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.
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.
|Timeframe||Category||Threat||% of Respondents|
|0-2 years||🟢 Environmental||Extreme weather||31.1%|
|0-2 years||🔴 Societal||Livelihood crises||30.4%|
|0-2 years||🟢 Environmental||Climate action failure||27.5%|
|0-2 years||🔴 Societal||Social cohesion erosion||27.5%|
|0-2 years||🔴 Societal||Infectious diseases||26.4%|
|0-2 years||🔴 Societal||Mental health deterioration||26.1%|
|0-2 years||🟣 Technological||Cybersecurity failure||19.5%|
|0-2 years||🔵 Economic||Debt crises||19.3%|
|0-2 years||🟣 Technological||Digital inequality||18.2%|
|0-2 years||🔵 Economic||Asset bubble burst||14.2%|
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.
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.
|Timeframe||Category||Threat||% of Respondents|
|2-5 years||🟢 Environmental||Climate action failure||35.7%|
|2-5 years||🟢 Environmental||Extreme weather||34.6%|
|2-5 years||🔴 Societal||Social cohesion erosion||23.0%|
|2-5 years||🔴 Societal||Livelihood crises||20.1%|
|2-5 years||🔵 Economic||Debt crises||19.0%|
|2-5 years||🟢 Environmental||Human environmental damage||16.4%|
|2-5 years||🟡 Geopolitical||Geoeconomic confrontations||14.8%|
|2-5 years||🟣 Technological||Cybersecurity failure||14.6%|
|2-5 years||🟢 Environmental||Biodiversity loss||13.5%|
|2-5 years||🔵 Economic||Asset bubble burst||12.7%|
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.
Respondents identified climate change as the biggest threat to humanity in the next decade.
|Timeframe||Category||Threat||% of Respondents|
|5-10 years||🟢 Environmental||Climate action failure||42.1%|
|5-10 years||🟢 Environmental||Extreme weather||32.4%|
|5-10 years||🟢 Environmental||Biodiversity loss||27.0%|
|5-10 years||🟢 Environmental||Natural resource crises||23.0%|
|5-10 years||🟢 Environmental||Human environmental damage||21.7%|
|5-10 years||🔴 Societal||Social cohesion erosion||19.1%|
|5-10 years||🔴 Societal||Involuntary migration||15.0%|
|5-10 years||🟣 Technological||Adverse tech advances||14.9%|
|5-10 years||🟡 Geopolitical||Geoeconomic confrontations||14.1%|
|5-10 years||🟡 Geopolitical||Geopolitical resource contestation||13.5%|
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.
“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:
- 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.
- Consider the entire ecosystem: Examine third-party services and external assets, and analyze the broader ecosystem in which you operate.
- Embrace diversity in resilience strategies: Not all strategies will work across the board. Complex problems will require nuanced efforts. Adaptability is key.
- 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.
- 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.
Visualizing China’s $18 Trillion Economy in One Chart
China’s economy reached a GDP of 114 trillion yuan ($18 trillion) in 2021, well above government targets. What sectors drove that growth?
Visualizing China’s $18 Trillion Economy in 2021
China is the world’s second largest economy after the U.S., and it is expected to eventually climb into the number one position in the coming decades.
While China’s economy has had a much rockier start this year due to zero-tolerance COVID-19 lockdowns and supply chain issues, our visualization covers a full year of data for 2021—a year in which most economies recovered after the initial chaos of the pandemic.
In 2021, China’s Gross Domestic Product (GDP) reached ¥114 trillion ($18 trillion in USD), according to the National Bureau of Statistics. The country’s economy outperformed government targets of 6% growth, with the overall economy growing by 8.1%.
Let’s take a look at what powers China’s modern economy.
Breaking Down China’s Economy By Sector
|Sector||2021 Total GDP |
|2021 Total GDP |
|Wholesale and Retail Trades||¥10.5T||$1.7T||9.2%|
|Farming, Forestry, Animal Husbandry, and Fishery||¥8.7T||$1.4T||7.6%|
|Transport, Storage, and Post||¥4.7T||$0.7T||4.1%|
|Information Transmission, Software and IT Services||¥4.4T||$0.7T||3.9%|
|Renting & Leasing Activities and Business Services||¥3.5T||$0.6T||3.1%|
|Accommodation and Restaurants||¥1.8T||$0.3T||1.6%|
Industrial production—activity in the manufacturing, mining, and utilities sectors—is by far the leading driver of China’s economy. In 2021, the sector generated ¥37.3 trillion, or one-third of the country’s total economic activity.
Despite a slowdown in December, wholesale and retail trades also performed strongly in 2021. As the main gauge of consumption, it was affected by lockdown measures and the spread of the COVID-19 Omicron variant towards the end of the year, but still rose by double digits, reaching a total of ¥10.5 trillion*.
“Other services”, which includes everything from scientific research and development to education and social services, generated 16% of China’s total economy in 2021, or ¥18.1 trillion.
*Editor’s note: At time of publishing, China’s government seems to have since adjusted this number to ¥11.0 trillion, which is not consistent with the original data set provided, but worth noting.
Where is China’s GDP Headed?
China’s economy recovered noticeably faster than most major economies last year, and as the overall trend below shows, the country has grown consistently in the years prior.
