According to the World Economic Forum’s (WEF’s) Global Risks Report 2024, the coming decade’s environmental and planetary changes could “radically impact” economic growth and insurability.
One risk area for Australia is food exports.
“The risk in this area is multi-faceted in some respects,” said Marc Clements (pictured above). “Such as for the likes of the major exporters, [they] can actually represent a major opportunity when it’s well-managed.”
Clements is national practice leader for Transport, Food & Beverage, Marsh Pacific. The global brokerage Marsh, together with Zurich Insurance Group, partnered with the WEF to release the Global Risks report.
Australia’s status as a big food exporter, suggested Clements, could drive the opportunity. The Global Risks report identifies Australia, together with countries including New Zealand, Canada and the United States as among some of the largest net exporters of food and agricultural products.
Clements suggested that, even in the coming years of climate uncertainty, the “insurable risks” facing food exporters can be dealt with effectively.
He characterised insurable risk as falling under a number of parameters. The parameters, he said, included physical loss such as weather or catastrophe loss, transportation loss or damage, and misappropriation or theft.
“As well as food safety risk, like food contamination and product liability risk, there are climate risks such as changes to growing regions or environments and adverse weather impact, trade credit and political risk – which includes supplier or customer default or government intervention,” said Clements. “These risks can be mitigated or sometimes eliminated through traditional risk transfer insurance products or non-traditional risk finance and parametric products.”
There are also macro-economic risks, he said, “On the other side of the ledger.”
“These include the sustainability of agricultural growing areas, competition for land and resources, international investment in domestic resources, resource sustainability and ESG risk which includes supply chain, climate commitments, social responsibility and labour market risk,” said Clements.
The Marsh expert said brokers are already helping the food sector better manage their risks.
“Brokers and risk advisors can and do assist farmers and all segments of the agricultural and food supply chain through identification, management and mitigation of risks within the sphere of insurable risk specified above,” he said.
The Global Risks Report 2024 is the 19th edition of this WEF risk survey.
In the preface, WEF’s managing director summarized the world’s daunting challenges.
“The report is set against a backdrop of rapidly accelerating technological change and economic uncertainty, as the world is plagued by a duo of dangerous crises: climate and conflict,” she said.
Apart from “active hostilities in multiple regions,” she said countries are also grappling with “record-breaking extreme weather” and “cost-of-living pressures.”
The report included findings from the Global Risks Perception Survey (GRPS). This survey captured insights from nearly 1,500 global experts. The overall tone of their responses made for gloomy reading.
“As we enter 2024, 2023-2024 GRPS results highlight a predominantly negative outlook for the world over the next two years that is expected to worsen over the next decade,” said the report. “The majority of respondents (54%) anticipate some instability and a moderate risk of global catastrophes, while another 30% expect even more turbulent conditions.”
In a decade’s time, the report found that the experts’ expectations plummet even further.
“The outlook is markedly more negative over the 10-year time horizon, with nearly two-thirds of respondents expecting a stormy or turbulent outlook,” said the report.
The global experts surveyed ranked the following risks as the most serious threats facing the globe for the next two years:
The report said the top risk, misinformation and disinformation, will be leveraged by “foreign and domestic actors alike” as billions of people take part in elections. The report said the resulting unrest could range from violent protests to terrorism.
“Beyond elections, perceptions of reality are likely to also become more polarized, infiltrating the public discourse,” said the report. “However, as truth is undermined, the risk of domestic propaganda and censorship will also rise in turn.”
Are you a risk adviser? What’s your view of the WEF’s Global Risks Report? Please tell us below
