Nations across the globe should step up preparations against global risks such as climate change and cyber attacks, EU officials say, as these areas remain the most pressing for global experts surveyed ahead of this year’s World Economic Forum (WEF) taking place in Davos next week.
The report, published on Wednesday (16 January), also included cyber-threats at the top of the rankings.
Are we sleepwalking into a crisis? For Alison Martin, chief risk officer at Zurich insurance, the answer is yes.
Climate change is the “clearest example” of that, she told an event hosted by EURACTIV.com, and supported by the Swiss insurance group.
Countries are working to implement the Paris Agreement’s goal of keeping global warming “well below 2C”. But the latest report from the intergovernmental Panel on Climate Change showed the consequences of 1.5C of warming could be very damaging as well.
“We should hope for the best but prepare for the worst,” said Elena Višnar Malinovská, a senior official at the European Commission’s climate action directorate (DG CLIMA).
For Suzana Carp, head of EU engagement at Sandbag, a climate policy think tank, the IPCC report proved that the speed and impact of these global risks may be bigger than initially thought.
Preparedness is even more urgent in the case of cyber-risks. “We cannot hope for the best” with cyber-threats, because they will only increase, said Despina Spanou, a senior official at the European Commission’s directorate for communication networks, content and technology (DG CNECT).
In Spanou’s view, both the public and private sector should work on resilience strategies.
And preparedness is a good investment, according to Zurich. For every dollar spent in prevention against natural disasters, citizens and companies save five dollars in potential costs. “It is cheaper to build resilience,” said Alison Martin.
But how can policymakers prepare for the unforeseen when risks become more interconnected and complex, and often hit from blind spots?
“You cannot plan for everything,” reminded Stefan Duchateau, professor of financial risk management at KU Leuven. And political dynamics also play against long-term planning, as politicians are short-sighted, he remarked.
Malinovská agreed that natural catastrophes cannot be avoided. But the extent of devastation can be minimised if resources are invested in prevention and preparedness, as experience showed with hurricanes in Florida, the official said.
According to Suzana Carp, consumers and market forces can also play their part.
She recalled how grassroots campaigns and consumer sentiment was crucial in persuading EU policymakers to push through legislation on curbing single-use plastics last year. In the US, two coal plants were forced to shut down under economic pressure shortly after President Donald Trump decided to pull out from the Paris Agreement.
“Markets and investment are a bigger force than we thought,” Carp said.
Some sectors can also play a leading role in building resilience ans sharing best practice.
Banks are among “the most experienced” when it comes to addressing cyber-threats, Spanou said. “It is time for them to share good practices,” she added.
Information sharing is also crucial to prepare for the unforeseen. In the insurance sector, the disclosure of economic costs is now commonplace in the aftermath of weather-related catastrophes.
But climate change is not only a threat. It could also be an opportunity to invest in new industries and involve citizens.
Climate policy represents a “huge opportunity” to establish a new social contract in Europe, Carp said, echoing similar calls from European leaders such as Greece’s Alexis Tsipras, Spain’s Pedro Sánchez and Commission first vice-president Frans Timmermans.
In Carp’s view, climate policies provide an opportunity to involve people at local, regional and national level in preparing a new social contract based on green transition principles.
Malinovská agreed, rejecting the “simplistic view” that the ‘yellow vests’ protests in France were a rejection of climate policies, triggered by rising fuel taxes. Europe needs a “fair transition” towards a green economy, she argued.
But as the WEF report pointed out, the time to act is now.
“Last year there was a feeling of complacency, now certainly the expectation is that things are only going to get worse,” Martin warned.