WEF Book

Insight Report
The Global Risks

Report 2017
12th Edition
The Global Risks Report 2017, 12th Edition is

published by the World Economic Forum within
the framework of The Global Competitiveness
and Risks Team.
The information in this report, or on which

this report is based, has been obtained from
sources that the authors believe to be reliable
and accurate. However, it has not been
independently verified and no representation or
warranty, express or implied, is made as to the
accuracy or completeness of any information
obtained from third parties. In addition, the
statements in this report may provide current
expectations of future events based on certain
assumptions and include any statement that
does not directly relate to a historical fact
or a current fact. These statements involve
known and unknown risks, uncertainties and
other factors which are not exhaustive. The
companies contributing to this report operate
in a continually changing environment and
new risks emerge continually. Readers are
cautioned not to place undue reliance on these
statements. The companies contributing to this
report undertake no obligation to publicly revise
or update any statements, whether as a result
of new information, future events or otherwise
and they shall in no event be liable for any loss or
damage arising in connection with the use of the
information in this report.
World Economic Forum
Geneva

2017 All rights reserved.
All rights reserved. No part of this publication

may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means,
electronic, mechanical, photocopying, or
otherwise without the prior permission of the
World Economic Forum.
ISBN: 978-1-944835-07-1
REF: 050117
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Figure 1: The Risks-Trends Interconnections Map
Source: World Economic Forum Global Risks Perception Survey 2016

Note: Survey respondents were asked to select the three trends that are the most important in shaping global development in the next 10 years. For each of the three trends
identified, respondents were asked to select the risks that are most strongly driven by those trends. The global risks with the most connections to trends are spelled out in the
figure. See Appendix B for more details. To ensure legibility, the names of the global risks are abbreviated; see Appendix A for the full name and description
Failed and failing

states
Oil and gas price

spike
Chronic disease,
developed world
Oil price shock
China economic
hard landing
Asset price
collapse
2nd
Retrenchment
from globalization
(developed)
Slowing Chinese
economy (<6%)
Oil and gas

price spike
Pandemics
Asset price
collapse
Retrenchment
from globalization
Interstate and
civil wars
Pandemics
Oil price shock
1st
2nd
Asset price
collapse
2010
Global governance
gaps
infrastructure
Fiscal crises
Breakdown of
critical information
Chronic disease
Slowing Chinese
economy (<6%)
Fiscal crises
Chronic disease
Oil and gas

price spike
Retrenchment
from globalization
(developed)
Economic
Fiscal crises
infrastructure
Chronic disease
Breakdown of
Oil price spikes
Retrenchment
from globalization
(developed)
Breakdown of critical information infrastructure
Asset price
collapse
2009
Retrenchment
from globalization
(emerging)
Global governance
gaps
Chronic disease
Slowing Chinese
economy (<6%)
2011
Environmental
Extreme energy
price volatility
Asset price
collapse
Geopolitical
conflict
Climate change
Fiscal crises
2011
Climate change
Biodiversity loss
Corruption
Flooding
Storms and
cyclones
2012
Geopolitical
Extreme volatility
in energy and
agriculture prices
imbalances
Food shortage
crises
Water supply
crises
Major systemic
financial failure
2012
Water supply
crises
Cyber attacks
Rising greenhouse
gas emissions
Chronic fiscal
imbalances
Severe income
disparity
2013
Societal
Failure of climatechange mitigation

and adaptation
Diffusion of
weapons of mass
destruction
Chronic fiscal
imbalances
Water supply
crises
Major systemic
financial failure
2013
Mismanagement
of population
ageing
Water supply
crises
Rising greenhouse
gas emissions
Chronic fiscal
imbalances
Severe income
disparity
2014
Technological
Critical information
infrastructure
breakdown
Unemployment
and
underemployment
Water crises
Climate change
Fiscal crises
2014
Cyber attacks
Climate change
Unemployment
and
underemployment
Extreme weather
events
Income disparity
2015

and adaptation
Interstate conflict
with regional
consequences
Weapons of mass
destruction
Rapid and massive

spread of
infectious diseases
Water crises
2015
High structural
unemployment or
underemployment
State collapse or
crisis
Failure of national
governance
Extreme weather
events
Interstate conflict
with regional
consequences
2016
Severe energy
price shock
Large-scale
involuntary
migration
Water crises
Weapons of mass
destruction

and adaptation
2016
Major natural
catastrophes
Interstate conflict
with regional
consequences

and adaptation
Extreme weather
events
Large-scale
involuntary
migration
2017

and adaptation
Major natural
disasters
Water crises
Extreme weather
events
Weapons of mass
destruction
2017
Massive incident
of data fraud/theft
Large-scale
terrorist attacks
Major natural
disasters
Large-scale
involuntary
migration
Extreme weather
events
Source: World Economic Forum 20017-2017, Global Risks Reports

Note: Global risks may not be strictly comparable across years, as definitions and the set of global risks have evolved with new issues emerging on the 10-year horizon. For example, cyberattacks, income disparity and unemployment entered
the set of global risks in 2012. Some global risks were reclassified: water crises and rising income disparity were re-categorized first as societal risks and then as a trend in the 2015 and 2016 Global Risks Reports, respectively. The 2006 edition
of the Global Risks Report did not have a risks landscape
5th
4th
3rd
2008
Asset price
collapse
2007
Top 5 Global Risks in Terms of Impact
5th
4th
3rd
Middle East
instability
Chronic disease
in developed
countries
1st
2010
Asset price
collapse
Breakdown of critical information infrastructure
2009
Asset price
collapse
2008
Asset price
collapse
Breakdown of
infrastructure
2007
Top 5 Global Risks in Terms of Likelihood
Figure 2: The Evolving Risks Landscape, 2007-2017
Figure 3: The Global Risks Landscape 2017

Note: Survey respondents were asked to assess the likelihood of the individual global risk on a scale of 1 to 7, 1 representing a risk that is not likely to happen and 7 a risk that is
very likely to occur. They also assess the impact on each global risk on a scale of 1 to 5 (1: minimal impact, 2: minor impact, 3: moderate impact, 4: severe impact and 5:
catastrophic impact). See Appendix B for more details. To ensure legibility, the names of the global risks are abbreviated; see Appendix A for the full name and description
Figure 4: The Global Risks Interconnections Map 2017

Note: Survey respondents were asked to identify between three and six pairs of global risks they believe to be most interconnected. See Appendix B for more details. To
ensure legibility, the names of the global risks are abbreviated; see Appendix A for the full name and description
The Global Risks

Report 2017
12th Edition
Strategic Partners
Marsh & McLennan Companies
Zurich Insurance Group
Academic Advisers
National University of Singapore
Oxford Martin School, University of Oxford
Wharton Risk Management and Decision Processes Center, University of Pennsylvania
Contents
4
Preface
By Klaus Schwab
Foreword
Executive Summary
Introduction
10
Part 1: Global Risks 2017

Economy: Growth and Reform
Society: Rebuilding Communities
Technology: Managing Disruption
Geopolitics: Strengthening Cooperation
Environment: Accelerating Action
22
42
Part 2: Social and Political Challenges

23
2.1 Western Democracy in Crisis?
29
2.2 Fraying Rule of Law and Declining Civic

Freedoms: Citizens and Civic Space at Risk
35
2.3 The Future of Social Protection Systems
Part 3: Emerging Technologies

43
3.1 Understanding the Technology Risk Landscape
48
3.2 Assessing the Risk of Artificial Intelligence
53
3.3 Physical Infrastructure Networks and the Fourth

Industrial Revolution
58
Conclusion
60
Appendices
Appendix A: Description of Global Risks, Trends and

Emerging Technologies 2017
Appendix B: Global Risks Perception Survey 2016 and

Methodology
68
Acknowledgements
Preface
As in previous years, the analysis

contained in this Report builds on the
annual Global Risks Perception Survey,
completed by almost 750 members of
the World Economic Forums global
multistakeholder community.
The year 2016 has seen profound

shifts in the way we view global risks.
Societal polarization, income inequality
and the inward orientation of countries
are spilling over into real-world politics.
Through recent electoral results in G7
countries, these trends are set to have
a lasting impact on the way economies
act and relate to each other. They are
also likely to affect global risks and the
interconnections between them.
Against the background of these
developments, this years Global Risks
Report explores five gravity centres
that will shape global risks. First,
continued slow growth combined with
high debt and demographic change
creates an environment that favours
financial crises and growing inequality.
At the same time, pervasive corruption,
short-termism and unequal distribution
of the benefits of growth suggest that
the capitalist economic model may not
be delivering for people. The transition
towards a more multipolar world order
is putting global cooperation under
strain. At the same time, the Fourth
Industrial Revolution is fundamentally
transforming societies, economies,
and ways of doing business. Last but
not least, as people seek to reassert
identities that have been blurred by
globalization, decision-making is
increasingly influenced by emotions.
In addition to these gravity centres, this
years Global Risks Report presents
deep-dive discussions of risks posed
by ongoing political and societal
transformations, including challenges
to democracy, closing space for civil
society, and outmoded social
protection systems. It also discusses
risks related to emerging technologies
of the Fourth Industrial Revolution and
the associated governance challenges.
4
The Global Risks Report 2017
The year 2017 will present a pivotal

moment for the global community. The
threat of a less cooperative, more
inward-looking world also creates the
opportunity to address global risks and
the trends that drive them. This will
require responsive and responsible
leadership with a deeper commitment
to inclusive development and equitable
growth, both nationally and globally. It
will also require collaboration across
multiple interconnected systems,
countries, areas of expertise, and
stakeholder groups with the aim of
having a greater societal impact. We
hope that The Global Risks Report
2017 and the subsequent deliberations
at the World Economic Forums Annual
Meeting 2017 will contribute to a
debate about pragmatic solutions.

