Global Risk Report 2023: A Year of Growing Concerns

The Global Risk Report 2023 paints a concerning picture of the world's future. Rising economic nationalism and protectionism are expected to continue, with 71% of experts predicting a significant increase in global trade tensions.

Experts are also warning about the growing threat of climate change, with 63% of respondents citing it as a top risk. This is not surprising, given the devastating impact of recent natural disasters.

The report highlights the increasing risk of social unrest, with 55% of experts predicting a rise in protests and civil unrest. This is a stark reminder of the need for governments and businesses to prioritize social cohesion and economic inclusion.

The World Economic Forum's Global Risks Report 2023 is a must-read for anyone interested in understanding the complex challenges facing our world.

The Global Risk Report is a comprehensive document that identifies the biggest global challenges facing us today. It's a collective effort by 1,400 global risk experts, policymakers, and industry leaders who come together to discuss the risks that could have a widespread impact on our world.

The report considers risks that have a global scope, affecting at least three world regions in at least two different continents. These risks can originate locally, but their impact can be felt globally.

The criteria for what constitutes a global risk are quite specific. To be considered global, a risk must have cross-industry relevance, affecting three or more industries. It must also be uncertain, with uncertainty about how it manifests itself and its potential impact within ten years.

The report identifies risks that have the potential to cause economic damage of at least $10 billion or more, or major human suffering that triggers public pressure and global policy responses. These risks require a multi-stakeholder approach for their mitigation, involving various stakeholders and experts from different industries and regions.

Here are the five criteria for what constitutes a global risk:

The 2024 Global Risks Report highlights the risks of deep societal polarization, which can lead to social unrest and instability. Companies must harness risk, build resilience, and promote inclusivity for sustainable development.

The world is facing economic confrontations between major powers, leading to a global economy slowdown. This is a concerning trend that affects many countries.

Rapidly rising prices due to inflation can erode purchasing power and decrease living standards. Effective monetary policies and fiscal measures are necessary to manage inflationary pressures and maintain price stability.

Economic slowdowns can lead to job losses, reduced consumer spending, and overall economic instability. They can also exacerbate inequalities, making it essential to implement robust economic policies and foster resilience.

South Africa has taken significant steps to strengthen its measures against money laundering and terrorist financing since the 2021 assessment.

The country has drawn on insights from over 90 countries within the FATF Global Network to improve its framework.

South Africa's progress in this area is a positive development, showing a commitment to addressing financial risks.

A key tool for countries like South Africa is the Money Laundering National Risk Assessment Guidance, which supports the conduct of a money laundering NRA.

This guidance is designed to help countries like Mexico, which is currently the FATF Presidency, in their efforts to tackle financial risks.

South Africa's actions to strengthen its framework are a result of its 2021 assessment and the 2023 Follow-Up report.

Inflation's Economic Impact can be a major concern for individuals and economies alike. Rapidly rising prices can erode purchasing power, leading to a decrease in living standards.

As economic confrontations between major powers grow, the global economy shows greater signs of a concerted slowdown. This can lead to increased inflationary pressures.

Effective monetary policies and fiscal measures are necessary to manage inflationary pressures and maintain price stability. The consequences of inflation on economies can be severe.

Social unrest can eventually follow when living standards decrease due to inflation.

Virtual assets are a key area of focus for global risk management. MER Oman and MER Argentina are leading efforts to implement FATF standards on virtual assets and virtual asset service providers (VASPs).

The FATF standards on virtual assets are being implemented through targeted updates, including the VASP update and the Mexican Presidency's guidance. These efforts aim to prevent the misuse of virtual assets for illicit purposes.

Several key outcomes are expected in the coming months, including the outcomes of the Plenary in October 2024 and the update to the grey listing criteria.

The FATF has been working on implementing standards for virtual assets (VA) and virtual asset service providers (VASP).

The implementation of these standards is a targeted update.

Countries such as MER Oman and MER Argentina are involved in this process.

The FATF has also released guidance on money laundering and terrorist financing related to virtual assets, known as the ML-NRA Guidance.

In October 2024, the FATF will hold an outcomes plenary to discuss the progress of this implementation.

The FATF has also updated its grey listing criteria to focus on countries posing greater risks to the international financial system.

Here are some of the recent developments in the FATF's efforts to implement standards for virtual assets and VASPs:

Technological Governance Deficits have serious consequences. Emerging technology risks can erode social discourse.

These risks also threaten economic stability. In fact, they can even pressure national and international security.

To address these issues, we need a significant technology governance refresh at all levels. This will help us better understand and manage systemic risks.

By doing so, we can mitigate the negative impacts of emerging technologies and create a more stable and secure environment.