How global risks can affect the public sectorPublic and voluntary sector organisations understand all too well how global risks can disrupt their day-to-day operations.
Consider, for example, the recent WannaCry ransomware attack
–– which crippled IT systems across 48 NHS trusts. Or the collapse of Iceland’s banks in 2008
, which left councils in England and Wales facing a six-year battle to recover more than £1bn in lost savings.
The World Economic Forum produces an annual Global Risks Report (GRR), which Zurich supports as a Strategic Partner. This report provides an assessment of the global risks that present the greatest challenge today, both in terms of likelihood and impact, and also paints a picture of how these risks have evolved over time.
Here, we consider what the GRR 2018
reveals about the challenges ahead for the public and voluntary sectors.
Extreme weather events
Environmental risks dominate the GRR 2018, from extreme weather events and natural disasters, to a failure to mitigate against the effects of climate change
. This is perhaps unsurprising, following a year that saw devastating hurricanes and the first rise in CO2 emissions in four years.
Increased risk of flooding is one of the greatest environmental challenges facing organisations in the UK, and our dedicated Flood Risk Resource
includes a wealth of content on mitigating flood risk.
However, this is by no means the only environmental risk organisations must contend with. A recent Zurich local authority roundtable heard how the health impact of long-term exposure to air pollution
is another major challenge. The GRR 2018 says air pollution is an “increasingly pressing threat to human health”, with indoor
air pollution being together responsible for more than 1 in 10 of all deaths globally each year.
It also observes that “a trend towards nation-state unilateralism” is hampering international efforts to counter global warming.
Threat of cyber risk
Cybersecurity is another global risk identified as a major threat to organisations worldwide, both in terms of likelihood and impact. This is amplified by a rising cyber dependency of the world’s economy.
The GRR 2018 notes that attacks against businesses have almost doubled in five years, adding that “incidents that would once have been considered extraordinary are becoming more and more commonplace”.
The report notes, in particular, the rise in the number of ransomware attacks, which accounted for 64% of all malicious emails sent in 2017. The most notable example of this being WannaCry, which affected 300,000 computers across 150 countries.
We have previously discussed the importance of building cyber resilience
to mitigate the impact of a potential cyber-attack. The imminent arrival of the GDPR
will also increase the importance of having robust measures in place to protect sensitive or personal data.
The relative decline in the seriousness of economic risks may offer some comfort to public and voluntary sector organisations.
The GRR 2018 says “economic indicators suggest the world is finally getting back on track after the global crisis that erupted 10 years ago”. However, it adds that this “upbeat picture masks underlying concerns”, including both long-standing vulnerabilities and newer challenges.
These include potential for long-term disruption to the labour force caused by “intensifying patterns of digitisation and automation”. This was another issue highlighted at our recent local authority roundtable, where attendees discussed the challenge of re-skilling their populations as automation and robotics become more widespread.
In the medium term, there remain significant concerns about the economic impact of Brexit, with a leaked government report
suggesting growth could be slower over the next 15 years, whatever the terms of Britain’s exit from the EU.
How should organisations respond to global risks?
Global risks are not restricted by borders and boundaries. Mitigating them requires collaboration and consensus, whether that means local authorities working together to agree measures to combat air pollution, or public and voluntary sectors working more closely with the government to make their voices heard during Brexit negotiations.
The World Economic Forum also warns there is “no scope for complacency” when dealing with global risks, and that organisations must prepare now for the “structural challenges and changes that lie ahead”.