Klaus Schwab
Founder and Executive Chairman
Foreword
As one of the Forums flagship reports,

The Global Risks Report has been a
collaborative effort since its first edition
in 2006. It draws on the unique
expertise available within the Forum
itself and its different communities and
knowledge networks. It also builds
firmly on the Forums ongoing
research, projects, debates and
initiatives. As well as reflecting the
views of leaders from our various
communities through the Global Risks
Perception Survey, the insights
presented here are the result of
numerous discussions, consultations,
and workshops.
With this in mind, we would like to
thank our Strategic Report Partners,
Marsh & McLennan Companies and
Zurich Insurance Group, represented
on the Steering Board by John Drzik,
President, Global Risk and Specialties,
Marsh; and Cecilia Reyes, Group Chief
Risk Officer, Zurich Insurance Group.
Furthermore, Professor Schwab is
grateful to our Academic Advisers the
National University of Singapore,
Oxford Martin School at the University
of Oxford, and the Wharton Risk
Management and Decision Processes
Center at the University of
Pennsylvania.
The Report has greatly benefited from
the dedication and valuable guidance
of the members of the Global Risks
2017 Advisory Board. Members are
Rolf Alter, Organisation for Economic
Co-operation and Development
(OECD); Sharan Burrow, International
Trade Union Confederation (ITUC);
Winnie Byanyima, Oxfam International;
Marie-Valentine Florin, International
Risk Governance Council (IRGC); Al
Gore, Generation Investment
Management; Donald Kaberuka,
Harvard University; Steven Kou,
National University of Singapore; Julian
Laird, Oxford Martin School; Pascal
Lamy, Jacques Delors Institute; Ursula
von der Leyen, Federal Minister of
Defence of Germany; Maleeha Lodhi,
Ambassador and Permanent
Representative of Pakistan to the
United Nations; Gary Marchant,
Arizona State University; Erwann
Michel-Kerjan, Wharton Risk
Center, University of Pennsylvania;
Nicolas Mueller, Federal Chancellery of
Switzerland; Moiss Nam, Carnegie
Endowment for International Peace;
Kirstjen Nielsen, George Washington
University Center for Cyber and

Homeland Security; Naomi Oreskes,
Harvard University; Jonathan Ostry,
International Monetary Fund; Nouriel
Roubini, New York University; John
Scott, Zurich Insurance Group; Richard
Smith-Bingham, Marsh & McLennan
Companies; Michelle Tuveson, Centre
for Risk Studies, University of
Cambridge Judge Business School;
Ngaire Woods, University of Oxford;
and Sandra Wu Wen-Hsiu, Japan Asia
Group Limited.
We are also grateful to Aengus Collins,
Practice Lead, Global Risks for his
leadership of this project and the Global
Risks 2017 core project team members
Ciara Browne, Nicholas Davis, Attilio Di
Battista, Daniel Gomez Gaviria, Thierry
Geiger, Galle Marti, Thomas Philbeck,
Katharine Shaw, and Stphanie Verin
for their contributions to this Report.
Last but not least, we would like to
thank the Global Risks Perception
Survey 2016 review group, respondents
who completed the Global Risks
Perception Survey and the participants
in the Global Risks workshops.
Margareta Drzeniek Hanouz

Head of Competitiveness and Risks and
Member of the Executive Committee
Richard Samans
Head of the Centre for the Global Agenda,
Member of the Managing Board
Executive
Summary
For over a decade, The Global Risks

Report has focused attention on the
evolution of global risks and the deep
interconnections between them. The
Report has also highlighted the
potential of persistent, long-term trends
such as inequality and deepening
social and political polarization to
exacerbate risks associated with, for
example, the weakness of the
economic recovery and the speed of
technological change. These trends
came into sharp focus during 2016,
with rising political discontent and
disaffection evident in countries across
the world. The highest-profile signs of
disruption may have come in Western
countries with the United Kingdoms
vote to leave the European Union and
President-elect Donald Trumps victory
in the US presidential election but
across the globe there is evidence of a
growing backlash against elements of
the domestic and international status
quo.
The Global Risks

Landscape
One of the key inputs to the analysis of
The Global Risks Report is the Global
Risks Perception Survey (GRPS), which
brings together diverse perspectives
from various age groups, countries and
sectors: business, academia, civil
society and government.
This years findings are testament to
five key challenges that the world now
faces. The first two are in the economic
category, in line with the fact that rising
income and wealth disparity is rated by
GRPS respondents as the most
important trend in determining global
developments over the next 10 years.
This points to the need for reviving
economic growth, but the growing
mood of anti-establishment populism
suggests we may have passed the
stage where this alone would remedy
fractures in society: reforming market
capitalism must also be added to the
agenda.
With the electoral surprises of 2016 and
the rise of once-fringe parties stressing
national sovereignty and traditional
values across Europe and beyond, the
societal trends of increasing
polarization and intensifying national
sentiment are ranked among the top
6
Global Risks 2015
five. Hence the next challenge: facing

up to the importance of identity and
community. Rapid changes of
attitudes in areas such as gender,
sexual orientation, race,
multiculturalism, environmental
protection and international cooperation
have led many voters particularly the
older and less-educated ones to feel
left behind in their own countries. The
resulting cultural schisms are testing
social and political cohesion and may
amplify many other risks if not resolved.
Although anti-establishment politics
tends to blame globalization for
deteriorating domestic job prospects,
evidence suggests that managing
technological change is a more
important challenge for labour markets.
While innovation has historically created
new kinds of jobs as well as destroying
old kinds, this process may be slowing.
It is no coincidence that challenges to
social cohesion and policy-makers
legitimacy are coinciding with a highly
disruptive phase of technological
change.
The fifth key challenge is to protect
and strengthen our systems of
global cooperation. Examples are
mounting of states seeking to withdraw
from various international cooperation
mechanisms. A lasting shift in the
global system from an outward-looking
to a more inward-looking stance would
be a highly disruptive development. In
numerous areas not least the ongoing
crisis in Syria and the migration flows it
has created it is ever clearer how
important global cooperation is on the
interconnections that shape the risk
landscape.
Further challenges requiring global
cooperation are found in the
environmental category, which this year
stands out in the GRPS. Over the
course of the past decade, a cluster of
environment-related risks notably
extreme weather events and failure of
climate change mitigation and
adaptation as well as water crises has
emerged as a consistently central
feature of the GRPS risk landscape,
strongly interconnected with many
other risks, such as conflict and
migration. This year, environmental
concerns are more prominent than
ever, with all five risks in this category
assessed as being above average for
both impact and likelihood.
Social and Political

Challenges
Managing the Fourth

Industrial Revolution
After the electoral shocks of the last

year, many are asking whether the
crisis of mainstream political parties in
Western democracies also represents
a deeper crisis with democracy itself.
The first of three risks in focus
considered in Part 2 of the Report
assesses three related reasons to think
so: the impacts of rapid economic and
technological change; the deepening of
social and cultural polarization; and the
emergence of post-truth political
debate. These challenges to the
political process bring into focus policy
questions such as how to make
economic growth more inclusive and
how to reconcile growing identity
nationalism with diverse societies.
The final part of this Report explores

the relationship between global risks
and the emerging technologies of the
Fourth Industrial Revolution (4IR). We
face a pressing governance
challenge if we are to construct the
rules, norms, standards, incentives,
institutions and other mechanisms that
are needed to shape the development
and deployment of these technologies.
How to govern fast-developing
technologies is a complex question:
regulating too heavily too quickly can
hold back progress, but a lack of
governance can exacerbate risks as
well as creating unhelpful uncertainty
for potential investors and innovators.
The second risk in focus also relates to

the functioning of society and politics: it
looks at how civil society organizations
and individual activists are increasingly
experiencing government crackdowns
on civic space, ranging from
restrictions on foreign funding to
surveillance of digital activities and even
physical violence. Although the stated
aim of such measures is typically to
protect against security threats, the
effects have been felt by academic,
philanthropic and humanitarian entities
and have the potential to erode social,
political and economic stability.
An issue underlying the rise of
disaffection with the political and
economic status quo is that social
protection systems are at breaking
point. The third risk in focus analyses
how the underfunding of state systems
is coinciding with the decline of
employer-backed social protection
schemes; this is happening while
technological change means stable,
long-term jobs are giving way to
self-employment in the gig economy.
The chapter suggests some of the
innovations that will be needed to fill the
gaps that are emerging in our social
protection systems as individuals
shoulder greater responsibility for costs
associated with economic and social
risks such as unemployment,
exclusion, sickness, disability and old
age.
Currently, the governance of emerging

technologies is patchy: some are
regulated heavily, others hardly at all
because they do not fit under the remit
of any existing regulatory body.
Respondents to the GRPS saw two
emerging technologies as being most
in need of better governance:
biotechnologies which tend to be
highly regulated, but in a slow-moving
way and artificial intelligence (AI) and
robotics, a space that remains only
lightly governed. A chapter focusing on
the risks associated with AI
considers the potential risks associated
with letting greater decision-making
powers move from humans to AI
programmes, as well as the debate
about whether and how to prepare for
the possible development of machines
with greater general intelligence than
humans.
The Report concludes by assessing
the risks associated with how
technology is reshaping physical
infrastructure: greater
interdependence among different
infrastructure networks is increasing
the scope for systemic failures
whether from cyberattacks, software
glitches, natural disasters or other
causes to cascade across networks
and affect society in unanticipated
ways.
Introduction
This 12th edition of The Global

Risks Report is published at a time
of heightened political uncertainty,
following a year of unexpected electoral
results, particularly in the United States
and the United Kingdom. Polarized
societies and political landscapes
are taking centre stage in many
countries, with deepening generational
and cultural divisions amplifying
the risks associated with sluggish
economic recovery and accelerating
technological change.
These tensions have been building
for some time, and over the past
10 years a nexus of social, political
and economic fragilities has been a
consistent focus of The Global Risks
Report. The events of 2016 should
serve as a wake-up call and prompt us
to reassess our preparedness in the
face of an evolving risk landscape.
While we should be wary of attributing
too much influence to a series of
very recent electoral results, the
consequences of which are still
unknown, major unexpected events
can serve as inflection points. Longterm trends such as persistent
inequality and deepening polarization,
which ranked first and third in
perceived importance in the Global
Risks Perception Survey (GRPS) this
year can build to a point at which
they become triggers for change. This
kind of change might involve risks
intensifying or crystallizing, but it is
important to recognize that shocks and
releases of tension might also lead to
a brightening of the risk outlook. We
are in a period of flux; paradoxically this
is therefore a time when things could
improve.
The world is undergoing multiple
complex transitions: towards a lowercarbon future; towards technological
change of unprecedented depth and
speed; towards new global economic
and geopolitical balances. Managing
these transitions and the deeply
interconnected risks they entail will
require long-term thinking, investment
and international cooperation. It will
also require policy-makers to bring
voters with them one of the lessons
of 2016 is that we are very far from
consensus on how to proceed.
This years Global Risks Report takes