Before the pandemic hit, China’s quarterly GDP growth had been quite stable at just above 5%.
After the initial onset of COVID-19, the country’s economy faltered, mirroring economies around the globe. But after a strong recovery into 2021, resurging cases caused a new series of crackdowns on the private sector, slowing down GDP growth considerably.
With the slowdown continuing into early 2022, China’s economic horizon still looks uncertain. The lockdown in Shanghai is expected to continue all the way to June 1st, and over recent months there have been hundreds of ships stuck outside of Shanghai’s port as a part of ongoing supply chain challenges.
China’s Zero-COVID Policy: Good or Bad for the Economy?
While every country reacted to the COVID-19 pandemic differently, China adopted a zero-COVID policy of strict lockdowns to control cases and outbreaks.
For most of 2021, the policy didn’t deter GDP growth. Despite some major cities fully or partially locked down to control regional outbreaks, the country’s economy still paced well ahead of many other major economies.
But the policy faced a challenge with the emergence of the Omicron variant. Despite lockdowns and an 88% vaccination rate nationally, seven out of China’s 31 provinces and all of the biggest cities have reported Omicron cases.
And China’s zero-COVID policy has not affected all sectors equally. Industrial production rose by more than 10% in the first 11 months of 2021, despite city lockdowns around the country. That’s because many factories in China are in suburban industrial parks outside the cities, and employees often live nearby.
But many sectors like hotels and restaurants have been more severely affected by city lockdowns. Many global economies are starting to transition to living with COVID, with China remaining as one of the last countries to follow a zero-COVID policy. Does that ensure the country’s economy will continue to slow in 2022, or will China manage to recover and maintain one of the world’s fastest growing economies?
Charted: U.S. Consumer Debt Approaches $16 Trillion
Robust growth in mortgages has pushed U.S. consumer debt to nearly $16 trillion. Click to gain further insight into the situation.
Charted: U.S. Consumer Debt Approaches $16 Trillion
According to the Federal Reserve (Fed), U.S. consumer debt is approaching a record-breaking $16 trillion. Critically, the rate of increase in consumer debt for the fourth quarter of 2021 was also the highest seen since 2007.
This graphic provides context into the consumer debt situation using data from the end of 2021.
Housing Vs. Non-Housing Debt
The following table includes the data used in the above graphic. Housing debt covers mortgages, while non-housing debt covers auto loans, student loans, and credit card balances.
|Total Consumer Debt
Source: Federal Reserve
Trends in Housing Debt
Home prices have experienced upward pressure since the beginning of the COVID-19 pandemic. This is evidenced by the Case-Shiller U.S. National Home Price Index, which has increased by 34% since the start of the pandemic.
Driving this growth are various pandemic-related impacts. For example, the cost of materials such as lumber have seen enormous spikes. We’ve covered this story in a previous graphic, which showed how many homes could be built with $50,000 worth of lumber. In most cases, these higher costs are passed on to the consumer.
Another key factor here is mortgage rates, which fell to all-time lows in 2020. When rates are low, consumers are able to borrow in larger quantities. This increases the demand for homes, which in turn inflates prices.
Ultimately, higher home prices translate to more mortgage debt being incurred by families.
No Need to Worry, Though
Economists believe that today’s housing debt isn’t a cause for concern. This is because the quality of borrowers is much stronger than it was between 2003 and 2007, in the years leading up to the financial crisis and subsequent housing crash.
In the chart below, subprime borrowers (those with a credit score of 620 and below) are represented by the red-shaded bars:
We can see that subprime borrowers represent very little (2%) of today’s total originations compared to the period between 2003 to 2007 (12%). This suggests that American homeowners are, on average, less likely to default on their mortgage.
Economists have also noted a decline in the household debt service ratio, which measures the percentage of disposable income that goes towards a mortgage. This is shown in the table below, along with the average 30-year fixed mortgage rate.
|Year||Mortgage Payments as a % of Disposable Income||Average 30-Year Fixed Mortgage Rate|
Source: Federal Reserve
While it’s true that Americans are less burdened by their mortgages, we must acknowledge the decrease in mortgage rates that took place over the same period.
With the Fed now increasing rates to calm inflation, Americans could see their mortgages begin to eat up a larger chunk of their paycheck. In fact, mortgage rates have already risen for seven consecutive weeks.
Trends in Non-Housing Consumer Debt
The key stories in non-housing consumer debt are student loans and auto loans.
The former category of debt has grown substantially over the past two decades, with growth tapering off during the pandemic. This can be attributed to COVID relief measures which have temporarily lowered the interest rate on direct federal student loans to 0%.
Additionally, these loans were placed into forbearance, meaning 37 million borrowers have not been required to make payments. As of April 2022, the value of these waived payments has reached $195 billion.
Over the course of the pandemic, very few direct federal borrowers have made voluntary payments to reduce their loan principal. When payments eventually resume, and the 0% interest rate is reverted, economists believe that delinquencies could rise significantly.
Auto loans, on the other hand, are following a similar trajectory as mortgages. Both new and used car prices have risen due to the global chip shortage, which is hampering production across the entire industry.
To put this in numbers, the average price of a new car has climbed from $35,600 in 2019, to over $47,000 today. Over a similar timeframe, the average price of a used car has grown from $19,800, to over $28,000.
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