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Risk list goes viral as climate change slips out of focus

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Infectious diseases and the global pandemic have soared up the ranks in Axa’s latest survey of most pressing global risks, with COVID-19 triggering a dramatic jump in health concerns to first place from eighth, knocking climate change from the top spot.

In its latest Future Risks Report, an annual ranking of the 10 major emerging risks, Axa says the lower perceived risk of climate change is concerning and shorter-term issues around the pandemic “should not completely overshadow longer-term threats”.

The survey of 2700 risk experts plus 20,000 of the general public finds artificial intelligence and big data “tech risk” was no longer in the top 10, while mental health and a fake news ‘infodemic’ were “candidates for tomorrow’s top threat.”

Following are the 10 major risks identified:

1. Pandemics and infectious diseases:

This ranked as the top risk to society among 56% of risk experts, double the percentage last year and jettisoning it from eighth to first place.

Axa says COVID-19 transformed pandemics from an important yet “perhaps distant and unlikely risk” into an immediate, deadly threat to the entire global population which is “playing out today in an extreme way.”

The pandemic is bringing about a wide range of destabilising shocks to healthcare systems, economies, and households and highlighting weakness in national and global preparedness around healthcare capacity.

2. Climate change:

Climate change slides from the top-rated risk for the first time since 2015 to rank second. It remains the number one risk in Europe, but has dropped overall from 67% to 54% as experts in Asia and America “deprioritise climate change risk at an alarming rate.”

A long-standing and growing consensus that climate change poses an immense threat “appears to be weakening,” though Axa says countries ignore climate change at their peril.

The report says climate change demands urgent, co-ordinated action by governments, businesses and the general public, yet just 16% of experts believe that public authorities are well prepared.

“The lack of confidence is stark, given the scale of government intervention.”

3. Cybersecurity risks:

Down one place to third, with 51% of experts identifying cybersecurity as a top risk. Phishing emails surged 600% between February and March, and employees using personal devices for work have increased vulnerability.

Cyber attacks can strike anyone and anywhere – including banks that hold the personal data of millions of customers, to hospitals, to utilities that control critical power infrastructure.

4. Geopolitical instability:

Geopolitic risk has moved down a notch from 2019. A rise of nationalism and populism and tensions between nation states were prominent concerns that COVID-19 has heightened.

Threats include non-tariff trade barriers and protectionist measures such as stopping foreign investment from a competitor or setting import restrictions.

“I’m concerned that we might go back to the 1950s and 1960s type of day-to-day government management of companies,” Axa Chief Economist Gilles Moëc says. “I’m seeing a lot of temptation to go back to some pretty inefficient practices.”

Healthcare, food and technology are seen by survey participants as most likely to attract heightened scrutiny in the wake of the pandemic.

5. Social discontent and local conflicts:

Social unrest could surge as COVID-19 widens inequality, accelerating local conflicts and discontent in countries, impacting on both low and high-income categories. .

“The fact that white-collar workers could safely work from home during lockdowns but blue-collar workers couldn’t and were therefore more exposed to the virus, symbolized this,” Axa Group Chief Risk Officer Renaud Guidée says.

6. New threats to security:

Up three notches to sixth place, new threats such as cyber warfare were a particular concern in Australia.

Extensive workforce education is an effective “first line defence,” and Axa says cyber security spending must be maintained or even increased.

7. Macroeconomic risks:

Up to seventh from tenth last year, this risk is topped by mass unemployment worries as the pandemic proves to be just as much an economic crisis as it is a health crisis.

The International Monetary Fund predicts that global GDP will shrink by 4.9% in 2020.

8. Natural resources and biodiversity:

This ranked as the eighth risk to society, down from fifth last year. Experts outside Europe do not even consider it a top-10 risk.

Axa says the biodiversity threat should not be underestimated, with more species under threat of extinction than at any other point in human history. Promotion of sustainable agriculture, fishing quotas and green spaces in urban areas is needed.

9. Financial risks:

Increased debt levels are another particular concern. Global net public debt is expected to rise to 85% this year, changing the playing field for younger generations who will inherit it. Many countries will have more debt as a percentage of GDP than at any time since World War II.

10. Pollution:

Last in the top 10, pollution garnered a fifth of risk expert responses. Axa says the focus on COVID-19 poses a danger of neglecting risks like pollution.