as its starting point the societal and
political polarization that besets an
increasing number of countries and
that looks set to be a determining
feature of the political landscape not
just for the next few years but for the
next few electoral cycles. In Part 1, the
Report draws on the trends and risks
highlighted in the latest GRPS to outline
the key challenges that the world now
faces: reviving economic growth;
reforming market capitalism; facing
up to the importance of identity and
community; managing technological
change; protecting and strengthening
our systems of global cooperation; and
deepening our efforts to protect the
environment.
Part 2 explores three social and
political risks in greater depth. The
first chapter considers whether recent
political trends amount to a crisis
of Western democracy. It looks at
underlying patterns that have led to a
weakening of democratic legitimacy
and points to three strategies that
might help to restore it. The second
piece highlights the importance of civil
society in mitigating risks and assesses
trends towards the curtailment of
civil society organizations freedom
to operate. The final chapter in this
part of the Report looks at one of the
gravest long-term challenges facing
the world: how to build systems of
social protection that can cope with the
seismic demographic, economic and
other changes that have transfigured
social structures and individual lives
over the last three decades.
Part 3 turns towards technology, which
is at once a source of disruption and
polarization and an inevitable part of
whatever responses to these trends
we choose to pursue. Informed by the
results of a special GRPS module on
emerging technologies, the urgency
of the governance challenge in this
area is stressed. This is followed by
two in-depth assessments of specific
technological risks: first, in relation to
artificial intelligence, and second, in
relation to our rapidly changing physical
infrastructure needs and vulnerabilities.
Part 1
Part 2
Part 1: Global
Risks 2017
Part 3
10
Part 1
That discontent with the current

order has now become an electionwinning proposition clearly increases
the urgency of understanding and
responding to these global risks. The
World Economic Forum has identified
five key challenges that will require
greater global attention and action:
fostering greater solidarity and
long-term thinking in market
capitalism,
revitalizing global economic

growth,
recognizing the importance of
identity and inclusiveness in
healthy political communities,
mitigating the risks and exploiting
the opportunities of the Fourth
Industrial Revolution, and
strengthening our systems of
global cooperation.
The remainder of Part 1 looks at

each of these challenges, drawing
on the latest Global Risks Perception
Survey (GRPS) to identify potential
trigger points that might create new
risks, exacerbate existing risks or
an under-appreciated possibility
provide opportunities to do things
differently in a way that mitigates risks.
Part 1 concludes with a reflection
on environmental risk, which again
stands out in the GRPS as a source
of concern, and which would be
particularly vulnerable to any loss of
momentum in global cooperation.
Economy: Growth and

Reform
Despite unprecedented levels of
peace and global prosperity, in many
countries a mood of economic malaise
has contributed to anti-establishment,
populist politics and a backlash against
globalization. The weakness of the
economic recovery following the global
financial crisis is part of this story,
but boosting growth alone would not
remedy the deeper fractures in our
political economy. More fundamental
reforms to market capitalism may
be needed to tackle, in particular, an
apparent lack of solidarity between
those at the top of national income and
wealth distributions and those further
down.
Economic concerns pervade the latest
GRPS results. This is not immediately
evident from the evolution of the topfive risks by impact and likelihood,
as illustrated in Figure 2 (inside front
cover), which shows economic risks
fading in prominence since the height
of the global financial crisis, and
missing entirely for the first time in the
latest survey. However, in addition
to asking respondents to assess the
impact and likelihood of individual risks,

the survey asks ask them to consider
the influences and interconnections
that shape the risk landscape. Here
the economy is paramount. Growing
income and wealth disparity is seen
by respondents as the trend most likely
to determine global developments over
the next 10 years (see Table 1.1), and
when asked to identify interconnections
between risks, the most frequently
mentioned pairing was that of
unemployment and social instability
(see Table 1.2 and Appendix A).
Table 1.1: Top 5 Trends that
Determine Global Developments
Part 3
These developments should not

surprise us. Over the past decade
The Global Risks Report has drawn
attention each year to a persistent
cluster of economic, social and
geopolitical factors that have helped
shape the global risks landscape.
In 2007 and 2008, for example,
The Global Risk Reports rankings
showed deglobalization in advanced
economies as tied for the risk with the
highest impact; in 2011, the Report
focused on economic disparity and
global governance failures; in 2014
it highlighted societal concerns
includ[ing] the breakdown of social
structures, the decline of trust in
institutions, the lack of leadership and
persisting gender inequalities; and in
2015 it observed that the fragility of
societies is of increasing concern and
cautioned against excessive economic
optimism, noting that it might reflect a
false sense of control, as history shows
that people are often taken by
surprise by the same risks.3
Part 2
Years of building pressure in many

parts of the world, at least since the
global financial crisis,1 crystallized
into dramatic political results during
2016 as public disaffection with the
status quo gained traction. In the
West, consensus expectations were
defied by the United Kingdoms
decision to leave the European Union,
by President-elect Donald Trumps
victory in the United States and by the
Italian electorates rejection of Matteo
Renzis constitutional reforms. The
implications of results such as these
are potentially far-reaching some
people question whether the West has
reached a tipping point and might now
embark on a period of deglobalization.2
But the uncertainty and instability that
characterized 2016 are not Western
phenomena alone: we saw variations
of them in countries across the world,
including Brazil, the Philippines and
Turkey.
1 Rising Income and wealth disparity

2 Changing climate
3 Increasing polarization of societies
4 Rising cyber dependency
5 Ageing population
Source: World Economic Forum Global Risks
Perception Survey 2016.
Globally, inequality between countries

has been decreasing at an accelerating
pace over the past 30 years.4 Within
some countries, however, the data tell
a different story. Inequality had been
falling consistently in the industrialized
world since the beginning of the 20th
century, but since the 1980s the
share of income going to the top 1%
has increased in the United States,
United Kingdom, Canada, Ireland and
Australia (although not in Germany,
Japan, France, Sweden, Denmark or
the Netherlands).5 Reasons include
skill-biased technological change6
which increases the returns to
education combined with scale
effects as markets became more
interconnected, increasing global
competition for talent. Among
other things, this has led to an
increase in CEO compensation as
firms have become larger.7 Global
communications have also driven
up returns for individuals who can
successfully cater to a global audience
what Sherwin Rosen described as
the economics of superstars.8
11
Part 1
Figure 1.1: The Pace of Global Recoveries since 1975

OECD real GDP; seasonally adjusted; rebased to 100 at trough of each slowdown
125
120
Part 2
1975
115
1982
110
1991
2001
105
2009
100
Part 3
95
0
10
11
12
13
14
15
16
17
18
19
20
Number of quarters after trough

Source: OECD Quarterly National Accounts Dataset.
In advanced economies, the incomes

of the traditionally well-off middle
classes have grown at a comparatively
slower pace9 and slower also than
the incomes of the emerging middle
classes of countries in Latin America,
Africa, and particularly Asia.10 The
slow pace of economic recovery since
2008 has intensified local income
disparities,11 with a more dramatic
impact on many households than
aggregate national income data would
suggest. This has contributed to antiestablishment sentiment in advanced
economies, and although emerging
markets have seen poverty fall at record
Table 1.2: Most Important Risks

Interconnections
Unemployment and
underemployment
Profound social instability
Large-scale involuntary
migration
State collapse or crisis
Failure of climate-change
mitigation and adaption
Water crises
Failure of national governance

Interstate conflict with regional
consequences
Large-scale involuntary
migration
Source: World Economic Forum Global Risks

Perception Survey 2016.
12
speed,12 they have not been immune

to rising public discontent evident,
for example, in large demonstrations
against corruption across Latin
America. Larrain et al. argue that rising
prosperity and a growing middle class
lead to greater demands for better
government and public goods, which
governments across the developing
world have been unable to meet.13
In the wake of the financial crisis,
economic policy-making has been
predominantly monetary rather than
fiscal. Unorthodox countercyclical
policies such as quantitative easing
large-scale purchases of government
bonds by central banks have evolved
into enduring features of economic
policy frameworks. And although
evidence points to positive impacts on
growth and employment,14 quantitative
easing has also exacerbated income
inequality by boosting returns enjoyed
by the owners of financial assets,15
while workers real earnings have been
growing very slowly.16
This is not the only source of concern
about exceptional monetary policies.
Sustained low interest rates can
distort the financial mechanisms that
underpin healthy economic activity:
they make it unusually cheap for
struggling companies to roll over their
debts, inhibiting the process of reallocating resources from inefficient to
more innovative parts of the economy.
This in turn complicates the process
of clearing the debt overhangs that in
many countries remains an unresolved
legacy of the pre-crisis boom, weighing

on growth by diverting income towards
debt servicing rather than fresh
consumption or investment.
Is it time for the pendulum to swing
from monetary to fiscal policy? In
the United States, President-elect
Trump campaigned on the promise
of increased infrastructure spending,
and globally there is tentative evidence
of a gradual move towards fiscal
loosening.17 This presents its own
risks: borrowing costs for governments
have been exceptionally low in recent
years, but if investors were to re-price
risk sharply, the adjustment this would
require from high-deficit countries could
have significant economic and political
consequences. However, it is not only
concerns about market responses
that shape governments reluctance to
turn to fiscal policy. Policy preferences
matter too. In the Eurozone, for
example, governments have been slow
to respond to repeated exhortations
from Mario Draghi, the president of
the European Central Bank, to find
more space for fiscal loosening.18
Using Organisation for Economic
(OECD) data, Figure 1.2 illustrates the
divergence of fiscal trends in the United
States and Eurozone since 2015.
Beyond monetary policy and fiscal
stimulus, productivity growth has also
been slow to recover from the crisis.
Structural rates of unemployment
remain high, particularly among young
people in Europe, and the United States
Part 1
Figure 1.2: Fiscal Balances 20092018

