Visualized: A Global Risk Assessment of 2022 and Beyond
Connect with us

Markets

Visualized: A Global Risk Assessment of 2022 and Beyond

Published

on

2022 Global Risks Horizon

Can I share this graphic?
Yes. Visualizations are free to share and post in their original form across the web—even for publishers. Please link back to this page and attribute Visual Capitalist.
When do I need a license?
Licenses are required for some commercial uses, translations, or layout modifications. You can even whitelabel our visualizations. Explore your options.
Interested in this piece?
Click here to license this visualization.

Visualized: A Global Risk Assessment of 2022 and Beyond

Since the start of the global pandemic, we’ve been navigating through tumultuous waters, and this year is expected to be as unpredictable as ever.

In the latest annual edition of the Global Risks Report by the World Economic Forum (WEF), it was found that a majority of global leaders feel worried or concerned about the outlook of the world, and only 3.7% feel optimistic.

Ever year, the report identifies the top risks facing the world, as identified by nearly 1,000 surveyed experts and leaders across various disciplines, organizations, and geographies.

What global risks are leaders and experts most concerned about, and which ones are posing imminent threats? Let’s dive into the key findings from the report.

Methodology for WEF’s Global Risk Assessment

In the survey, respondents were asked to compare 37 different risks, which were broken down into five categories: economic, environmental, geopolitical, societal, and technological.

To get a sense of which risks were seen as more urgent than others, respondents were asked to identify when they believed these threats would become a serious problem to the world, based on the following timeframes:

  • Short-term threats: 0-2 years
  • Medium-term threats: 2-5 years
  • Long-term threats: 5-10 years

By categorizing global risks into these time horizons, it helps provide a better idea of the problems that decision makers and governments may have to deal with in the near future, and how these risks may interrelate with one another.

Short-Term Risks

When it comes to short-term threats, respondents identified societal risks such as “the erosion of social cohesion” and “livelihood crises” as the most immediate risks to the world.

TimeframeCategoryThreat% of Respondents
0-2 years🟢 EnvironmentalExtreme weather31.1%
0-2 years🔴 SocietalLivelihood crises30.4%
0-2 years🟢 EnvironmentalClimate action failure27.5%
0-2 years🔴 SocietalSocial cohesion erosion27.5%
0-2 years🔴 SocietalInfectious diseases26.4%
0-2 years🔴 SocietalMental health deterioration26.1%
0-2 years🟣 TechnologicalCybersecurity failure19.5%
0-2 years🔵 EconomicDebt crises19.3%
0-2 years🟣 TechnologicalDigital inequality18.2%
0-2 years🔵 EconomicAsset bubble burst14.2%

These societal risks have worsened since the start of COVID-19. And as emerging variants threaten our journey towards normalcy, the pandemic continues to wreak havoc worldwide, with no immediate signs of slowing down.

According to respondents, one problem triggered by the pandemic is rising inequality, both worldwide and within countries.

Many developed economies managed to adapt as office workers pivoted to remote and hybrid work, though many industries, such as hospitality, still face significant headwinds. Easy access to vaccines has helped these countries mitigate the worst effects of outbreaks.

Regions with low access to vaccines have not been so fortunate, and the economic divide could become more apparent as the pandemic stretches on.

Medium-Term Risks

A majority of respondents believe we’ll continue to struggle with pandemic-related issues for the next three years. Because of this, the medium-term risks identified by respondents are fairly similar to the short-term risks.

TimeframeCategoryThreat% of Respondents
2-5 years🟢 EnvironmentalClimate action failure35.7%
2-5 years🟢 EnvironmentalExtreme weather34.6%
2-5 years🔴 SocietalSocial cohesion erosion23.0%
2-5 years🔴 SocietalLivelihood crises20.1%
2-5 years🔵 EconomicDebt crises19.0%
2-5 years🟢 EnvironmentalHuman environmental damage16.4%
2-5 years🟡 GeopoliticalGeoeconomic confrontations14.8%
2-5 years🟣 TechnologicalCybersecurity failure14.6%
2-5 years🟢 EnvironmentalBiodiversity loss13.5%
2-5 years🔵 EconomicAsset bubble burst12.7%

The pressing issues caused by COVID-19 mean that many key governments and decision-makers are struggling to prioritize long-term planning, and no longer have the capacity to help out with global issues. For example, the UK government postponed its foreign aid target until at least 2024. If countries continue to prioritize themselves in an effort to mitigate the impact of COVID-19, the inequality gap could widen even further.

Respondents also worry about rising debt levels triggering a crisis. The debt-to-GDP ratio globally spiked by 13 percentage points in 2020, a figure that will almost certainly continue to rise in the near future.

Long-Term Risks

Respondents identified climate change as the biggest threat to humanity in the next decade.

