Right off the heels of my risk concerns for the BRIC series, the World Economic Forum published their Global Risks Report for 2008.
Since I’m a citizen of the world, I decided to be more… worldly, and take a stab at reading this.
Want to know what are the emerging risks for the decade ahead? Show others how well-read and concerned you are about the state of the world?
Or at the very least fake it.
I have summarized the 4 emerging risks discussed in this report for your speed reading pleasure.
Systemic financial risk
Surprise, surprise, the (possible) U.S. recession is a concern. Can other nations propel the global economy ahead?
A recession in the United States cannot be excluded in the year ahead, and economists are divided on whether domestic-led growth in Asian markets can drive the global economy. In Europe, the impact of economic uncertainty may be highly divergent.
Food security
No, this doesn’t mean putting a padlock on your refrigerator when people come over to shop in your kitchen.
Food security is about “ensuring supply at a price which allows economic activity and well-being to flourish”.
Truth be told, I just buy whatever is on sale, so I have no brand loyalty. And if I do notice that the prices went up, I’d just naturally think they were gouging me.
However, here’s what really happened:
In 2007, prices for many staple foods reached record levels. The price of corn in late 2007 was 50% higher than 12 months previously. The price of wheat was double. Global food reserves are at their lowest in 25 years and, as a result, world food supply is vulnerable to an international crisis or natural disaster.
This might explain why your grocery budget isn’t going as far as it used to.
Hyper-optimization and supply chain vulnerability
It’s amazing what people can nag about. With globalization, we’ve apparently gotten too good at outsourcing abroad. Now we’re worried what happens if a global supply chain is disrupted.
All kidding aside, it’s a valid risk. We’ve seen natural disasters strike without warning. Furthermore, how are business continuity plans handled in different organizations spread around the world?
Energy
Energy continues to be a hot topic these days. Few pundits see a decline in energy prices for the next decade as global demand is on the rise.
The International Energy Agency has predicted a 37% rise in demand for oil to 116 million barrels per day (bpd) by 2030, but investment in exploration has fallen and many experts suggest that oil production is unlikely to exceed 100 million bpd.
So, the search is on for cleaner energy alternatives to offset any likelihood of future price shocks due to a tightening of energy supply for whatever reason.
If you’ve read this far then I’m surprised good for you.
Sometimes these aren’t the sexiest of topics but it never hurts to open your eyes to what is going on in the world.
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