General government balance; % of GDP
2009 10
11
12
13
14
15
16
17
18
-4
-6
-8
-10
-12
United States
Eurozone
Source: OECD Economic Outlook 100 database
has seen a marked slump in labour

participation rates. And in contrast
with the pre-crisis era, when Chinas
rapid expansion bolstered overall
growth rates, there is no emergingmarket game-changer on the horizon.19
China is in a gradual slowdown as
its economy transitions from an
investment-led to a consumptionled growth model, and many other
emerging markets are undergoing
a traumatic adjustment to the end
of a commodities super-cycle that
underpinned much of their growth so
far this century.
In sum, it is difficult to identify routes
that will lead back to robust global rates
of economic growth. However, growth
is now only part of the challenge policymakers need to address. Concerns
over income and wealth distribution are
becoming more politically disruptive,
and much greater emphasis is needed
on the increasing financial insecurity
that characterizes many peoples
lives. As socio-economic outcomes
are increasingly determined globally,
popular frustration is growing at the
inability of national politics to provide
stability. Economist Dani Rodrik coined
the phrase the globalization trilemma
to capture his view that, among
democracy, national sovereignty and
global economic integration, only
two are simultaneously compatible
and recent events in Europe and the
United States suggest an appetite for
rebalancing towards democracy and
national sovereignty.
The combination of economic

inequality and political polarization
threatens to amplify global risks, fraying
the social solidarity on which the
legitimacy of our economic and political
systems rests. New economic systems
and policy paradigms are urgently
needed to address the sources of
popular disenchantment.20 These could
include more effective human capital
policies, to enable more people to
benefit from skill-biased technological
change; better public goods (whether
publicly or privately provided) to
address the ambitions of the growing
middle class around the world; and
more responsive governance systems
to empower individuals at the local level
without sacrificing the many benefits of
globalization.
Society: Rebuilding
Communities
Issues of identity and culture were
central to the two most dramatic
Western political results of 2016, in the
United Kingdom and the United States.
This is part of a broader trend affecting
both international and domestic
politics. Across the European Union,
parties stressing national sovereignty
and/or values have prospered,21
boosted in part by migration flows that
GRPS respondents continue to point to
as a major geopolitical risk. Outside the
European Union, polarization in Turkey
has deepened since 2010,22 while
Russia has been expressing its national
In the West, decades of rapid social

and economic change have widened
generation gaps in values, disrupted
traditional patterns of affiliation and
community, and eroded the support
of mainstream political parties.25 Early
analysis by political scientists Ronald
Inglehart and Pippa Norris points to
the populism behind the victories of
Brexit and President-elect Trump as
being driven more by demographics
and cultural factors than income
inequality:26 a backlash among older
and less-educated voters who feel
that they are being marginalized within
their own countries by changing
values in areas such as gender, sexual
orientation, race, multiculturalism,
environmental protection and
international cooperation. Pew
research found stark divisions in the
self-described values of supporters of
President-elect Trump and Democrat
candidate Hillary Clinton: for example,
72% of President-elect Trumps
supporters described themselves as
traditional, versus 31% of Clinton
supporters; other big differences
13
Part 3
-14
In the latest GRPS, respondents

ranked increasing polarization as
the third most important trend for
the next 10 years it was cited by
31% of respondents, with increasing
national sentiment cited by 14%. The
survey recorded an increase in the
perceived impact of failure of national
governance but, perhaps surprisingly,
profound social instability dropped
in the rankings for both perceived
likelihood and impact. One possibility
is that the global decision-makers
who mostly comprise the GRPS panel
have not been sufficiently attuned to
this risk. Another way of interpreting
the GRPS, however, is to focus on
the underlying trends rather than the
risks. By placing both polarization and
intensifying national sentiment among
the top five trends (see Table 1.1),
GRPS respondents have highlighted
long-term patterns that, if they persist,
are likely to continue to amplify a range
of social and political risks.
Part 2
-2
political identity in increasingly assertive

foreign policy stances.23 Globally,
politics is increasingly defined by the
rise of charismatic strongman national
politicians and emotive political debate:
post-truth was the Oxford English
Dictionarys word of the year.24
Part 1
Technology: Managing
Disruption
Figure 1.3: Populist Voting in Europe

14
13.2%
12
Mean vote share (%)
Part 2
10
8
6
4
5.1%
Part 3
2
0
1970s
2000s
Source: Adapted from Inglehart and Norris (2016), drawing on Dring and Manow (2016). Parliaments and
government database (ParlGov) Elections dataset.
Note: Vote shares of populist-right parties in national parliamentary and European parliamentary elections in 24
European countries.
included honor and duty are my

core values (59% vs 35%); typical
American (72% vs 49%), feminist
(5% vs 38%) and supporter of LGBT
rights (24% vs 66%).27
Many established political parties
are ill-equipped to respond to voters
placing greater emphasis on culture
and values, because the parties have
shifted towards the centre of the
political spectrum and a managerial
or technocratic style of politics.28 They
have lost touch with their traditional
core constituencies, particularly those
with class-based roots.29 In 2013,
political scientist Peter Mair wrote that
political parties failure to engage voters
meant democracy was starting to
buckle as electorates are becoming
effectively non-sovereign.30 Events
last year suggest that verdict may
have been premature. Both the Brexit
and President-elect Trump victories
featured (1) outsiders to major party
politics (2) successfully engaging
traditionalist voters with (3) appeals to
sovereignty rooted in national identity
and pride. Unusually, older voters were
in the vanguard of these disruptive
movements and with populations
ageing, the pendulum may not swing
back towards the younger generations
views for some time.31
14
Dramatic events can have complex

effects on the risk landscape. They can
trigger new risks or exacerbate existing
ones, but they can also open the way
to responses that mitigate risks. As
many of the Wests democracies face
up to the growing electoral influence
of traditionalist political identities,
there are potential gains for social
solidarity and democratic legitimacy
if processes of political debate and
compromise re-connect with the older,
less-educated and predominantly male
voters who currently feel excluded.
However, it will be challenging to find
political narratives and policies that can
repair decades-long cultural fault-lines
while preserving, for example, gender
and minority rights. Failure could
further undermine social and cultural
cohesion: Daron Acemoglu, author with
James Robinson of Why Nations Fail,
has cautioned that current divisions
in the United States risk undermining
not just the electoral process but the
institutions and norms on which it is
founded.32
Evidence suggests that technological

change provides a better explanation
than globalization for the industrial
decline and deteriorating labour-market
prospects that have catalyzed antiestablishment voting in many of the
worlds advanced economies. Todays
world is one in which production,
mobility, communication, energy
and other systems are changing with
unprecedented speed and scope,
disrupting everything from employment
patterns to social relationships and
geopolitical stability. Driven by the
convergence between digital, biological
and physical technologies, the Fourth
Industrial Revolution (4IR) is creating
new global risks and exacerbating
existing risks.
Perhaps because of the increasing
ubiquity of innovative technology,
respondents to the GRPS have tended
not to include technological risks
among the most impactful or the most
likely to occur. This can be seen in
the comparatively few technological
risks that appear in the evolving risk
matrix (Figure 2, inner cover). There
are possible signs of change, however.
The year 2014 was the first in which
two technological risks made it into
the evolving risk matrix, and this year,
although only one is included (massive
incident of data fraud/theft), another
(large-scale cyberattacks) came sixth
in the list of risks most likely to occur in
the next 10 years.
According to the economists Michael
Hicks and Srikant Devaraj, 86% of
manufacturing job losses in the United
States between 1997 and 2007
were the result of rising productivity,
compared to less than 14% lost
because of trade. Most assessments
suggest that technologys disruptive
effect on labour markets will accelerate
across non-manufacturing sectors in
the years ahead, as rapid advances in
robotics, sensors and machine learning
enable capital to replace labour in an
expanding range of service-sector
job. Estimates of the number of jobs
at risk to technological displacement
vary: a frequently cited 2013 Oxford
Martin School study has suggested
that 47% of US jobs were at high risk
from automation; in 2016 an OECD
Part 1
We can shape the dynamics of the

4IR. Careful governance can guide
the distribution of benefits and
impact on global risks, because the
evolution of new technologies will
be heavily influenced by the social
norms, corporate policies, industry
standards and regulatory principles
being debated and written today.38
Unfortunately, however, current legal,
policy-making and standard-setting
institutions tend to move slowly. For
example, the US Federal Aviation
Authority took eight months to grant
Amazon an experimental airworthiness
certificate to test a particular model of
drone, by which time the model was
obsolete;39 Amazon conducted its trials
in Canada and the United Kingdom
instead. In 2015, the US Food and
Drug Administration (FDA) approved
an application by AquaBounty
Technologies for regulatory approval
of genetically modified salmon an
application made in 1995. The salmon
still cannot be sold in the United
States, pending an update to labelling
regulations.40
We are in a highly disruptive phase of

technological development, at a time
of rising challenges to social cohesion
and policy-makers legitimacy. Given
the power of the 4IR to create and
exacerbate global risks, the associated
governance challenges are both huge
and pressing, as further discussed in
Part 3. It is critical that policy-makers
and other stakeholders across
government, civil society, academia
and the media collaborate to create
more agile and adaptive forms of local,
national and global governance and risk
management.
Geopolitics: Strengthening
Cooperation
In a worrying sign of deteriorating
commitment to global cooperation,
states are stepping back from
mechanisms set up to underpin
international security through mutual
accountability and respect for common
norms. For example, 2016 saw Russia,
South Africa, Burundi and Gambia
withdraw from the International
Criminal Court, and China reject the
verdict of the international tribunal on
the South China Sea. At the time of
writing, the incoming US president
is considering withdrawal from the
recent Joint Comprehensive Plan of
Action (Iran nuclear deal) and the Paris
Climate Change agreement. The exit
of major stakeholders from economic
agreements such as the Trans-Pacific
Partnership and Trans-Atlantic Trade
and Investment Partnership also carries

geopolitical significance.
In Syria, the drawn-out nature of the
war indicates how the absence of a
great-power accord handicaps the
United Nations, compounding the
difficulties of brokering a settlement to
a conflict with multiple stakeholders at
global, regional and non-state levels, or
even organizing a limited intervention
to facilitate humanitarian relief or
protect civilians. The death toll among
non-combatants including from
chemical weapons has been met
with despairing rhetoric but no effective
action to enforce long-standing
humanitarian laws and norms.
In parallel to their withdrawal of support
for collective solutions, major powers
now openly trade accusations of
undermining international security or
interfering in their domestic politics. For
years President Putin has accused the
United States of seeking to undermine
global stability and Russian sovereignty,
and in 2016 the US National Security
Agency blamed Russia for interference
in the presidential election. Tensions
rose between the United States and
China over freedom of navigation in the
South China Sea and the deployment
of US missile defence systems to the
Republic of Korea, which led to Beijing
warning the United States not to harm
Chinas strategic security interests.
In response to the general loss of faith
in collective security mechanisms,
regional powers and smaller nations are
increasingly exploring the acquisition of
new conventional weapons capabilities,
offensive cyber weapons and even
nuclear ones. Notwithstanding the
normative and practical obstacles
confronting a state seeking nuclear
capability, political leaders in nuclear
and non-nuclear weapons states alike
have increasingly made reference to
the utility of nuclear weapons in the
context of changing threat perceptions
and wavering confidence in alliance
structures. If this rhetoric turns into
policy, it could entail a huge diversion
of resources into a new nuclear arms
race and a jump in the risk of preemptive strikes aimed at preventing an
adversary gaining nuclear capability.
In summary, developments in 2016

present numerous reminders that
international security requires collective
15
Part 3
Technology has always created

