As we head towards what looks like the beginning of the end of the pandemic, businesses, governments and individuals are trying to figure out what might be next – and how to prepare for possible fallouts, as well as potential opportunities. The World Economic Forum surveyed 347 analysts to get their input on the most likely economic, social, technological and environmental risks for the next year and a half. The COVID-19 Risks Outlook report seeks to provide a preliminary picture of which familiar risks may be amplified by the crisis and which new ones may emerge, recognizing that key issues remain to be analysed – health and geopolitics among them, according to the World Economic Forum. The report is an initial mapping that will be supplemented by further work including the World Economic Forum’s (WEF) annual Global Risks Report. <h3><strong>It’s About the Economy</strong></h3> Economic factors were at the top of the list. The biggest risk for businesses identified by over two-thirds of the 347 analysts surveyed was a “prolonged global recession”. Most analysts believe that if you can get the money side of things right you can solve many of the other problems. <img src="https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-1024x459.png" alt="" srcset="https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-1024x459.png 1024w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-300x134.png 300w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-768x344.png 768w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-1536x689.png 1536w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-2048x918.png 2048w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-750x336.png 750w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-likely-risks-the-world-faces-in-the-next-18-months-1140x511.png 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="459"> <h3><strong>Debtor Nations</strong></h3> Public debt in the G20 economies reached a historically high level of 90% of GDP in 2019. As countries roll out massive assistance and stimulus packages, public debt is now expected to reach new records. In advanced economies alone, it is expected to increase from 105% of GDP in 2019 to 122% in 2020. Most governments are likely to face increasingly burdened budgets for many years, others may face a structural weakenings of the fiscal positions, even to the point of defaulting. So governments will need more money, and usually that means more taxes. However, that can end up hurting consumer spending and industry. Through the pandemic, public expenditure has been critical to guarantee pay for furloughed workers, procure critical goods and strengthen health systems. Exit strategies will also depend on large public spending, as governments will need to secure tests, therapeutic drugs, vaccinations or a combination of the above, said the WEF. <h3><strong>Corporate Debt Crisis</strong></h3> Prior to the current crisis, debt accumulation was also burdening the private sector. In 2019, corporate debt reached record levels in China and the United States and was listed by the IMF as a key vulnerability in the global financial system. Private debt is likely to increase significantly in the current context, adding to the risk of bankruptcies and unemployment, according to the World Economic Forum. <blockquote> Following the financial crisis, global consumption grew at the slowest pace for any 10-year period on record - a trend that is likely to continue, according to the World Economic Forum.</blockquote> <h3><strong>Foreign Investment Faces Uncertain Markets</strong></h3> Lowering tariffs to stimulate affected sectors is contingent on the normalization of trade, and incentives for FDI may only have a partial effect, as investors face uncertainty on when, which or even how long markets will reopen. There may also be tighter FDI restrictions, as some economies seek to prevent aggressive takeover deals, said the WEF. Even before the pandemic, there were rising geopolitical tensions between developing nations and those with more economic power. While nations want, and even need, inward investment, many will be wary about predatory investment or acquisitions by outsiders who are capitalizing weaker economies. Geopolitical rent-seeking, attempts to concentrate trade and FDI, deteriorating trust and geo-economic rivalries may not only worsen the impact of the crisis and complicate global recovery. They could also exacerbate its already dire humanitarian consequences. For example, the pandemic has put an additional 130 million people at risk of starvation – for a total of 265 million – yet multiple countries have banned the export of key foods, according to the WEF. <blockquote> China, India and Indonesia are the only G20 countries expected to grow in 2020, according to the World Economic Forum.