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Opinion

Risky business: five questions for the World Economic Forum

Published on 22 January 2020

Image of Nathan Oxley
Nathan Oxley

Impact Communications and Engagement Officer

The World Economic Forum’s Global Risks Report is now published, and as you might expect, concerns about climate change and ecological collapse are strongly featured. Based on the views of 750 ‘global experts and decision makers’, along with facts, figures and projections from various sources, the report highlights the links between environmental and social problems, and explores the ‘likelihood’ and ‘impact’ of various potential threats.

The threats highlighted range from economic ones like unemployment or energy prices, to geopolitical conflicts, tech concerns like data fraud, social instability, and a set of environmental disasters – strikingly, the environmental ones all score highly on ‘likelihood’ and ‘impact’. Similar themes were explored by the STEPS Centre last year, focusing on the politics of uncertainty – a wider issue than just assessing risk.

The report is produced in partnership with an insurance group, reflecting the importance given to insurance in global economic decision-making. The potential costs and liabilities from various global risks are enormous – but also hard to quantify. Insurance needs to be good at estimating likelihoods of things and how they affect each other. Systemic thinking, one of the core recommendations of the report, can help, though it can also reveal how things interact in sometimes chaotic ways, making the future less clear.

The impacts of reports like these, and the discussions around them, are real. The ambition of such exercises is to look into the future – and use this to inform decisions made in boardrooms, cabinets, Annual General Meetings, General Assemblies. Of course, nobody is claiming that they can predict the future exactly. It is potential futures that are under discussion. What’s important is how likely they are, what might happen if they come about, how they should be valued, and how to avoid them, insure against them, or change course. The flipside of risks is opportunities.

This is the striking thing about the way risks are discussed. Potential futures have real effects. Investments, layoffs, research & development, law-making, even political activism – all depend on thinking about a future that doesn’t exist yet. Those decisions in turn affect the way things turn out – sometimes in a self-fulfilling prophecy, and sometimes in unintended or disastrous ways. And it’s not one future: we’re dealing with shadows of possibilities, projected by what we know so far, and the directions and trajectories of change. Likelihoods and impacts, of course, are matters of estimation and judgement, not pure prediction. In a complex world, nobody has a crystal ball.

This doesn’t mean that those estimations and judgements are wrong or useless. It means they are human. Seeing the human nature of projected risks help us by drawing attention to some interesting features behind the numbers.

  • The fuzzy disagreement behind the survey stats. There is no chance, at all, that all respondents agreed on the precise likelihoods or impacts of various technological, geopolitical or environmental risks. The report has to crunch the numbers to come to a view on the balance of responses, weighing these against measurements and statistics from elsewhere. Like all measurements and statistics, these also depend on human judgement.
  • How questions are asked. The questions behind the report respond to the WEF’s concerns, and those of its audiences. Like any research, these questions are not neutral and objective. However rigorously researched, the answers will be shaped by what is asked – and what isn’t.
  • Multiple futures. In a diverse world, we face the prospect of multiple divergent futures appearing alongside each other – some more dominant than others. In a global, aggregated vision of the future, this diversity may disappear. It’s a challenge to give space for a diversity to emerge, but it can be extremely valuable – to allow space for experimentation, to try, and succeed, or fail, and learn.
  • What are the values that shape our responses to potential futures? The report points to a diversity of respondents – including social entrepreneurs and other ‘global shapers’. But you need to read between the lines to spot the values and moral assumptions that shape the recommendations. This isn’t just a matter of looking at the text of one report; elsewhere, the WEF has published a Manifesto that places stakeholder capitalism front and centre of efforts to create a better world.
  • What are the uncertainties that can’t be quantified? The report mentions the word ‘uncertainty’ 14 times, mainly to highlight areas where people are genuinely unsure of what will happen – where the outcomes are hard to predict. But in a report on risk, the focus will be on trying to quantify and assess outcomes. This approach to uncertainty has a stranglehold on policy-making: it demands that policy-makers place numbers on likelihoods and impacts. But many global challenges – from disease emergence, to social reactions to climate disruption – are not amenable to a risk calculation.

Beyond risks and uncertainties, we face the prospect of ‘unknown unknowns’ – genuine surprises that defy expectation or prediction. What systems, social norms and processes are in place to deal with these surprises – which often hit hardest for poor and vulnerable people? This will always be a challenge for those who, in good faith, are concerned with managing risks and speculating on uncertain futures.

In the end, dealing with true uncertainty is about admitting the limits of knowledge. Reports and discussions around the global economy ought to do that. But who’s involved in these discussions, whose knowledge is valued, and what visions of the future are accepted or denied, are hard questions for the WEF and other institutions with power. And if we accept that we don’t know everything, what systems and structures can we create to accommodate surprise and respond to unexpected turns of events? This is the question of how people can be cared for in an uncertain world.

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