jobs as well as destroying them, but
there is evidence that the engine of
technological job creation is sputtering.
The Oxford Martin School estimates
that only 0.5% of todays US workforce
is employed in sectors created since
2000, compared with approximately
8% in industries created during the
1980s.35 Technological change is
shifting the distribution of income
from labour to capital: according to
the OECD, up to 80% of the decline
in labours share of national income
between 1990 and 2007 was the
result of the impact of technology.36 At
a global level, however, many people
are being left behind altogether: more
than 4 billion people still lack access to
the internet, and more than 1.2 billion
people are without even electricity.37
Such regulatory delays can mean social

and economic benefits are missed
but when health, the environment and
broader social impacts are at stake,
a cautiously deliberative approach
is prudent. How best to strike this
balance is currently causing debate,
for example, in efforts to accelerate
the regulation of self-driving vehicles.41
Although populist movements have
recently tapped public hostility to
globalization more than to technology,
there is still the risk of backlash against
technological change. For example,
public concerns about genetically
modified foods have consistently
exceeded scientific assessments of
the risks associated with them, and
concerns about climate change have
not precluded public opposition to wind
farms.42
Part 2
working paper put the figure lower,

at 9%.33 In 2015 a McKinsey study
concluded that 45% of the activities
that workers do today could already
be automated if companies choose to
do so.34 As discussed in Chapter 3.1,
respondents to this years GRPS rate
artificial intelligence and robotics as the
emerging technology with the greatest
potential for negative consequences
over the coming decade.
Part 1
Part 2
commitments and investment to define

a positive vision, as well as political
will to make responsible trade-offs
and commit resources (Box 1.1). As
technological, demographic and
climate pressures intensify the danger
of systems failure, competition among
world powers and fragmentation of
security efforts makes the international
system more fragile, placing collective
prosperity and survival at risk.
Part 3
Environment: Accelerating
Action
As Figure 2 (inside front cover)
illustrates, a cluster of interconnected
environment-related risks including
extreme weather events, climate
change and water crises has
consistently featured among the topranked global risks for the past seven
editions of The Global Risks Report.
Environment-related risks again stand
out in this years global risk landscape
(see Figure 3 (inside rear cover), with
every risk in the category lying in
the higher-impact, higher-likelihood
quadrant. Environmental risks are also

closely interconnected with other risk
categories. Four of the top ten risk
interconnections in this years GRPS
involve environmental risks, the most
frequently cited of these being the
pairing of water crises and failure
of climate change mitigation and
adaptation.
This shows that ineffective
management of the global commons
the oceans, atmosphere, and climate
system can have local as well as
global consequences. For example,
changing weather patterns or water
crises can trigger or exacerbate
geopolitical and societal risks such
as domestic or regional conflict and
involuntary migration, particularly in
geopolitically fragile areas.
Further progress was made during
2016 in addressing climate and other
environmental risks, reflecting firm
international resolve on the transition to
a low-carbon global economy and on
building resilience to climate change:
The Paris Agreement on climate
change entered into force on 4
November 2016; it is now ratified by

more than 110 countries;
a strong signal of support for
implementing the Paris Agreement
was made by 196 governments,
including China, at the Marrakesh
Climate Conference in late
November 2016;43
the International Civil Aviation
Organisation agreed a marketbased measure that will ensure
no net growth in aviation emissions
after 2020 this is significant
because international aviation, like
shipping, falls outside the scope of
the Paris Agreement; and
also in October, parties to the
Montreal Protocol on ozonedepleting substances agreed an
important amendment that could
help avoid an additional 0.5C of
warming by 2050 through reducing
the use of hydrofluorocarbons
(HFCs), which have an extremely
high global warming potential.44
The year 2016 also saw positive

empirical evidence that the transition to
a low-carbon economy is underway:
Box 1.1: Five Factors Exacerbating Geopolitical Risks

Five factors aggravate the impact on global risks of the current geopolitical atmosphere of rising competition, loss of trust and
heightened suspicion:
First, international cooperation is giving way to unilateral or transactional approaches to foreign policy just as a host of issues
such as global growth, debt and climate change demand urgent collective action. If allowed to fester, such issues could spawn
a range of new problems with costs falling disproportionately on fragile communities.
Second, the inter-connected nature of the global system produces cascading risks at the domestic level. In Syria, for example,
failures of governance have produced civil conflict, driving migration that transfers economic, social and political pressures into
countries already experiencing frustrations with low growth and rising inequality, fuelling radicalization and acts of violence.
Third, a declining sense of trust and mutual good faith in international relations makes it harder to contain the resulting pressures
through domestic policy. The current climate of mutual suspicion can exacerbate domestic political tensions through
accusations of outside actors interfering to shape popular perceptions via proxy forces, media manipulation or threatening
military gestures.
Fourth, technological innovation exacerbates the risk of conflict. A new arms race is developing in weaponized robotics and
artificial intelligence. Cyberspace is now a domain of conflict, and the Arctic and deep oceans are being opened up by remote
vehicle access; in each case, there is no established system for policing responsible behaviour. Because research and
development of dual-use technologies takes place largely in the private sector, they can be weaponized by a wider range of
state and non-state actors for example, the self-proclaimed Islamic State has used commercial drones to deliver bombs in
Syria, and open-source technology could potentially create devastating biological weapons. Existing counter-proliferation
methods and institutions cannot prevent the dissemination of technologies that exist in digital form.
Fifth, while risks intersect and technologies develop quickly, too often our institutions for governing international security remain
reactive and slow-moving.
16
Part 1
The Emissions Gap Report 2016

from the United Nations Environment
Programme (UNEP) shows that even if
countries deliver on the commitments
known as Nationally Determined
Contributions (NDCs) that they made
in Paris, the world will still warm by 3.0
to 3.2C.50 To keep global warming
to within 2C and limit the risk of
dangerous climate change, the world
will need to reduce emissions by 40%
to 70% by 2050 and eliminate them
altogether by 2100.51 While attention
will be focused on China, the United
States, the European Union, and India
which collectively comprise more than
half of global emissions all countries
will need to ratchet up their action in
order to limit warming to 2C.
Increasingly, legal action is being
taken against national governments
in an attempt to force action on
environmental issues. The United
Kingdom is being sued for failing to deal
with a national air pollution crisis,52
and it has also been threatened with
legal action if it fails to reduce its
greenhouse emissions;53 a group of
teenagers has challenged the US
government for not protecting them
from climate change;54 the Netherlands
has been ordered by a court to cut its
emissions;55 and Norway is being sued
Figure 1.4: Projected Global Greenhouse Gas Emissions, 20252030

65
GtCO2e/year
55
45
over Arctic drilling plans.56 Meanwhile,

the US Environmental Protection
Agency (EPA)s Clean Power Plan is
being challenged in court and has
divided the electricity industry: coal
miners, some labour unions, and 27
states support the challenge while the
renewable energy industry, leading tech
firms, and 18 states are supporting the
EPAs legislation.57
As warming increases, impacts grow.
The Arctic sea ice had a record melt in
2016 and the Great Barrier Reef had
an unprecedented coral bleaching
event, affecting over 700 kilometres
of the northern reef.58 The latest
analysis by the UN High Commissioner
for Refugees (UNHCR) estimates
that, on average, 21.5 million people
have been displaced by climate- or
weather-related events each year
since 2008,59 and the UN Office for
Disaster Risk Reduction (UNISDR)
reports that close to 1 billion people
were affected by natural disasters
in 2015.60 Communities from Alaska
to Fiji and Kiribati have already been
relocated or are making plans to do so
because the rising sea level threatens
their lands.61 The World Bank forecasts
that water stress could cause extreme
societal stress in regions such as the
Middle East and the Sahel, where the
economic impact of water scarcity
could put at risk 6% of GDP by 2050.62
The Bank also forecasts that water
availability in cities could decline by as
much as two thirds by 2050, as a result
of climate change and competition
from energy generation and agriculture.
The Indian government advised that at
least 330 million people were affected
by drought in 2016.63 The confluence
of risks around water scarcity, climate
change, extreme weather events
and involuntary migration remains a
potent cocktail and a risk multiplier,
especially in the world economys
more fragile environmental and political
contexts.
35
2025
2005 baseline
Unconditional INDCs
2C scenario
2030
Current policy trajectory

Conditional INDCs
1.5C scenario
Source: UNEP 2016a.

Notes: (1) The 2005 baseline scenario assumes no additional climate policies put in place from 2005; (2) the two
INDC (Intended Nationally Determined Contributions) scenarios assume implementation of commitments made
in Paris: unconditional assumes only unconditional commitments are implemented, while conditional
assumes that commitments with conditions attached are also implemented; (3) the 1.5C and 2C scenarios
represent least expensive paths with a greater than 50% likelihood of limiting warming to below 1.5C and 2C
respectively.
With power and influence increasingly

distributed, however, there is a
growing recognition that the response
to environmental risks cannot be
delivered by international agencies
and governments alone. It requires
new approaches that take a wider
systems view of the interconnected
challenges, and that involve a larger
and more diverse set of actors.
Some promising recent examples
17
Part 3
However, the pace of change is not

yet fast enough. Global greenhouse
gas (GHG) emissions are growing,
currently by about 52 billion tonnes
of CO2 equivalent per year,47 even
though the share from industrial and
energy sources may be peaking as
investment and innovation in green
technology accelerates (see Box 1.2).
The year 2016 is set to be the warmest
on the instrumental record according
to provisional analysis by the World
Meteorological Organisation.48 It
was the first time the global average
temperature was 1 degree Celsius or
more above the 18801999 average.
According to the National Oceanic and
Atmospheric Administration, each of
the eight months from January through
August 2016 were the warmest those
months have been in the whole 137

year record.49
Part 2
Bloomberg New Energy Finance

reported that global investment in
renewable energy capacity in 2015
was US$266 billion, more than
double the allocations to new coal
and gas capacity;45 and
the International Energy Agency
(IEA) reported that the total
generation capacity of renewable
energy now exceeds coal-fired
power plants for the for first
time, and for the past two years
greenhouse gas emissions have
been de-coupled from economic
growth.46
Part 1
Part 2
Part 3
come from the financial sector: the

