RMI2302 Final Exam Study Guide Module 11 Global Risks Report 2015 Overview Been done for the last century Survey risk management experts Many risks do not respect national boarders Survey of 800 experts Orient inform decision makers about the largest global risks that exist today and look forward to the next 5 or 10 years Objectives o Map 28 global risks of risks vary slightly each year o 13 trends driving those risks o Look at 3 risks in detail o Discuss managing these risks Cannot be managed by one nation Very short wrap up in pt 3 What is a Global Risk Global Risk occurrence or risk that causes significant negative impact for several countries and industries over a time frame of up to 10 years o Has to affect several countries and industries o Horizon risk Part I the 28 Global Risks for 2015 along with the 13 Trends driving Report Structure them overview Part II Three specific Risks in Focus Part III Risk Management Practices and Risk Resilience ability for nations and industries to bounce back follow these negative events Part I Categories of Risk 28 Global Risks see Table A divided into 5 categories o Economic asset bubbles deflation energy price shock failure of a major financial mechanism or institution failure shortfall of critical high structural unemployment or underemployment unmanageable inflation infrastructure financial crisis o Environmental extreme weather events failure of climate change adaptation major biodiversity loss and ecosystem collapse major natural catastrophes man man environmental catastrophes o Geopolitical failure of national governance interstate conflict with regional consequences Syria and Iraq large scale terrorist attacks state collapse or crisis weapons of mass destruction o Societal failure of urban planning food crises large scale involuntary migration profound social instability rapid and massive spread of infectious diseases water crisis big one now ability to get fresh water and move it to where it is needed occurring in the United States today in places with droughts o Technological breakdown of critical information infrastructure and networks large scale cyber attacks massive incident of data fraud theft massive and widespread misuse of technologies risk in focus Some of the major Trends table B tie together multiple risks in the table above o Aging population o Climate change o Emerging economies o Chronic diseases o Rising geographic mobility o Rising income disparity o Urbanization o All of these trends tie together multiple risks o There are more but these are the ones that will be focused on Part I Risk Analysis Risks analyzed along 3 parameters o Highest Concern qualitative Figure 1 1 Not a lot of number not an analysis just an idea 2 ways that this chart is looked at Are you concerned about this now year 18 months Or long term Geopolitical interstate commerce is a big concern in the next 18 months gets below 10 on long term horizon Ongoing concern water crisis starts out low for 18 months and jumps up 40 in 10 year window Unemployment climate things like that are a concern Cyber attacks stays the most consistent numbers hardly together change over time o Likelihood and impact quantitative Figure 1 Frequency and Severity Y axis impact X axis likelihood All of the risks are color coded by category Higher you go the worst things are Upper right corner highest impact and likelihood Interstate conflict Unemployment Water crisis Failure of climate change adaptation Colors fade as impact rises the colors get darker showing the significance of the impact Size of diamond changes as you look at likelihood What things are popping up multiple times Interstate conflict Water crisis Unemployment or underemployment o Interdependencies systemic Figure 2 3 All 28 risks mapped together Strength of the strings imply how highly related they are 2 ways to look at the map With the 28 risks Overlay the 13 trends onto the map None of these risks exist in a vacuum o 18 months o 10 years Geopolitical risks are the biggest risks over short term Environmental risks Societal risks If you look at the report from 10 years ago these were the long terms risks they are still the highest risks for the long term Part I Understanding Global Risks Highest Concern From 18 months to 10 years Figure 1 1 Part I The Global Risks Landscape Likelihood Impact Figure 1 The Global Risks Landscape o The 28 risks mapped based on likelihood and impact o Includes the breakdown by the 5 categories Economic Environmental Geopolitical Societal Technological Part I The Global Risks Landscape Highest Concern Likelihood Impact What risks appear on all three radar screens be very aware of these o Interstate conflict Battles between countries Syria Iraq Iran Afghanistan chilling relationship between US and Russia US and China in the freezing sea what is international water and what is China water Very big concern for us moving forward What happens if we reach the tipping point where global temperatures rise too much and we see runaway climate change We don t know what is going to happen o Wealth climate change How can we be resilient Something that will take money to address o Water crisis Do we have enough fresh water to sustain the population Do we have the water in the right place o Unemployment underemployment Uber economy what you end up with is people who don t work at a company anymore Jobs are farmed out Online advertising farm out for bid and look for lowest cost People are working for themselves This is what happened in the early 1900s where employees are at a huge disadvantage Part I Interconnections Trends Figure 2 The Global Risks 2015 Interconnections Map Figure 3 The Risks Trends 2015 Interconnections Map o The 28 risks mapped based on how interconnected they are with the other risks o Pay attention to weighting o Includes the breakdown by the 5 categories Economic Environmental Geopolitical Societal Technological Part I Geopolitical Risk Box 1 2 Risk of non state actors groups of individuals or organizations that are not nations but they start to behave as nation o Not elected but they have leaders who make the rules and laws they will follow o Problem raises some other risks interstate conflict there are so many countries involved in ISIS now o Potential for larger conflicts is very large o Taliban o ISIS SIL ruling Syria and parts of Iraq Raises risk of to o Interstate conflicts o Weapons of mass destruction Where will they use them and how will they use them o
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