TimeframeCategoryThreat% of Respondents
5-10 years🟢 EnvironmentalClimate action failure42.1%
5-10 years🟢 EnvironmentalExtreme weather32.4%
5-10 years🟢 EnvironmentalBiodiversity loss27.0%
5-10 years🟢 EnvironmentalNatural resource crises23.0%
5-10 years🟢 EnvironmentalHuman environmental damage21.7%
5-10 years🔴 SocietalSocial cohesion erosion19.1%
5-10 years🔴 SocietalInvoluntary migration15.0%
5-10 years🟣 TechnologicalAdverse tech advances14.9%
5-10 years🟡 GeopoliticalGeoeconomic confrontations14.1%
5-10 years🟡 GeopoliticalGeopolitical resource contestation13.5%

Climate inaction—essentially business as usual—could lead to a global GDP loss between 4% and 18%, with varying impacts across different regions.

Experts also pointed out that current decarbonization commitments made at COP26 last year still aren’t enough to slow warming to the 1.5°C goal set in the Paris Climate Agreement, so more action is needed to mitigate environmental risk.

That said, efforts to curb climate change and solve long-term issues will likely have negative short-term impacts on the global economy and society. So risk mitigation efforts need to be in place as we work to reach net-zero and ultimately slow down climate change.

Risk Mitigation Efforts

People’s thoughts on risk mitigation were gauged in the WEF survey. Respondents were asked to identify which risks our world is most equipped to handle, and which ones they believe we’re less prepared for.

Global Risk Mitigation Efforts

“Trade facilitation,” “international crime,” and “weapons of mass destruction” were risks that respondents felt we’ve effectively prepared for. On the flip side, “artificial intelligence” and “cross-border cyberattacks and misinformation” are areas where most respondents think we’re most unprotected against.

As society becomes increasingly reliant on digital infrastructure, experts predict we will see an uptick in cyber attacks and cybercrime. New AI-enabled technologies that offer ransomware-as-a-service allow anyone to engage in cybercrime—even those without the technical knowledge needed to build malware.

How Do We Move Forward?

Based on the findings from this year’s survey, WEF identified five lessons that governments, businesses, and decision-makers should utilize in order to build resilience and prepare for future challenges:

  1. Build a holistic mitigation framework: Rather than focusing on specific risks, it’s helpful to identify the big-picture worst-case scenario and work back from there. Build holistic systems that protect against adverse outcomes.
  2. Consider the entire ecosystem: Examine third-party services and external assets, and analyze the broader ecosystem in which you operate.
  3. Embrace diversity in resilience strategies: Not all strategies will work across the board. Complex problems will require nuanced efforts. Adaptability is key.
  4. Connect resilience efforts with other goals: Many resilience efforts could benefit multiple aspects of society. For instance, efficient supply chains could strengthen communities and contribute to environmental goals.
  5. Think of resilience as a journey, not a destination: Remaining agile and vigilant is vital when building out resilience programs, as these efforts are new and require reflection in order to improve.

The next few years will be riddled with complex challenges, and our best chance at mitigating these global risks is through increased collaboration and consistent reassessment.

Subscribe to Visual Capitalist
Click for Comments

Markets

The Top Google Searches Related to Investing in 2022

What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.

Published

on

Trend lines showing when the top Google searches related to investing reached peak popularity over the course of 2022.
The following content is sponsored by New York Life Investments

The Top Google Searches Related to Investing in 2022

It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most? 

This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.

Top Google Searches: Year in Review

We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.

Month of Peak InterestSearch Term
JanuaryGreat Resignation
FebruaryRussian Stock Market
MarchOil Price
April Housing Bubble
MayValue Investing
JuneBitcoin
JulyRecession
AugustInflation
SeptemberUS Dollar
OctoberOPEC
NovemberLayoffs
DecemberInterest Rate Forecast

Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.

Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.

Q1 2022

The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.

DateClosing Price of WTI Crude Oil
(USD/Barrel)
January 2, 2022$76
March 3, 2022$125
December 29, 2022$80

While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.

Q2 2022

The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.

IndexPrice Return in 2022
S&P 500 Value Index-7.4%
S&P 500 Growth Index-30.1%

Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.

Q3 2022

The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.

Currency USD Appreciation Against Currency
(Dec 31 2020-Sep 30 2022)
Japanese Yen40.1%
Chinese Yuan9.2%
Euro25.1%
Canadian Dollar7.2%
British Pound22.0%
Australian Dollar18.1%

Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.

Q4 2022

The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.

 202320242025Longer Run
Minimum Projection4.9%3.1%2.4%2.3%
Median Projection5.1%4.1%3.1%2.5%
Maximum Projection5.6%5.6%5.6%3.3%

The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.

The Top Google Searches to Come

After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?

Find out how New York Life Investments can help you make sense of market trends.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Subscribe

Popular