Financial Stability Boards Taskforce
on Climate-related Financial Disclosure
is developing recommendations for
managing the physical, liability, and
transition risks of climate change;
rating agencies S&P and Moodys
have announced plans to assess the
climate risks facing both companies
and countries; and investor groups
have called for greater disclosure of
companies exposure to climate risks.
The Tropical Forest Alliance 2020 also
offers the promise of advancing new
multi-dimensional approaches to help
reduce deforestation from global supply
chains, such as the recent Africa Palm
Oil Initiative.64
Taking a systemic view also implies

accounting for new risks that could be
created by successful action to address
environmental risks. For example, the
transition to a low-carbon future will
require measures in some economies
to absorb potential labour-market
impacts. Chinas announcement in
early 2016 that it will reduce its coal and
steel sector workforce by 1.8 million
(15%) over two years, resettling affected
workers in response to industrial
overcapacity, may provide a glimpse of
what is to come.65 While most research
suggests the shift to clean energy
could create a substantial increase in
net employment,66 the overall policy
equation is complex and may require
new approaches to skills training
and retraining, along with measures
to facilitate increased labour-force

mobility. Ensuring a just transition will
be important for societal stability.
Issue-specific and organizationspecific silos will need to be dismantled
across the public and private sectors
throughout the world economy. In
their place, new multi-actor alliances
and coalitions for action will need to
be built, cutting horizontally across
traditional boundaries of interest,
expertise and nationality. The rise of
such multidimensional cooperation
to manage our global environmental
commons will be challenging in the
international context described above,
but essential if we are to respond
adequately to the structural risks posed
by climate change, extreme weather,
and water crises.
Box 1.2: Climate Change and the 4IR - by Al Gore, Generation Investment Management
Every day we spew 110 million tons of heat-trapping global warming pollution into our atmosphere. The accumulated amount of all
that manmade global warming pollution is trapping as much extra heat energy as would be released by 400,000 Hiroshima-class
atomic bombs exploding every single day. All that extra heat energy is disrupting the hydrological cycle, evaporating water vapor
from the oceans and leading to stronger storms, more extreme floods, and deeper and longer droughts, declining crop yields,
water stresses, the spread of tropical diseases poleward, and refugee crises and political instability, among other problems. Our
efforts to solve the climate crisis are a race against time, but the technologies embodying the Fourth Industrial Revolution (4IR), and
the implications of these changes for business and society, contain hope for the acceleration of the necessary solutions to the
climate crisis.
We are seeing a continuing sharp, exponential decline in the costs of renewable energy, energy efficiency, batteries and storage
and the distribution of technologies that allow for the spread of sustainable agriculture and forestry giving nations and
communities around the world an opportunity to embrace a sustainable future based on a low carbon, hyper-efficient economy. In
fact, in many parts of the world, renewable energy is already cheaper than that of fossil fuels. In some developing regions of the
world, renewable energy is leapfrogging fossil fuels altogether, much in the same way mobile phones leapfrogged land-line
phones.
Sixteen years ago, projections said that by 2010 the world would be able to install 30 gigawatts of wind capacity. In 2015, we
installed 14.5 times that amount. Solar energys price decrease is even steeper and more exciting. Fourteen years ago, projections
said that the solar energy market would grow 1 gigawatt per year by 2010 that goal was exceeded by 17 times over. In 2015, we
beat that mark by 58 times and 2016 was on pace to beat that mark 68 times over. In fact, the cost of solar energy has come down
10 percent per year for 30 years.
Similar developments are likely to occur across the board as new developments in electric vehicles, smart grids and micro grids,
advanced manufacturing and materials, and other areas continue to accelerate climate action. We are already seeing revolutions
unfolding in areas like car sharing, forest monitoring, and data-driven reductions in industrial energy usage.
But it is not just the technologies of the 4IR that are directly making a difference: it is also the transformative operating models
inherent within these technologies that contain the seeds for change. The Internet of Things has introduced a world of hyperconnectivity that allows us to approach decision-making in an entirely new manner. Our increased connectivity between one
another and to the material world enables us to transfer information and materials more efficiently to greater numbers of people.
All of this is making the tools we need to solve the greatest challenges we face more effective and more ubiquitous at a previously
unseen pace.
We are going to prevail in our collective effort to solve the climate crisis, and it will be in large part due to our increasing ability to
mitigate the burning of dirty fossil fuels through the opportunities presented to us by the 4IR.
18
Part 1
Endnotes
These problems did not begin with the financial crisis. For example, Russell Dalton
(Dalton, 2004) was writing about the erosion of political support in advanced
industrial democracies in 2004, and one prominent argument about the hollowing
out of Western democracy looks to the 1990s as a pivotal decade for declining
public engagement in politics (Mair, 2013).
1
Schuman 2016.
World Economic Forum Global Risks Reports, various years.
For evidence of global falling inequality see McCloskey 2016; Pinkovskiy and Sala-iMartin 2009; Roser 2016.
4
39
Lavars 2015.
40
Juma 2016; see also AquaBounty Technologies 2016.
41
Gonzales 2016.
42
Gonzales 2016.
United Nations Framework Convention on Climate Change, Marrakech Action

Proclamation For Our Climate and Sustainable Development, November 2016,
available at https://unfccc.int/files/meetings/marrakech_nov_2016/application/pdf/
marrakech_action_proclamation.pdf
43
Roser 2016.
Goldin and Katz 2008; Murphy and Topel 2016.
44
UNEP 2016b.
Gabaix and Landier 2008; Lustig, Syverson, and Van Nieuwerburgh 2011.
45
Frankfurt School-UNEP Centre/BNEF 2016.
Sherwin 1981.
46
IEA 2016a.
47
UNEP 2016a.
See Darvas and Wolff (2016) on the jobs polarization hypothesis, which suggests
that technology leads to increased demand for high-skilled and lowest-skilled labour,
leading to a hollowing out of the middle class.
WMO (World Meteorological Organisation), Provisional WMO Statement on the

Status of the Global Climate in 2016, 14 November 2016. http://public.wmo.int/en/
media/press-release/provisional-wmo-statement-status-of-global-climate-2016
48
10
Milanovic 2012.
11
See Eaton et al. 2011; Hoekman 2015; World Economic Forum 2016b.
49
NOAA 2016.
12
Sala-i-Martin 2006.
50
UNEP 2016a.
13
Larrain et al. 2013.
51
IPCC 2014, p. 20.
14
Weale and Wieladek 2014.
52
Kaye 2016.
15
Middeldorp 2015.
53
New Scientist 2015.
54
Berger 2016.
55
Nelsen 2015.
56
Nelsen 2016.
57
Dlouhy and Harris 2016.
58
Coral Reef Studies 2016.
59
IDMC 2016; UNHCR 2016.
60
CRED 2016.
See the ILO Global Wage Report at http://www.ilo.ch/global/research/globalreports/global-wage-report/2014/lang--en/index.htm

16
17
Kahn 2016.
See, for example, Draghi and Constncio 2016 at https://www.ecb.europa.eu/

press/pressconf/2016/html/is160908.en.html
18
19
20
Capital Economics 2016.

Milanovic 2016.
See, for example, the performance of the National Front in France; Alternative for
Germany in Germany; Sinn Fein in Ireland; the Freedom Party in Austria; the Party for
Freedom in the Netherlands; Law and Justice in Poland; the Danish Peoples Party in
Denmark; Fidesz in Hungary.
21
22
23
24
For information on relocation plans for Alaska, see Malo 2016; for Fiji see Climate
Home 2014; for Kiribati see Chapman, 2012.
61
62
van der Heijden, Otto, and Maddocks 2015; World Bank 2016.
63
BBC News 2016.
64
TFA 2020 2016
65
Reuters 2016.
66
OECD 2012a, paragraph 70, p. 38.
Erdogan 2016.
Galeotti and Bowen 2014.
The Economist 2016; Oxford Dictionaries 2016.
25
Inglehart and Welzel 2005.
26
Inglehart and Norris 2016.
27
Pew Research Center 2016.
28
The Economist Intelligence Unit 2015.
29
Mair 2013, pp. 3742.
30
Mair 2013, p. 2.
Building on his research into intergenerational conflicts in ageing societies (Ahlfeldt,

Maennig, and Steenbeck 2016), Gabriel Ahlfeldt notes that a back-of-the-envelope
calculation suggests that the United Kingdoms Brexit vote would have swung
the other way if the electorate had been an average of three years younger, which
corresponds to going back in time to the mid-1990s (Ahlfeldt No date).
31
32
Acemoglu 2016.
33
Frey and Osborne 2013.
34
Chui, Manyika, and Miremadi 2015.
35
Schwab 2015.
36
OECD 2012b.
37
IEA 2016b.
19
Part 3
Part 2
See for example, as shown in the deliberations of the International Summit on

Gene Editing in December 2015 (http://www.nationalacademies.org/gene-editing/
Gene-Edit-Summit/index.htm) and in the US Federal Automated Vehicles Policy,
released in September 2016 (https://www.transportation.gov/AV).
38
Part 1
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Part 1
Part 2
Part 2:
Social and Political
Challenges
Part 3
22
Part 1
2.1: Western Democracy in Crisis?
The chapter then looks at three

challenges Western policy-makers
will have to try to resolve if they are
to tackle these issues successfully:
how to make economic growth more
inclusive; how to deliver the change
voters want while maintaining continuity
in systems of government; and how to
reconcile growing identity nationalism
with diverse societies. The chapter
concludes that restoring the health of
democracy may prove challenging, but
some potential ways forward can be
identified.
Rising Support for AntiEstablishment Parties

The recent increase in support
and influence enjoyed by antiestablishment, populist political parties
and movements in many Western
countries is the continuation of a trend
The political impact of antiestablishment sentiment has already

been dramatic. Most notably, the
cluster of anti-elitism, cultural nativism
and economic nationalism formed
important parts of the winning 2016
campaigns in the United Kingdom
(UK) referendum on European Union
(EU) membership and both the United
States (US) Republican primary and
the subsequent presidential election.
This cluster has resonated particularly
strongly in Europe, where Eurozone
and EU problems provide fertile ground
for populists calling for a return to
national sovereignty. Support for farright parties has increased in Europes
four largest countries Germany, the
United Kingdom, France and Italy
as well as others, including Austria,
Belgium, Denmark, Greece, Hungary,
the Netherlands, Poland, Sweden, and
Switzerland.3
Anti-establishment politicians have
not yet won many elections in Europe.
Nonetheless, in many countries these
movements have already succeeded
in shifting the political centre of gravity,
forcing mainstream parties to adopt
elements of their policy platforms. In
some countries such as Spain and
Ireland they have contributed to a
fragmentation of parliamentary forces
that has complicated the process
of forming stable governments and
implementing effective policies. There
is even some contested evidence
that young people, in particular, are
Three Trends Undermining

Democracy
Numerous factors have been
suggested as playing a role in
weakening democratic legitimacy and
effectiveness. While all related, they
can be grouped under three main
headings.
1. Rapid economic and
technological change

Statistics show clearly that
globalization and trade have
created growth, promoted
competitiveness and efficiency,5
cut poverty and global inequality,
and narrowed the gap between
emerging economies and the rich
world. Overall, global prosperity is
at its highest point in a decade.6
But globalization and trade feature
prominently in anti-establishment
sentiment in Western democracies
because the benefits of growth
have been unequally experienced.

