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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. 

GDP Growth Depends on Far More Than Investment

Source: World Economic Outlook Database, IMF

Average gross domestic product (GDP) per capita in Latin America has not grown consistently since 1990. However, in the last 30 years, GDP in Asian countries has grown fourfold — in part due to investor activity, according to a paper from the International Monetary Fund. 

Over the past two decades, Latin America has received far less investment compared to Asian countries — but more than European countries, and Europe saw growth in GDP during the same period. Europe’s growth resulted from institutional reforms, meaning the relatively low GDP growth in Latin America is due to factors beyond investment.

The combination and quality of human capital, business climate and governance is what makes a difference: “In countries where property rights are not secure and governance is poor, firms will remain small and productivity low,” the paper notes. IMF analysis found that Latin American countries score low on both human capital and strong governance, making low investment in Latin America the result of low growth — not the cause. “Governments solely focused on boosting investment might want to look at the problem from a different perspective,” says the IMF.

50% of Jobs Lost in US Performing Arts Due to COVID-19

Source: Brookings Institution

The creative industry will lose an estimated 31% of jobs and 9% of its sales in the United States due to the impact from coronavirus. Fine and performing arts will see the heaviest loss at 1.4 million jobs and $42.5 billion in sales, according to estimates from the Brookings Institution, due to the pause in live performances.  

The southern region of the U.S. will suffer the most losses, followed by the western region, as creative industries in these areas are larger, with California, New York and Texas being most economically affected.

The creative industry is “one of the sectors most at risk from COVID-19,” says Brookings. The sector heavily supports other regional economies as well, and without the right financial support, “the damage will have reverberating effects” beyond the economy, on culture and quality of life.

News Deserts Are a Major Loss for Communities Across the US

Source: UNC Hussman School of Journalism and Media

More than 2,100 — or one quarter — of newspapers have disappeared in the United States since 2004. 

News deserts, or areas with one local newspaper or none, “contribute to the cultural, economic and political divide within the country,” according to a report from the University of North Carolina. Those who live in news deserts tend to be older, less formally educated and more economically vulnerable, and their lack of access to local news may result in less political engagement and interest in voting. 

During a crisis, local news outlets play a vital role in distributing the latest safety information, but the Brookings Institution found that half of the counties reporting COVID-19 cases in April were in news deserts. Without information from local news on how the pandemic is playing out on a community level and how locals can best protect themselves against the virus, those in news deserts could be more vulnerable to its spread.

Working Hours Lost at 10 Times the Rate of the 2008 Crisis During COVID-19

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

The impact of job hours lost during the coronavirus pandemic is already 10 times greater compared to the early months of the 2008 Great Recession. The economy is not expected to bounce back to its pre-pandemic levels until after 2021, according to the OECD.

COVID-19 has seen a steeper rise in unemployment and a broader reach among the population compared to the Great Recession. The Great Recession reached its unemployment peak in January 2010 at 10.6% — a rate that we surpassed in May 2020 at 13.0% (and it’s still rising). Almost every age group has been economically affected by the COVID-19 outbreak, while during the Great Recession, parts of the older generations were relatively more insulated from the economic fallout.

This drastic job loss could further expand the poverty-wealth gap and backtrack both progress toward gender equality and the ability of younger generations to be financially independent, purchase a home or pay off student loans. The effects of unemployment on mental health are substantial as well and will likely continue increasing during this crisis.

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