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Social disparity, regulations, online communications among global risks: WEF

Social disparity, regulations, online communications among global risks: WEF

Chronic fiscal imbalances and social disparity are the most prevalent risks facing the world in the next 10 years, according to a World Economic Forum report published Wednesday.

The Geneva-based WEF's “Global Risks 2012” report, published ahead of the WEF meeting of global leaders in Davos, Switzerland, later this month, outlines three major global risks: seeds of dystopia, unsafe safeguards and the dark side of connectivity.

According to the report, which collated responses from 469 business and risk experts, the seeds of dystopia stem from the imbalance between populations of young people with few job prospects, growing numbers of retirees putting pressure on state-run retirement plans and the growing gap between rich and poor.

“Individuals are increasingly being asked to bear risks previously assumed by governments and companies to obtain a secure retirement and access to quality health care,” said John Drzik, CEO of Oliver Wyman Group, a unit of Marsh & McLennan Cos. Inc. and a sponsor of the report. “This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community,” he said in a statement.

The threat of inappropriate or overzealous regulation is another big risk, according to the report.

“We need to get the balance right with regulations and, to that end, our safeguards must be anticipatory rather than reactive,” said David Cole, chief risk officer at Swiss Re Ltd., a sponsor of the report. “It's equally important that regulations be made more flexible to effectively respond to change,” he added.

The rise of online systems to connect people across the globe also poses a large risk, according to the report.

“The Arab Spring demonstrated the power of interconnected communications to drive personal freedom, yet the same technology facilitated riots in London,” noted Steve Wilson, chief risk officer for general insurance at Zurich Financial Services Ltd., another of the report's sponsors.

“Governments, societies and businesses need to better understand the interconnectivity of risk in today's technologies if we are to truly reap the benefits they offer,” he said.