Pandemic Impacts Will Last A Decade While Climate Change Accelerates
World Economic Forum’s Global Risks Report warns of long-term effects of Covid-19
Impacts include growing inequality and geopolitical instability
Environmental issues still dominate the list of the biggest risks the world faces
For the past 15 years, the World Economic Forum has warned about the dangers of pandemics. In 2020, those warnings were emphatically vindicated and the world saw the catastrophic effects of ignoring such long-term risks, according to the organisation’s Global Risks report 2021.
We will feel the effects for the next decade, it adds. “The COVID-19 pandemic is increasing disparities and social fragmentation, in the next 3-5 years will threaten the economy, and in the next 5-10 years will weaken geopolitical stability,” the report says, while highlighting that the next decade will be dominated by environmental issues such as climate change and extreme weather events.
“Climate change—to which no one is immune—continues to be a catastrophic risk. Although lockdowns worldwide caused global emissions to fall in the first half of 2020, evidence from the 2008–2009 financial crisis warns that emissions could bounce back,” the report warns. “A shift towards greener economies cannot be delayed until the shocks of the pandemic subside.” Climate action failure is the most impactful and second most likely long-term risk identified in the report.
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The short-term impact of the pandemic are evident for all to see, but the WEF points out that it will have lasting effects. “The COVID-19 pandemic has not only claimed millions of lives, but it also widened long-standing health, economic and digital disparities. Billions of caregivers, workers and students – especially minorities who were disadvantaged before the pandemic – are now at risk of missing pathways to the new and fairer societies that the recovery could unlock”.
And the report points out that the pandemic’s impacts are not just health-related. “These developments may further impede the global co-operation needed to address long-term challenges such as environmental degradation,” it says.
“In 2020, the risk of a global pandemic became reality, something this report has been highlighting since 2006. We know how difficult it is for governments, business and other stakeholders to address such long-term risks, but the lesson here is for all of us to recognize that ignoring them doesn’t make them less likely to happen,” said Saadia Zahidi, Managing Director at the World Economic Forum.
“As governments, businesses and societies begin to emerge from the pandemic, they must now urgently shape new economic and social systems that improve our collective resilience and capacity to respond to shocks while reducing inequality, improving health and protecting the planet.”
Among the highest likelihood risks of the next 10 years are extreme weather, climate action failure and human-led environmental damage, the report states, as well as digital power concentration, digital inequality and cybersecurity failure. Among the highest impact risks of the next decade, infectious diseases are in the top spot, followed by the failure of climate action and other environmental risks; as well as weapons of mass destruction, livelihood crises, debt crises and IT infrastructure breakdown.
The pandemic is set to particularly affect young people, creating a generation of “pandemials” facing its second global crisis in a generation that could see them miss out on opportunities in the next decade, as well as widening the gap between the ‘haves’ and ‘have nots’.
Financial, digital and reputational pressures resulting from COVID-19 also threaten to leave behind many companies and their workforces in the markets of the future, the WEF says, potentially causing societal fragmentation for states, and hindering the global recovery.
However, the report also says that there are lessons to be drawn from global responses to Covid-19 that could help to improve global resilience. These lessons include the need to formulate analytical frameworks, foster risk champions, build trust through clear and consistent communication, and create new forms of partnership.
One of the key impacts of the virus-induced lockdowns around the world has been the acceleration of the digital transformation. This promises huge benefits including the creation of almost 100m new jobs by 2025 but it may also displace 85m jobs. “And since 60% of adults still lack basic digital skills the risk is the deepening of existing inequalities,” said Peter Giger, group chief risk officer at Zurich Insurance Group. He added that “the biggest long-term risk remains a failure to act on climate change. There is no vaccine against climate risks, so post-pandemic recovery plans must focus on growth aligning with sustainability agendas to build back better.”
Carolina Klint, risk management leader, Continental Europe at Marsh, added that as businesses transform their workplaces, new vulnerabilities are emerging. “Rapid digitalization is exponentially increasing cyber exposures, supply chain disruption is radically altering business models, and a rise in serious health issues has accompanied employees’ shift to remote working.”