</blockquote> <h3><strong>Sustainability Could Struggle</strong></h3> For sustainability, the gravest environmental fallout for the world is a shortfall of investment in climate action. This is in effect a result of a potentially weak global economy. The survey said that 18% of respondents identified this risk as one of the most likely risk outcomes and 16% considered it to be one of the most concerning. Years of progress could be lost through underinvestment in infrastructure adaptation, withdrawals from previous commitments and weaker climate activism. This would give way to a vicious cycle of continued environmental degradation, biodiversity loss and further zoonotic infectious disease outbreaks, according to the WEF. One positive outcome was a sharp drop in emissions and pollution globally. As countries start to emerge from the immediate health crisis and work on rebooting their economies, new working practices and attitudes towards traveling, commuting and consumption may make it easier to have a lower carbon footprint and more sustainable recovery. <h3><strong>Social Impact and Risks</strong></h3> Another infectious disease outbreak is of greatest concern among societal risks for the world, according to 40% of respondents. Another 30% identifyed this as a likely outcome, in addition to the dangers to public health. Individual and social well-being are also likely to be affected by an accelerated automation of the workforce, which 25% of respondents indicated is likely to result from the coronavirus crisis. One-third of respondents also expect a developing economy to collapse in the medium term, which would have dire humanitarian consequences as vulnerable groups would suffer the worst impacts. There are also growing risks to personal freedom, well-being, and the educational and wealth prospects of the young generation. <img src="https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-1024x459.png" alt="" srcset="https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-1024x459.png 1024w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-300x134.png 300w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-768x344.png 768w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-1536x689.png 1536w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-2048x918.png 2048w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-750x336.png 750w, https://insidefashionlive.net/wp-content/uploads/2020/08/c90CI-most-worrisome-risks-for-companies-1140x511.png 1140w" sizes="(max-width: 1024px) 100vw, 1024px" width="1024" height="459"> <h3><strong>Technology Risks</strong></h3> Technology has been a blessing during the pandemic since it enabled business to continue though the lockdowns and social distancing. At the same time, a greater dependence on technology has increased cybersecurity risks. According to 38% of the risk experts surveyed, new working patterns leading to cyberattacks and data fraud are the most likely technological fallout risk for the world. The rapid roll-out of new technology solutions has exacerbated other risks, such as digital fragmentation, privacy violations and inequality. We are already seeing new challenges to the relationship between technology and governance. Meanwhile, mistrust or misuse of technology could have long-lasting effects on society. For businesses, the opportunity exists to accelerate a transformation towards more sustainable and digital operating models, while enhancing productivity. When it comes to the Fourth Industrial Revolution, technology has demonstrably helped societies manage the crisis and provided a window into the benefits of more technology-enhanced ways of learning, working and producing – from telemedicine to logistics to the knowledge economy. There is potential for a new era of innovation, growth and enhanced technology governance in the service of societal and environmental goals. <blockquote> The International Monetary Fund anticipates world output to drop by 3% in 2020, – much worse than during the 2008/2009 financial crisis – global trade is predicted to collapse between 13% and 32% and foreign direct investment (FDI) inflows are estimated to fall between 30% and 40%.</blockquote> <h3><strong>The Biggest Risk of All</strong></h3> The biggest risk is ignoring the risks. The devastation brought on by the COVID-19 pandemic could potentially have been lessened had governments and those that influence them taken earlier health warnings to heart. The voices of medical experts and scientists went unheeded. The focus was unshakably on ‘growing the topline,’ ‘scaling,’ and becoming the next trillion dollar company. Preparedness for a pandemic seemed silly, a weak man’s view of the world. According to the World Economic Forum, pandemics have traditionally suffered from a panic–neglect cycle. <h3><strong>We've Been Warned ...</strong></h3> “Quiet periods see no action, early warnings of an outbreak tend to be overlooked, significant response and funding are late and uncoordinated, and valuable lessons from the crisis are not institutionalized. Successive editions of The Global Risks Report have recognized the challenges brought by disease-related risks and sought to raise awareness,” the WEF points out. In 2016, the organization stressed the need for greater global collaboration in the face of the Ebola crisis. “This would not be the last serious epidemic the world faces” and that “public health outbreaks are likely to become ever more complex and challenging”. Again, in 2018 the WEF took stock of the ongoing struggle to contain antimicrobial resistance, while its 2019 report highlighted the growing threat from manufactured biological threats (released deliberately or by accident), against the backdrop of a rising number of naturally occurring infectious disease outbreaks. The subsequent pandemic has further highlighted the necessity for more fundamental investment in health and revealed the need for greater investment in other socio-economic priorities. The longer term question is “will we learn from this pandemic – or will we continue to repeat the past?”