Extreme weather tops WEF global risks in 2024

Extreme weather events such as wildfires, floods, heatwaves and droughts have been identified as the number one risk likely to cause a global crisis this year, according to the World Economic Forum’s 2024 Global Risks Report.

Two-thirds (66%) of the 1,490 academia, business, government and civil society experts surveyed by WEF in its annual risk report believe that extreme weather will be the most likely cause of crisis in 2024.

With El Niño’s warming effect expected to continue and strengthen until May, many expect new heat records this year, WEF adds.

Chief Sustainability Officers should take this warning into consideration as they plan this year’s activities: in 2023, which was recently confirmed as the hottest year on record, severe storms cost insurers an estimated US$60 billion.

“Localised strategies leveraging investment and regulation can reduce the impact of those inevitable risks that we can prepare for, and both the public and private sector can play a key role to extend these benefits to all. The collective actions of individual citizens, companies and countries may seem insignificant on their own, but at critical mass they can move the needle on global risk reduction,” write the report’s authors.

On the bright side, investment in climate adaptation (such as flood resilience) is proven to bring great benefits to companies, with a BCG/Global Resilience Partnership/USAID study showing benefit-to-cost ratios of 15 to 1.

Environmental risks expected to worsen

While over the next two years, the risk landscape will be dominated almost equally by extreme weather and AI-generated misinformation and disinformation, environmental risks will settle firmly at the top in the long term.

The WEF report identifies extreme weather events, critical changes to Earth systems (described as long-term, potentially irreversible changes to critical planetary systems with severe consequences for human welfare), biodiversity loss and ecosystem collapse, and natural resource shortage as the four most severe risks on a 10-year horizon.

However, survey respondents seem to disagree on the urgency of these risks, with the private sector citing biodiversity loss and critical changes to Earth systems as top concerns over the longer term, whereas civil society and government respondents appear to prioritise them in the short term.

“This dissonance in perceptions of urgency among key decision-makers implies sub-optimal alignment and decision-making, heightening the risk of missing key moments of intervention, which would result in long-term changes to planetary systems,” warns WEF.

Evidence suggests that biodiversity risk assessments are becoming more mainstream in the corporate world, but action remains too limited.