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RISK: Environmental risk tops World Economic Forum’s Global Risks Report | Canadian Insurance
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RISK: Environmental risk tops World Economic Forum’s Global Risks Report

"We know climate change is exacerbating other risks such as migration and security."

Failure to mitigate and adapt to climate change is the risk with the biggest potential impact in 2016, the World Economic Forum’s Global Risks Report has found.

Survey respondents ranked weapons of mass destruction as the second greatest risk, water crises as third, large-scale involuntary migration as fourth and severe energy prices as fifth.

This is the first time in the report’s 11-year history that an environmental concern has topped the ranking.

The risk most likely to occur, however, is large-scale involuntary migration. Extreme weather events are next most likely to take place, followed by failure of climate change mitigation and adaptation, interstate conflict with regional consequences and major natural catastrophes.

Survey respondents also identified related and cascading risks, such as climate change potentially exacerbating water crises. That, in turn, could lead to more regional conflicts and forced migration.

“We know climate change is exacerbating other risks such as migration and  security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways,” says Margareta Drzeniek-Hanouz, Head of the Global Competitiveness and Risks, World Economic Forum. “Mitigation measures against such risks are important, but adaptation is vital.”

Similarly, “geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders,” says Cecilia Reyes, Chief Risk Officer of Zurich Insurance Group. “These political conflicts are in turn making the challenge of climate change all the more insurmountable–reducing the potential for political co-operation, as well as diverting resource, innovation and time away from climate change resilience and prevention.”