Evidence compiled by economist
Branko Milanovic shows that
those people between the 75th
and 90th percentiles of the global
income distribution have been the
non-winners from globalization.7
Meanwhile, the richest have made
the biggest gains, especially since
the global financial crisis: in the
United States, between 2009 and
2012, the incomes of the top 1%
grew by more than 31%, compared
with less than 0.5% for the
remaining 99% of the population
(Figure 2.1.1).8 Middle-class income
stagnation is particularly affecting
youth: recent research shows that
540 million young people across
25 advanced economies face
the prospect of growing up to be
poorer than their parents.9

Alongside globalization,
technological change has
dramatically affected many
peoples sense of economic
security. Traditional manufacturing
hubs in advanced economies
have been hollowed out by a
23
Part 3
But is democracy itself in crisis?

Some point out that voters punishing
politicians who have failed to represent
them adequately is one of the essential
virtues of the democratic process.
Others argue that the current crisis
in mainstream politics goes deeper,
fundamentally threatening how politics
works. This chapter considers three
related reasons to be concerned about
the future of democracy: the impacts
of rapid economic and technological
change; the deepening of social
and cultural polarization; and the
emergence of post-truth political
debate.
with long roots.2 Anti-establishment

populism expresses itself differently in
different countries: there are left-wing
and right-wing strands, and domestic
factors are significant. But there are
also common themes: appeals to
national sovereignty and criticism
that elites have failed to protect
electorates from the negative impacts
of globalization are threads that run
through both left- and right-wing
strands. In many cases, there are also
appeals to the rights of native citizens,
as opposed to immigrants, and the
importance of restoring traditional
values and hierarchies.
Part 2
In many Western democracies,

traditional mainstream political parties
are in crisis. They are struggling
to respond to rapid changes in
the political landscape as voters
disaffection expresses itself in
lower turnouts or rising support for
previously peripheral movements.1 The
unexpected triumphs in 2016 for the
Brexit campaign in the United Kingdom
and President-elect Donald Trumps
campaign in the United States are the
most high profile indicators of a febrile
political environment.
becoming willing to entertain the idea

that democracy itself is failing to deliver
and to consider non-democratic
alternatives.4
Part 1
Part 2
combination of labour-saving
technology and outsourcing.10
Technology has historically been
a net creator of jobs, but new jobs
do not necessarily materialize
quickly or in the same locations
as jobs that have been displaced:
economist Diane Coyle has argued
that one of the drivers of current
political disaffection in postindustrial regions is that job losses
have eroded whole communities.11
3. Post-truth political debate

The cultural polarization of
democratic societies has been
exacerbated by profound changes
in the way news and information is
produced, distributed and shared
(Box 2.1.1). The aftermath of the
US presidential election featured
a prominent debate about fake
news.19 The Oxford English
Dictionary chose as its word of
the year post-truth, defined as
denoting circumstances in which
objective facts are less influential
in shaping public opinion than
Figure 2.1.1: Income Share of the Top 1 % , 19752015
10
$!"
5
#"
1970
$&'!"
75
'#"
80
(!"
85
(#"
90
&!"
France
)*+,-."
Italy
23+41"
8,73.9":7,;9<0"
United Kingdom
95 2000
&#"
%!!!"
05
!#"
10
$!"
Germany
/.*0+,1"
Spain
56+7,"
8,73.9"53+3.="
United States
Source: The World Wealth and Income Database (http://www.wid.world/#Database).
24
Free speech and the lively contest

of ideas are a fundamental part
of the democratic process, but
they depend on all participants
accepting each others good faith
and a shared set of underlying
facts. Historically, relatively
small numbers of media outlets
provided a widely trusted common
foundation for national debates.
Increasingly, however, the media
landscape is characterized by
fragmentation, antagonism and
mistrust, with individuals tending to
segregate themselves according
to their values and beliefs. Online
echo chambers reinforce rather
than challenge peoples existing
biases, making it easier for
misinformation to spread.21
Companies that run social media
platforms face a commercial
incentive to ensure that their
users are presented with content
with which they are more likely to
engage which, in political terms,
implies presenting content with
which they are likely to agree.22
If the resulting emergence of
self-reinforcing communities of
like-minded people undermines
the health of democracy, it raises
serious questions related to
market capitalism reform, an issue
discussed in Part 1 of this Report.
There is no consensus on what needs

to be done to strengthen democratic
processes, but three dilemmas can be
identified as particularly significant.
15
$#"
0
!"
appeals to emotion and personal

belief.20
Three Strategies to
Improve Democracy
%!"
20
Part 3
2. Deepening social and cultural

polarization

Issues related to national identity,
cultural values and ethnic origins
have been prominent in the rise
of anti-establishment populism.
Even in the Nordic countries
affluent, post-industrial knowledge
societies, with comparatively
homogenous populations and
generous welfare models there
is evidence of a backlash against
progressive changes in social
values such as acceptance of
same-sex marriage, gender
identity and secularism.12 With the
rapid spread of more cosmopolitan
and egalitarian attitudes, especially
among young people and the
educated middle class, those who
are older and less educated may
feel left behind.13

Immigration has proven to be
an extremely successful policy
issue for anti-establishment
populists, providing a common

thread for their electoral advances
across different countries.14
However, the links between
immigration and populist voting
are not straightforward: in the
United Kingdoms vote on EU
membership, for instance, areas
with more immigrants were more
likely to support remaining in the
European Union.15 One possible
explanation is that what matters to
the voters is not so much absolute
levels of immigration but rates of
change.16 Another is that voters
are focusing on immigration policy
for a complex range of reasons:
to bolster national sovereignty in
a globalized world;17 to reject the
deep cultural changes of recent
decades; or to express anger at
mainstream politicians for breaking
clear promises.18
15
$#"
1. Generating more inclusive

growth

The availability of good, well-paying
jobs is critical to persuading people
that the economic system works
for them. Evidence shows that
there is no trade-off in principle
between promoting social inclusion
and competitiveness: growth
and equity can go together.23
Governments can, in theory,
deploy various tools, policies and
Part 1
Box 2.1.1: Social Media and the Distortion of Information - by Walter Quattrociocchi, Northeastern University
Part 2
Social media can liberate, inform, engage, mobilize, and encourage innovation and democracy. However, social media has also
changed the way we get informed and form our opinions, with troubling results. According to one recent estimate,1
approximately 63% of users acquire their news from social media. But news sourced in this way is subject to the same
dynamics as other forms of online content, such as selfies and cat photos. It is the most popular content that spreads,
regardless of its factual accuracy.
As a result of disintermediated access to information and algorithms used in content promotion, communication has become
increasingly personalized, both in the way messages are framed and how they are shared across social networks. Recent
studies show that, online, we seek information that supports existing viewpoints and predominantly engage with communities of
like-minded people, leading to the problem of confirmation bias.2
Part 3
Online discussion negatively influences users emotions and intensifies polarization,3 creating echo chambers closed, mostly
non-interacting communities with different narratives, where beliefs become amplified or reinforced. With users on social media
aiming to maximize the number of likes, information is frequently oversimplified. The combination of simplification and
segregation provides a fertile environment for the diffusion and persistence of unsubstantiated rumours.4
Misinformation has always represented a political, social and economic risk. Social medias power to misinform, manipulate and
distort public opinion has become severe. Experimental evidence shows that confirmatory information is accepted even if it
contains deliberately false claims, while dissenting information is mainly ignored or might even increase group polarization.5
This evidence suggests a real possibility that public opinion can be intentionally distorted by exploiting information overload and
confirmation bias, with significant political, social and economic consequences. Strategies for mitigation remain uncertain.6
Google has proposed trying to correct false claims by marking information as fact-checked; but confirmation bias might simply
result in the claim of fact-checking being discounted. The problem behind misinformation is polarization hence, we need to
create synergies among institutions, scholars and communicators to reframe and smooth contrast in the information system.
Notes
1
Newman, Levy, and Nielsen 2015.
2
Quattrociocchi, Scala, and Sunstein 2016; Del Vicario et al. 2016.
3
Zollo et al. 2015; Sunstein 2002.
4
Mocanu et al. 2015.
5
Quattrociocchi, Scala, and Sunstein 2016.
6
Ciampaglia et al. 2015.
institutions to make growth more

inclusive. However, in practice,
the current environment presents
some serious challenges.

Technological change is
diminishing the contribution
of labour to GDP growth, as
machines become more able to do
a wider range of work. One study
predicts that 47% of US jobs are at
risk of automation,24 affecting over
80% of low-income workers.25 New
technology has also historically
increased labour productivity and
created new and better jobs but
as machines become better at
cognitive as well as physical tasks,
there is significant uncertainty
about the future of job creation.
Technology is also contributing

to the changing nature of work,
with secure and predictable jobs
giving way to more sporadic,
short-term self-employment.26
Research suggests that the
number of people in alternative
work arrangements increased
faster than overall employment
between 2005 and 2015.27 The rise
of the gig economy threatens the
stability of income people need
to plan long-term investments
such as home ownership and
savings for old age. As discussed
in Chapter 2.3, it also undermines
social insurance schemes that
are commonly linked to formal
employment.
on globalization rather than

technology, but evidence points to
technology being much the bigger
factor. As shown by Figure 2.1.2,
manufacturing in the United States
has not decreased: the country
is producing as much as it ever
has, only with fewer workers. In
the United Kingdom, the share of
manufacturing in the economy has
decreased but the manufacturing
that remains is higher value,28
and cross-border services have
massively expanded in parallel.
Less openness is presented as
a simple solution, but it would
likely create more problems than
it solves: trade barriers intended
to protect local workers could,
for example, cause job losses by
increasing the cost of inputs for
high value added companies.
Populist movements tend to

focus blame for job losses

25
Part 1
2. Maintaining continuity in
government while accelerating
change

The economic policies of
historically mainstream political
parties from the left and the right
have converged in recent
decades.31 This has enabled
once-fringe movements to rise by
portraying the established parties
as part of the same technocratic
political class, focused on selfenrichment while the institutions
of government are allowed to
fail. Populist movements call
for bold, dramatic action; when
moderates point to public debt
and overstretched monetary
policy as constraining room for
manoeuvre, they can be portrayed
as patronizing.
Part 2
Rather than seeking to

reduce globalized trade flows,
governments will ultimately need
to work out a viable political offer
for those negatively impacted.
How best to support displaced
workers is a complex problem that
requires political will to tackle.29 In
particular, an overhaul of labour
regulations and employment
contracts is likely to be needed to
prevent gig economy workers from
being left out of existing welfare
schemes, and to ensure that
governments continue to receive
the contributions they need to
maintain them.30
Part 3
Rebuilding public trust in the

political process and in leaders
will be a difficult task. This work
needs to start with the recognition
that some valid concerns underlie
the rise of anti-establishment
sentiment. For example, studies
have shown that the preferences of
constituents in the lowest third of
income groups are not reflected in
the votes of their representatives,
which are instead overwhelmingly
skewed toward the wealthy.32
Other studies demonstrate the
extent to which the revolving door
between government and business
drives growing
inequality. 33
The challenge is to deliver the
short-term change voters demand,
while also reforming institutions in
a way that maintains the continuity
of government and established
checks and balances. Arguably, the
US election result demonstrated a
paradox: voters who responded to
candidate Donald Trumps drain
the swamp message often also
expressed reservations about
his personal suitability for the
presidency, implying that they
trusted the existing system to be
robust enough protect them from
potential excesses even as they
voted to shake that system up.34
Finding the right balance between
change and continuity will not be
easy.
Figure 2.1.2: US Manufacturing Output and Employment, 19912016

