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The Biggest Risks Facing the World in 2017

Source | Knowledge@Wharton

Economic inequality, societal polarization and environmental dangers are the three trends that will create the most challenging problems for the world over the next 10 years, according to an annual report that was released at the World Economic Forum (WEF) in Davos, Switzerland, this week.

World leaders are gathering in Davos to discuss some of the greatest risks facing the world, and how they might collaborate in solving them. They will be guided in their deliberations in part by the annual Global Risks Report, developed in collaboration with the Wharton Risk Management and Decision Processes Center.

Those three key risks form the uppermost layer of 30 different economic, environmental, geopolitical and technology-related challenges and 13 underlying trends included in the report, which was based on surveys with 750 experts. This is the 13th year the Wharton center has produced the global risk report for the WEF.

The environmental risks that rank high in the report highlight issues related to climate change, said Howard Kunreuther, Wharton professor of operations, information and decisions, and co-director of the center. “We are facing a real challenge in [the U.S.] in terms of how we are going to deal with [climate change],” he added. He noted that the 2015 U.N. climate change conference held in Paris, and the agreement reached by delegates there, was “one success that hopefully will play a role” in shaping future agendas of governments. He upheld the Paris meeting as a model in securing wide endorsement across countries.

“A disempowered citizen may go for something very different because he or she is tired of the status quo.”Erwann Michel-Kerjan

Another top risk factor is social instability, especially as it relates to wealth disparity and how it will impact the job market. The risk reports for 2016 and 2017 highlighted how income disparity has caused a growing distrust in elected officials around the world, noted Erwann Michel-Kerjan, the center’s executive director. Both reports raise alerts about how “a disempowered citizen may go for something very different because he or she is tired of the status quo,” he added. He said that such disenchantment doesn’t occur overnight, but builds up over time, and that the reports over the years have taken increased notice of these issues.

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