Will 2024 be the great year of worry?

Whilst 2024 looks set to be another year of worry, being prepared will arguably help ward off instability and instil business confidence more broadly. (Image: Mohamed Hassan from Pixabay).

What are the key risks facing the world in 2024? Clare B Marshall takes a look at recent reports which highlight issues of concern to businesses, governments and other stakeholders as they make their plans for the next 12 months.

As 2023 drew to an end, inflation remained the number one concern for 29 countries participating in the IPSOS What Worries the World survey (December 2023). Crime and violence, poverty and social inequality and unemployment were the next series of worries for adults aged 18-74, with terrorism and climate change ranking midway in the global list.

Increasing hostility and war continue to take hold as we launch into a new year, seeing concerns mounting over various humanitarian crises, alongside the widespread impact of conflict. But how do these significant worries compare with recent findings from the World Economic Forum’s (WEF) 2024 Global Risks Report, a forerunner to the forum’s recent annual meeting in Davos?

As Saadia Zahidi, managing director of WEF, says: “The future is not fixed . . . the report serves as a vital call to action for open and constructive dialogue among leaders . . . to take action”. So, now is a good time for business to start the year with all eyes on current thinking from their peer group, government and academia on the global risk landscape in the short, mid and long term.

Business risk radar

The team behind WEF’s Global Risks Report describes a “fractured and fast-moving global landscape” with a general sense of ‘gloominess’ and a ‘deteriorating’ outlook. Overall, survey respondents foresee a “stormy, turbulent and unsettled” short and long-term (ten-year) future with only 1% predicting a ‘calm’ (or negligible risk) of global catastrophe within the next two to ten years.

The picture is darker still for respondents from the business category in the report. Over half those surveyed (54.3%) expect upheaval and an elevated risk of global catastrophes in the next two years with only 0.9% anticipating a negligible risk of global catastrophe.

Risk categories

This year’s report has its trajectories set against four key structural forces, namely climate change, population change (demographic bifurcation), technological acceleration and geostrategic shifts (power). The detailed report carries far-reaching narrative and foresight on a broad range of topics ranging from state-enabled criminality, the adverse effects (and opportunities) of AI, to the “next global shock”.

For a business audience, an important new risk in the global list is lack of economic opportunity. Touching on unemployment, inflation, technological advances, digital disparities and societal polarisation, it considers the impact on living standards and growth and job opportunity paths in both developing and developed countries within the next decade.

Trend highlights

The report explores three timelines – current landscape (2024), two-year and ten years ahead. One of the key takeaways from the press launch of the report was the headline-grabbing impending threat of ‘fake news’ from AI-driven channels, particularly in a period where major elections are on the horizon for many countries and where ‘synthetic’ content is readily accessible and easy to produce.

Given the magnitude of rapid advances in technology in recent years and an increase in digital competencies since the global pandemic, there was some surprise from the report team that the risk of misinformation and disinformation – now the top risk in the two-year risk landscape timeframe – had not featured more prominently in previous surveys. The risk of misinformation is considered to have less severe impact in the ten-year horizon, ranking fifth, with climate-related risks (such as extreme weather and natural resources shortages) dominating the top slots for perceived severe impact.

Inflation and economic downturn appear for the first time in the top ten list of risks for the two-year horizon, reflecting wider global sentiments around economy instabilities. Similarly, in the near-term, interstate armed conflict ranked fifth out of the 34 risks in the two-year timeframe, making it a new entry to this category and a risk that is carried through to the ten-year timeframe.

Concerns to business in 2024

The business category (which makes up most of the overall survey sample composition at 48%) cited extreme weather, AI generated mis/disinformation, cyber-attacks, society/political polarisation and the cost of living crisis as the top five risks most likely to present crisis on a global scale in 2024.

In 2024, extreme weather and AI generated mis/disinformation are also the top two risks identified by civil society and academia, with government identifying extreme weather and cost of living crisis respectively as its top two risks likely to cause immediate crisis. Civil society is the only category which lists economic downturn in its top five list of risks (fifth) and most likely to present a material crisis on a global scale in 2024.

Perceptions by age

The report also provides insight on differing perceptions of risk impacts based on age, a useful marker for understanding how business employees, teams, clients and customers might be feeling about the world. For example, all age groups (from less than 30 years up to 70-plus) rank extreme weather followed by AI generated mis/disinformation as their top-two risks for the coming year.

The difference between concerns for cyber-attacks based on age is notable. Older audiences are more wary of this together with the likelihood of societal and/or political polarisation, something they feel is more likely to present crisis than their younger counterparts.

A business prepared

The report recognises that a “myriad of vulnerabilities are stretching our capacity to respond to global challenges”. In looking for ways to reduce the impact of risk and respond appropriately, the team reflects on, among other things, ‘balanced’ strategies combining localised, ‘on the ground’ initiatives to help reduce risk, whilst advocating international cooperation and cross-border collaboration with the aim of moving the “needle on global risk reduction”.

The inevitable interconnectivity of global risks (and the impacts the effects one risk factor can have on another area) is outlined in a useful graphic not dissimilar in complexity to a plate of spaghetti! In this scenario, societal polarisation and economic downturn have been quoted as having the most interconnections suggesting these might have the most influence on risk behaviour across the network of risks.

Adopt a longer lens

The report team flags the danger of leadership “absorbing” short term crisis – what is right in front of us – leaving little room for longer term planning to help ward off the future adverse effects of risk impacts. And with the UN’s flagship World Economic Situation and Prospects 2024 also warning recently that “sluggish global growth is projected to grow slower” with “development delayed and denied” there is much for businesses to consider in relation to both growth and resilience.

Practical measures for business

Global risks carry varying probability, presenting short and longer term impacts. However, key events in play this year – including the evolving conflict situation in various geographies and several national elections (including in the US, UK and Taiwan) brings a greater focus to velocity of these global risks. The speed with which risk becomes more than purely theoretical could be accelerated by these complex, underlying world events.

So, getting ready, by identifying immediate measures to navigate these issues to enable readiness and recovery, is key.

Also important is not to forget historic events still having significant ramifications, including the Covid-19 pandemic. We continue to operate in a changing business environment responding, in real time, to mega change events. The impact of hybrid working sees an increasing shift back to the office and perceptions – and in some cases reality – of lost productivity continuing to cause havoc for some in business.

This could itself continue to impact objectives for low unemployment, exacerbating global risks of lack of economic opportunity and economic downturn. More broadly, historic/ongoing events combined with forecasted global risks could have catastrophic impact.

A gloomy outlook indeed. But any worry can be sensitively managed or reduced by having a plan in place which can make navigating the unknown much easier. Robust and actionable strategic risk management plans can take some of the guesswork and stress out of the decision-making process. Proactivity over reactivity is also key – in the boardroom and throughout an organisation – empowering all to contribute to risk management protocols.

Whilst 2024 looks set to be a(nother) year of worry, being prepared will arguably help ward off instability and instil business confidence more broadly.

Click here to download the World Economic Forum’s 2024 Global Risks Report.

Clare B Marshall is a partner at business consultancy 2MPy (www.2mpy.com) and discipline head for risk at the FIDIC Academy.