Global Risk Report 2022: Implications for crisis management
January: Two weeks ago the World Economic Forum (WEF) published the 2022 version of its Global Risk Report. Jelle Groenendaal discusses how crisis management capabilities can benefit from this and similar reports
Several institutions publish a threat or risk report annually, of which the Business Continuity Institute (BCI) and the World Economic Forum (WEF) are the best known and most respected. Recently, the latter released its Global Risk Report with expectations for 2022 and beyond.
The Global Risk Report identifies global risk perceptions among risk experts and world leaders in business, government and civil society. It presents the results of the latest Global Risks Perception Survey, followed by an analysis of key risks emanating from current economic, societal, environmental and technological tensions. The report concludes with reflections on enhancing resilience, drawing from the lessons of the last two years of the Covid-19 pandemic.
In the Global risk Perception Survey, respondents were asked to identify the ten most severe risks on a global scale over the next decade. Climate action failure, extreme weather and biodiversity loss – all environmental risks – are the top three, according to the respondents. The other risks are social cohesion erosion, livelihood crises, infectious diseases, human environmental damage, natural resource crises, debt crises and geoeconomics confrontation.
Risk reports such as this can be useful for crisis management preparedness, but one should appreciate their true value and understand their limitations. To start with the latter: Risk reports comprise expectations about the future, but do not have any predictive value. There is a small, but important, difference between expectations and predictions. An expectation is an acknowledgement of how things have worked in the past and are likely to work in the future, for example: “We will likely be confronted with a new variant of Covid-19”. A prediction, on the other hand, captures this idea in a measurable way at a specific point in time, such as: “By the end of 2022, we will face a Covid-19 variant with much higher mortality rates”.
One limitation of risk reports is that they are solely based upon questionnaires and hence cover perceptions. These perceptions can be biased and it is not known whether the sample of respondents is representative. In addition, statements in risk reports are not always underpinned by scientific evidence. For instance, in the Global Risk Report, it is suggested that cyberattacks can negatively affect corporate reputation. Research has shown, however, that this relationship is far more complex.
But if these limitations are taken into account, risk reports can still hold value for crisis management. Here are three examples:
First, threat and risk reports can help the organisation to focus attention towards specific risks. There are infinite risks, while crisis management capabilities typically have only limited time and resources. This means that crisis management capabilities need to prioritise and focus on risks that matters most to the business objectives of the organisation. Risk reports can drive the selection of crisis management exercise scenarios and contingency plans. In 2019 – one year before the Covid-19 crisis – the Global Risk Report contained a dedicated section on the rising threat of disease outbreaks. This could have triggered organisations to prepare for pandemics.
Second, risk reports can be used as an input for business continuity risk assessments. These assessments are helpful to identify existing and emergent threats that could disrupt the business. By using the Global Risk Report, organisations can assess how the identified top three environmental risks can affect their business. Considering the failure to act upon climate change, for instance, would it be a good decision to build a data centre in an area that is actually below sea-level?
Third, risk reports can be used to examine whether organisations’ crisis management structure meets the needs of futures crises. For instance, the rise of supply chain threats could require much more involvement of procurement and other stakeholders that maintain relationships with third parties in the crisis management organisation. On the other hand, the role of facilities could change too, as many people are likely to continue to work from home in the future.