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Quick Takes

Environment Dominates the Risk Outlook of Younger Stakeholders

Economic, environmental and domestic political risks all dominate the short-term concerns of respondents to the Global Risks Perception Survey. Its results are presented in the 2020 Global Risks Report from the World Economic Forum, produced with support from Marsh McLennan and other partners. 

The first column shows risks that are expected to increase by the WEF’s multistakeholder community, while the second column shows the concerns of WEF’s younger constituents. 

It illustrates the different priorities of each group, with the latter being much more focused on climate change and its impacts. 

Economic confrontations and their effects on trade — complicated by protectionism and the lack of a resolution to 2019’s trade war — mostly concern the group of WEF multistakeholders, along with the potential for a recession in a major economy.  

Economic inequality and social issues are another focal point: The domestic political fractures and protests seen in 2019 are expected to continue as people demand more from and remain critical of their governments. Without social stability, countries will find it more difficult to address key global issues, the report says. 

The interrelated nature of global risks complicates their potential solutions, for example, “a growth in nationalist policies risk[s] preventing meaningful action,” against climate change, the report notes. 

Foreign Aid Is at a Record Peak, But Is It Enough?

Source: Organization for Economic Co-operation and Development (OECD)

Foreign aid rose to an all-time high of $161.2 billion last year, a 3.5% increase from 2019. In many cases, larger economies directed these funds to countries in need of significant help to respond to the short-term impacts from the COVID-19 pandemic, according to the OECD. 

An OECD survey shows that the foreign aid supported health systems, humanitarian aid and food security. However, OECD Secretary-General Angel Gurría added that there will need to be “a much greater effort to help developing countries with vaccine distribution … to build a truly global recovery.” 

Internationally, governments approved $16 trillion worth of COVID-19 stimulus measures, but only 1% was used to help developing countries handle the virus. Trade, foreign direct investment and remittances in developing countries have also declined as a result of the pandemic, intensifying their need for support.

Why Are Central Banks Creating Digital Currencies?

Source: Atlantic Council

Nineteen countries have started to test a central bank digital currency (CBDC) on a small-scale with a limited number of participants. The Atlantic Council defines CBDC as “the digital form of a country’s fiat currency that is also a claim on the central bank.”

As of today, the People’s Bank of China (PBOC) and the European Central Bank (ECB) are prominent players in the digital currency realm. The United States currently lags behind in the research phase, yet the Federal Reserve has expressed continued interest in the digital dollar.

As digital currencies expand globally, there are challenges ahead — the legal, political and regulatory properties of CBDCs remain unclear. But the IMF notes that there are also multiple benefits to having government involvement in digital currencies, including lower cash transfer costs, greater accessibility to banking services and easier implementation of monetary policies. 

The Great Commodity Bounceback

Source: World Bank

Most global commodity prices were higher than their pre-pandemic levels during the first quarter of 2021. Metal prices are expected to continue their upward trend, rising by 30% during 2021, according to the World Bank. This jump in commodity prices parallels the rise in global economic activity, the impact of stimulus bills and changes in supply factors.  

The crude oil industry saw a record-fast recovery after a price and demand collapse in 2020. The predicted average cost of crude oil for this year is $56 per barrel —  about one-third higher than its cost in 2020. Natural gas prices also rose by one-third as a result of increased demand during the winter season.

The World Bank expects that price levels will “remain close to current levels throughout the year” driven by “global economic rebound and improved growth prospects.” The report notes that all commodity markets heavily depend on how long the economic implications from the pandemic last and how well the risk is managed by governments.

COVID-19 Threatens Press Freedom Across the World

Source: Reporters Without Borders (RSF)

Note: White represents “Good Situation,” yellow represents “Satisfactory Situation,” orange represents “Problematic Situation,” red represents “Difficult Situation” and black represents “Very Serious Situation.”

Journalistic efforts were completely blocked or severely disrupted in 73% of the 180 countries analyzed in the 2021 World Press Freedom Index. Last year, only 7% had a “favorable environment for journalists,” compared to 8% of the countries in 2019.

“The coronavirus pandemic has been used as grounds to block journalists’ access to information sources and reporting in the field,” the report notes. The largest drop in ranking was Malaysia — down 18 places at 119 — as a result of increased censorship. Countries in Asia, the Middle East and Africa ranked the lowest due to internet censorship, surveillance and propaganda — especially in China, which ranked 177th. 

Norway ranked first in the index, followed by Finland and Sweden. Europe and the Americas remain the most favorable continents for press freedom, despite “abuses” and “violations” against press freedom increasing. At the same time, the public is putting an increasing amount of trust in business, as opposed to media, along with expectations for social leadership, according to Edelman’s latest Trust Barometer.

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