Global Village People
We face extreme global risks that
cannot be addressed by existing institutions or governments. An
international, global plan of action is required.
The recent economic crisis and the more recent civil unrest
throughout the Middle East underscore the fragility of our
world. We see what happens when people are disenfranchised,
when they have to fight for scarce resources and when the young
have no jobs or opportunities. How we solve these problems as a
global community is a challenge, particularly when our own
interests conflict with others.
Fortunately, some of the world’s smartest people from
government, academia and industry get together at the annual
meeting of the World Economic Forum in Davos, Switzerland.
There they brainstorm about our global systems and explore
solutions that can positively transform our world. Similarly,
the recent Summit on the Global Agenda in Dubai, also sponsored
by the World Economic Forum, brought together 600 thought
leaders from 60 countries to discuss the most significant
issues facing our nations and industries. From that meeting
came a roadmap for a new reality for how our world must relate,
communicate and connect to confront risks and opportunities in
the 21st century.
The major challenges identified by the group in its report,
Outlook on the Global Agenda
2011, are worth our attention. As the report explains,
the financial crisis has exhausted our capacity for dealing
with shocks: “The frequency and severity of risks to
global stability have [been] amplified, while the ability of
global governance systems to deal with them has not.”
These challenges are not only relevant for us as a society,
but for our industry as it attempts to meet the risk needs of
the future. Below are highlights from the report.
Global Power Shifts There is a
fundamental economic and political shift of power underway.
Power is no longer concentrated in the developed economies. As
power moves to emerging economies, political power will follow.
Emerging markets have become centers of both economic growth
and geopolitical decision making. As one member of the group
said, “Asia and other emerging markets will outstrip the
economic performance of Europe and North America, where
stubborn unemployment and political gridlock will make policy
Population Growth The
world’s population is exploding with 6.8 billion people
(and rising). These people are competing for resources that are
becoming increasingly scarce. “Global population growth
and humanity’s decision to be silent on the issue for
political/cultural/religious reasons is the most important
issue,” a member of the population group said. The
inevitable strain this trend puts on all areas of
socio-political relations influences all the issues identified
by the experts.
Uncertain Recovery There is a
high degree of volatility and ambiguity across many markets in
the short to medium term, which is likely to lead to irrational
behavior on the part of investors. The issue is aggravated by
the aftermath of the global financial crisis, global
imbalances, the specter of financial collapse across Europe,
fiscal crises across the world, and currency volatility.
Governments and global institutions that were fragile before
the crisis have, by and large, become even more so in the face
of global instability. The world is in no state to withstand
Inequality While global growth
has continued, inequality between and within countries has
Shortage of Resources The
strain of providing for a world population of nearly seven
billion threatens to undercut growth, create environmental
problems and cause social and political conflict. Limited
resources will drive much conflict and realignment of the
global landscape in the near future. Shortages across
commodities from water and food to iron ore and rare earth will
be a key point of negotiation. How do we decouple economic
growth from resource consumption?
The report notes trends that are overestimated and
underestimated drivers of global affairs. Climate change,
corporate responsibility and sustainable energy are
overestimated. Significantly, underestimated trends include
inequality, population growth and resource scarcity. Some
trends are polarizing to society. The aging population and the
spread and increased speed of connectivity are two. As we saw,
the Internet and social media played a key role in helping
protesters organize in Egypt, while the generation gap is
clearly evident in debates over social security and pension
So what did the brainiacs conclude? We must find new ways to
cooperate to rebalance the risks and opportunities which will
lead to a more stable and sustainable long-term future. Global
rebalancing needs to be a “long-term, collaborative
process” that includes the disenfranchised and encourages
those who have benefited to continue to do so in a sustainable
Easier said than done. But as the report makes crystal
clear, we can no longer contain and address systemic risks
alone. It will take many disciplines and many stakeholders to
improve the global system’s overall resilience.
In other words, it will take a global village to address the
challenges. Fortunately, the world’s smartest people are
not just talking to each other. The next step is to put
together an action plan. Let’s hope Congress
doesn’t have to vote on it.
Kemper is The Council’s vice president of Industry