In a world marked by increasing tumult and uncertainty, extreme weather, artificial intelligence (AI) and the cost-of-living crisis have been identified in a new survey as three of the top five risks globally.

    Australian risk experts have identified economic challenges and extreme weather events as the top risks on their radar for 2024 and beyond in the World Economic Forum’s (WEF) latest Global Risks Report 2024.

    The top five risks nominated by Australian respondents to the global survey were seen as: Economic downturn, inflation, household debt, energy supply shortages and extreme weather events, in that order.

    Land abandonment or the exit of investment and insurance in high-risk regions may result from the extreme weather risks, the report said. “Advanced economies will not be insulated from some of these effects. For example, in Australia nearly 521,000 homes are predicted to be uninsurable by 2030 due to the risks of extreme weather.”

    The report was published in partnership with Marsh and Zurich Insurance. It contains the Global Risks Perception Survey (GRPS), which captures insights from more than 1,400 global experts and analyses global risks through three timeframes.

    As we enter 2024, the results highlight a predominantly negative outlook for the world over the next two years (84 per cent of respondents are concerned) which is expected to worsen over the next decade (92 per cent are pessimistic).

    This outlook echoes the Australian-based findings of the latest AICD Director Sentiment Index, for 2H 2023, which found that director sentiment dived last year further into negative territory, to its lowest level since the second half of 2020. According to the AICD survey, labour shortages and the cost of living are seen as the major economic challenges facing Australian businesses, followed by inflation and rising interest rates. Download the AICD report here.

    New era of global risks

    Carolina Klint, Marsh McLennan’s Europe chief commercial officer, said at the launch of the risk report in Geneva in January at the WEF that it will take greater cooperation between the public and private sectors to navigate the rapidly evolving risk landscape and a relentless focus to build resilience at organisational, country and international levels.

    “We are potentially entering a new era of risk, which poses a critical challenge for risk professionals, senior leaders, board members and many others,” said Klint. “Through creative approaches and greater cooperation on risk, intersecting crises and the trajectories they drive, businesses, governments and societal stakeholders can reduce uncertainty, improve risk investment decision-making and responses and build longterm resilience on a planetary scale.”

    She said AI breakthroughs will radically disrupt the risk outlook for organisations, with many struggling to react to threats arising from misinformation, disintermediation and strategic miscalculation. “At the same time, companies are having to negotiate supply chains made more complex by geopolitics and climate change and cyber threats from a growing number of malicious actors.”

    Marsh found that the top five risks that all survey respondents felt were most likely to present a material crisis on a global scale this year were extreme weather (66 per cent) artificial intelligence (53 per cent), generated misinformation and disinformation (53 per cent), societal and or political polarisation (46 per cent), cost of living crisis (42 per cent) and cyber attacks (39 per cent).

    The cost-of-living crisis is a major concern in the global outlook for 2024. The economic risks of inflation and economic downturn are “notable” new entrants to the top 10 risk rankings over the two-year period, says the report. Although a “softer landing” appears to prevail for now, the near-term outlook remains highly uncertain.

    “Similarly, the convergence of technological advances and geopolitical dynamics could also create a new set of winners and losers across advanced and developing economies alike,” the report says.

    “Vulnerable countries and communities could be left further behind, digitally isolated from turbocharged AI breakthroughs impacting economic productivity, finance, climate, education and healthcare, as well as related job creation.”

    Adverse outcomes of AI technologies are anticipated to rapidly rise over the next decade, the risk report says. Disruption posed by AI is imminent, but may catch the workforce by surprise, the report says. Four in 10 executives globally believe AI will lead to net job losses this year. Potential skills gaps would be seen in several countries, suggesting that domestic workers will face barriers to matching job demand within the next two years and that three in five workers will require training before 2027.


    In Australia, the federal government released in January its interim response to the Safe and Responsible AI consultation held in 2023. Ed Husic, Minister for Industry and Science, said, “We have heard loud and clear that Australians want stronger guardrails to manage higher-risk AI.”

    The government announced it will target the use of AI in high-risk settings, where harms can be difficult to reverse, while ensuring that the vast majority of low-risk AI use continues to flourish largely unimpeded. It is now considering mandatory guardrails for AI development and deployment in high-risk settings, whether through changes to existing laws or the creation of new AI specific laws.

    Immediate actions include:

    • Working with industry to develop a voluntary AI Safety Standard;
    • Working with industry to develop options for voluntary labelling and watermarking of AI-generated materials;
    • Establishing an expert advisory group to support development of options for mandatory guardrails.

    Some studies suggest that the “AI-will-take-our-jobs” fear is exaggerated. A 2021 OECD Report entitled ‘Preparing for the Future of Work Across Australia’ found that Australia faces a lower risk of losing jobs to automation than the OECD average (36 per cent vs 46 per cent).

    Jobs at “high risk” of automation are even lower, at 14 per cent across the OECD and around 7 per cent in Australia. The research also finds that AI will be a net creator, rather than destroyer of jobs, with the World Economic Forum predicting in its 2020 ‘Future of Jobs Report’ that by 2025 AI will have created 12 million more jobs than it would have eliminated. In Australia, a Microsoft and Tech Council of Australia report estimated that generative AI could add between $45 to $115 billion to the Australian economy, including between $2 and $4 billion in new jobs. 

    The new global risk report states that Australia could also benefit as a supplier of critical minerals. . “…a widening array of pivotal powers could leverage their own competitive advantages in the highly concentrated value chain to obtain access to these technologies on more favourable terms, leading to novel power dynamics. This could range from suppliers of critical minerals, including Australia, Canada, Indonesia, Morocco, Vietnam and Chile.”

    Australia and other countries such as United Arab Emirates, Saudi Arabia, Qatar, South Africa, Brazil and Argentina have also identified both unemployment and labour shortages in their top 10 risk rankings.

    Over a 10-year horizon, environmental risks including biodiversity loss and critical change to the Earth's systems topped the rankings, with misinformation, disinformation and adverse outcomes of AI just behind.

    Meanwhile, two-thirds of risk experts surveyed globally expect a multipolar or fragmented world order to emerge in the next decade, "in which middle and great powers contest, set and enforce regional rules and norms", the survey said.

    Simmering geopolitical tensions combined with technology will drive new security risks, the report says. Interstate armed conflict is a new entrant into the top risk rankings over the two-year horizon. “This becomes an even more worrying risk when considered in the context of recent technological advances.”

    Ideological and geoeconomic divides will disrupt the future of governance. “A deeper divide on the international stage between multiple poles of power and between the global North and South could paralyse international governance mechanisms, erode cooperation and divert the attention and resources of major powers away from urgent global risks.”

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