resource nationalization
geopolitical context, a fragile and Food crises*
uneven recovery in advanced
economies, and a slowdown in many Pandemic outbreak**
emerging economies, it is not Profound political and social instability**
surprising that economic risks are
those of most immediate and highest Breakdown of critical information infrastructure and networks*
concern to businesses. Escalation in large-scale cyber attacks**
fourth; a major obstacle to business Prolonged neglect of critical infrastructure and its development needs
Violent interstate conflict with regional consequences
development, economic integration
Greater incidence of environmentallyrelated events
and trade performance, it is the main
Breakdown of critical information infrastructure and networks
concern in Cte dIvoire, Mozambique, Major escalation in organized crime and illicit trade
Paraguay and Uganda. Mismanaged urbanization
Escalation of economic and resource nationalization
Score
References
Browne, C., A. Di Battista, T. Geiger, and T. Gutknecht. 2014. The Executive Opinion Survey: The Voice of the
Business Community. The Global Competitiveness Report 2014-2015. Geneva: World Economic Forum;
http://www.weforum.org/reports/global-competitiveness-report-2014-2015
Jacomy, M., S. Heymann, T. Venturini, and M. Bastian. 2012. ForceAtlas2, A Continuous Graph Layout Algorithm
for Handy Network Visualization; http://www.medialab.sciences-po.fr/publications/Jacomy_Heymann_Venturini-
Force_Atlas2.pdf.
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