Produced by the Global Risks Advisory Board of the World Economic Forum (WEF) together with Marsh McLennan, SK Group and Zurich Insurance, the report paints a picture of a world still affected by the aftermath and ongoing devastation of a pandemic.
According to Peter Giger, Group Chief Risk Officer of the Zurich Insurance Group, the climate crisis remains the greatest long-term threat to humanity worldwide.
“Failure to act against climate change could shrink global GDP by a sixth.that The UN climate conference (COP26) is still not enough to achieve the 1.5 ° C target. It is not too late for governments and businesses to respond to the risks they are facing and forge an innovative, determined and inclusive transition that protects the economy and people, ”he says.
South Africa was identified as one of 31 countries, including Argentina, France, Germany and Mexico, with high risks associated with the erosion of social cohesion.
Spiros Fatouros, CEO of Marsh Africa, pointed out that the disparities that existed before the Covid-19 pandemic are now widening.
“Worldwide there are an estimated 51 million other people living in extreme poverty,” he says. The unemployment rate in South Africa reached a record 34.9% in the third quarter of last year.
Stanlib chief economist Kevin Lings says while the recent spell of job losses was largely due to widespread unrest and looting last July, overall unemployment is catastrophic, especially when you consider that around 550,000 to 600,000 people are entering the labor market each year.
In short, South Africa has to climb a huge mountain just to get back to pre-Covid-19 employment. This level of job creation can only be achieved through much higher capital investment by the private sector, which can only be achieved through sustained higher corporate confidence, he says.
Trust required to foster public-private partnerships
Carolina Klint, head of risk management at Continental Europe, Marsh, says society needs to build trust in order to build public-private partnerships that can drive positive developments.
“Greater trust will help drive change in the economic landscape as companies begin to meet their commitments. Delivery and execution by both governments and the private sector is more likely to be done with increased trust on both sides, ”she says.
Regarding economic stagnation, Fatouros points out that the general expectation is that developed countries will have reached around 90% of their pre-pandemic growth by 2024, while developing countries (excluding China) are still 5.5% below growth the pandemic will be.
With regard to corruption, the recently published first report by the Zondo Commission shows that no politically associated persons have been prosecuted to date.
In response to the report, Cas Coovadia, CEO of Business Unity South Africa, says it is clear that the companies will use the report “for …
“We believe the report’s recommendations on investigations and prosecutions of identified parties need urgent follow-up and we expect the criminal justice system to provide the resources necessary to ensure an expeditious investigation and prosecution,” he says.
Load shedding remains a major concern when it comes to infrastructure issues. Eskom tariffs could rise by more than 40%, although load shedding on the order of last year is expected to continue for at least the next two years.
“There is no doubt that public-private partnerships are key to solving some of our challenges. However, we need to set the right framework and encourage engagement with a positive platform for collaboration to move forward, ”says Fatouros.
While mental health issues have been highlighted around the world rather than identified as a risk to South Africa, it is also an issue of local concern. The South African Depression and Anxiety Group (Sadag) reports that its hotlines have received more than 466,400 calls since January 2021, with one in five calls being suicide-related.
“We’re seeing an increase in calls to our hotlines every day, with 1,800 to 2,200 incoming calls,” said Cassey Chambers, Operations Director at Sadag.
With the national bans in the past two years, illegal trafficking has increased, particularly in the alcohol and tobacco industries. Kurt Moore, chairman of the board of directors of the South African Liquor Brand Association, said last February that roughly 15% of the market share was due to illicit trafficking or organized crime, which appeared to have flourished during the lockdown.
There is no doubt that the pandemic is taking its toll on a country that has already faced numerous challenges. Resolute action from both the public and private sectors is the catalyst needed to drive change in the right direction.
In its 17th edition, the report encourages executives to think beyond the quarterly reporting cycle and develop policies that manage risk and set the agenda for years to come. It examines four areas of emerging risks: cybersecurity, competition in space, disorderly climate change and migratory pressures, each of which requires global coordination for successful management.
“Health and economic disruptions exacerbate social divisions. This creates tension at a time when cooperation within societies and among the international community will be essential to ensure a more equitable and expeditious global recovery.
“Global leaders need to come together and take a coordinated, multi-stakeholder approach to address relentless global challenges and build resilience to the next crisis,” said Saadia Zahidi, executive director of WEF.
Carolina Klint, Risk Management Leader, Continental Europe, Marsh said, “As companies recover from the pandemic, they are rightly sharpening their focus on organizational resilience and ESG credentials.
“With cyber threats growing faster than our ability to permanently eliminate them, it is clear that resilience and governance cannot be achieved without credible and sophisticated cyber risk management plans.
“Similarly, organizations must begin to understand their space risks, particularly those to satellites on which we have become increasingly dependent in the face of increasing geopolitical ambitions and tensions.” BM / DM