Extended global recession top concern: World Economic Forum

The economic fallout from COVID-19 dominates business concerns, with two-thirds identifying a prolonged global recession as a top risk, according to an analysis released Tuesday from the World Economic Forum.

Bankruptcies and industry consolidation, the failure of industries to recover and disrupted supply chains are also “crucial worries” cited by half of 350 senior risk professionals responding to the WEF survey.

A rise in cyberattacks and data fraud due to a shift in working patterns is another top threat, as is the breakdown of information technology infrastructure and networks, according to its findings.

Businesses are also concerned about geopolitical disruptions to operations, with more than 40% citing tighter restrictions on the movement of people and goods among the most worrisome effects of COVID-19, the WEF said.

Some 31% of respondents also rated another global outbreak of COVID-19 or another infectious disease as a top risk.

Economic distress and social discontent will rise over the next 18 months unless world leaders, businesses and policymakers work together to manage the fallout of the pandemic, the WEF said in a statement.

“We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive,” Saadia Zahidi, managing director for the World Economic Forum, said in the statement. 

Even before the COVID-19 crisis, businesses were faced with a “highly complex and interconnected global risk landscape,” John Doyle, president and CEO for Marsh LLC, said in the statement.

“From cyber threats to supply chains, as well as the well-being of their colleagues, businesses will now rethink many of the structures they formerly relied on,” Mr. Doyle said.

Governments and the private sector need to work together more effectively to speed recovery, he said.

Almost one-fifth of survey respondents also cited an investment shortfall in climate action as a top risk, the WEF said.

Even though industrial production worldwide was cut by lockdowns and shutdowns, resulting in a sharp fall in emissions and pollution globally, COVID-19 could have “severe post-crisis effects” on the planet and its species, the report said.

“COVID-19 has shown it is crucial to keep existential risks in focus, and climate change is one of these,” Peter Giger, group chief risk officer for Zurich Insurance Group, said in the statement.

“As we reboot our economies, changes in working practices and in attitudes towards traveling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future,” Mr. Giger said.

The WEF’s COVID-19 Risks Perception Survey, produced with Marsh & McLennan Cos. Inc. and Zurich, was conducted April 1-13.

More insurance and risk management news on the coronavirus crisis here.