Output and employment rebased to 100 in 2007
(*"#
130
120
()"#
110
(("#
100
(""#
90
'"#
80
&"#
70
%"#
+,-./0,123#
Employment
)"(!#
2015
)"(*#
2013
)"((#
2011
)""'#
2009
)""%#
2007
)""!#
2005
)""*#
2003
)""(#
2001
('''#
1999
(''!#
1995
(''*#
1993
(''(#
1991
50
!"#
(''%#
1997
60
$"#
453-53#
Output
Sources: U.S. Bureau of Labor Statistics 2016; U.S Board of Governors of the Federal Reserve System 2016.
26
An increasingly common response

to popular disaffection with the
political process has been for
elected representatives to defer
to referendums: the UK vote on
EU exit was one of a spate of
plebiscites in 2016. However,
these are an imperfect solution.
Representative democracies have
typically evolved mechanisms
to protect the rights of minorities
from crude majoritarianism, and
increased use of direct democracy
may upset the balance. Countries
that lack a historical tradition of
direct democracy may also be
more likely to struggle with the
question of who should be held
accountable for implementing the
results of popular votes.
Moreover, boiling down complex
issues to binary questions is an
imperfect substitute for genuinely
listening to the nuanced concerns
of the electorate. One potential
solution could be to make
better use of technology in the
process of government not
only to deliver services in a faster,
more transparent, inclusive and
consumer-oriented way, but also to
establish a digital public square
with more direct communication
between leaders and people.35
3. Reconciling identity nationalism

and multiculturalism

Ongoing humanitarian challenges
will continue to create flows of
people and in countries where
fertility rates are declining and
numbers of pensioners are
growing, immigration will be
needed to bring in new workers.
However, as with globalization,
the overall economic benefits
brought by immigration are not
felt by all sections of society.
And immigration creates cultural
tensions: there is a need to allow
space for religious tolerance
without opening the door to
extremism, and a need to
encourage the diversity that
brings innovation without fostering
resentment.

In Western democracies,
political parties are the traditional
mechanism for resolving competing
interests,36 but the rise of identity
nationalism has exposed splits in
society that cannot be mapped
Part 1
To some extent, the cultural

challenges associated with
immigration could be tackled by
getting better at communicating
change:37 data show that voters
will change their views on cultural
changes in society if politicians
highlight the assimilation already
taking place.38
See the International IDEA Voter Turnout Database, www.idea.int/data-tools

Inglehart and Norris 2016.
3
Aisch, Pearce, and Rousseau 2016; The Economist Data Team, 2016.
4
See Foa and Mounk 2016 in their article The danger of deconsolidation: The
democratic disconnect in Journal of Democracy and the response in the same issue
by Inglehart.
5
Dabla-Norris et al. 2015.
6
Legatum Institute 2016.
7
Milanovic 2012.
8
Saez 2013.
9
Dobbs et al. 2016.
10
Dabla-Norris et al. 2015.
11
Coyle 2016.
12
See the World Values Survey website, http://www.worldvaluessurvey.org/
13
Norris 2016.
14
Halla, Wagner, and Zweimller 2015.
15
Travis 2016.
16
The Economist 2016.
17
The pro-Brexit campaign was built around the hugely successful slogan Take
Back Control!
18
Reeves 2016.
19
Benton 2016; Waters, Garrahan, and Bradshaw 2016.
20
Oxford Dictionaries 2016.
21
Del Vicario et al. 2016.
22
Del Vicario et al. 2016.
23
Samans et al. 2017.
24
25
Obama and Council of Economic Advisers. 2016
26
Hill 2015.
27
Katz and Krueger 2016.
28
Lanchester 2016.
29
Brown 2016.
30
Kuddo, Robalino, and Weber 2015.
31
Zakaria 2016.
32
Cramer 2016.
33
Abernathy, Konczal, and Milani 2016.
34
Runciman 2016.
35
Papacharissi 2019.
36
Lanchester 2016.
37
Cramer 2016.
1
2
38
Part 3
Leaders will need to face up to

a debate over how to allocate
economic and residential
entitlements to economic migrants
and refugees. Some countries
may want to link these entitlements
to cultural assimilation or work,
treating native populations and
migrants unequally: the latter
have to earn the rights that
are fundamental to the native
populations citizenship. Other
countries this was an important
driver of the United Kingdoms
Brexit vote may choose to
loosen their international economic
ties in order to slow the pace of
immigration.
Endnotes
Part 2
against existing party structures.

This raises the need to find new
ways to reconcile differences
in opinion about immigration,
encouraging assimilation while
avoiding the risk of majorities
which represent the prevailing
culture flexing their muscles in a
dangerously destabilising way.
Kaufmann 2016.
Conclusion
There is room for debate about
the extent to which the rise of antiestablishment sentiment in Western
democracies reflects a threat to the
democratic process itself. Nonetheless,
there are clear reasons to worry
about the health of democracy,
and challenges related to cultural
polarization and economic dislocation
have no straightforward answers. This
could be a pivotal moment in political
history, and it requires courageous new
thinking about how best to manage the
relationship between citizens and their
elected representatives.
Chapter 2.1 was contributed by Stefan Hall, World

Economic Forum, and Ngaire Woods, Blavatnik
School of Government, University of Oxford.
27
Part 1
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Inglehart. R. F. and P. Norris. 2016. Trump, Brexit, and the Rise of Populism:
Economic have-nots and cultural backlash. HKS Faculty Research Working Paper
No. RWP16-026. Cambridge, MA: Harvard Kennedy School.
Zollo, F., P. K. Novak, M. Del Vicario, A. Bessi, I. Mozeti, A. Scala, . . . and W.

Quattrociocchi. 2015. Emotional dynamics in the age of misinformation. PloS one
10 (9): e0138740.
Katz, L. F. and A. B. Krueger. 2016. The rise and nature of alternative work
arrangements in the United States, 19952015. https://krueger.princeton.edu/sites/
default/files/akrueger/files/katz_krueger_cws_-_march_29_20165.pdf
Kaufmann, E. 2016. Assimilation and the immigration debate. Fabian Society:
Fabian Essays, 26 September 2016. http://www.fabians.org.uk/assimilation-andthe-immigration-debate/
Kuddo, Robalino, and Weber. 2015. Balancing Regulations to Promote Jobs:
From Employment Contracts to Unemployment Benefits. Washington, DC: World
Bank Group. http://documents.worldbank.org/curated/en/636721468187738877/
Balancing-regulations-to-promote-jobs-from-employment-contracts-tounemployment-benefits
Lanchester, J. 2016. Brexit blues. London Review of Books 38 (15): 36. 28 July
2016. http://www.lrb.co.uk/v38/n15/john-lanchester/brexit-blues
Legatum Institute. 2016. The Legatum Prosperity Index 2016. http://www.
prosperity.com/
28
Part 1
Analysing the Closing

Space for Civic Freedoms
The trend is accelerating and

expanding globally, to encompass
countries that have traditionally been
open and inclusive. According to the
CIVICUS Monitor, 3.2 billion people
live in countries where the freedoms of
expression, association and peaceful
assembly are repressed or closed,
with only nine countries out of the 104
analysed globally being rated as open
in terms of enjoyment of rights and
adherence to the rule of law (Figure
2.2.1).9
A new era of restricted freedoms

and increased governmental control
could undermine social, political and
economic stability and increase the
risk of geopolitical and social conflict.1
Empowered by sophisticated new
technological tools in areas such
as surveillance, governments and
decision-makers around the world
are tightening control over civil society
organizations, individuals and other
actors.
Over the past 10 years, multiple
sources from within and outside the
civil society sector have pointed to
deteriorating rule of law and declining
respect for basic civil and political rights
at the global level.2 New regulations
and restrictions are ostensibly intended
to protect against increased security
threats, but potentially threaten the
existence of an open and free society
and the stability of the environment in
which businesses invest and operate.
Civil society actors have historically
been integral to driving progress and
innovation in the political, social and
economic spheres by advancing
human rights, the rule of law and
sustainable development and they
are currently at the forefront of efforts
to tackle global challenges such as
the migration crisis, implementing
the United Nations Sustainable
Development Goals (SDGs), and
promoting transparent governance.
Closing space for civil society reduces
the chances that these challenges will
be effectively addressed.
This chapter will explain the current
challenges of a closing space for civic
freedoms and solid rule of law, casting
a light on the triggers and contextual
factors that are contributing to the
phenomenon. A separate focus on the
implications for businesses and society
at large is also provided to highlight the
medium-to-long term impact of this
trend and the issues at stake in the
global context of a fraying rule of law.
Closing civil society space refers

to actions by governments and
others that, intentionally or otherwise,
result in the prevention, limitation or
eradication of civil society activities.
This is something that can occur
for very different reasons. In some
cases repressive laws have been
introduced in order to reduce dissent
and silence opposing voices. In
others, civil society freedoms have
been unintentionally restricted as a
consequence of other democratically
agreed policies. This is testament to
the fact that the compromise between
security and liberty is still a difficult
one to tread for many policy-makers.
In the current context of heightened
security concerns and terrorist threats,
many governments have promulgated
regulatory frameworks that entail
greater scrutiny of all economic
and societal actors but trade-offs
between security and the protection
of civic freedoms have not always
been managed in a balanced way, and
some of these measures have had a
disproportionate impact on civil society
organizations in certain parts of the
world.3
Closing space is difficult to quantify
because restrictions are different in
each country and impact each actor
in different ways.4 In some countries,
for example, businesses and civil
society actors have different reporting
requirements for example, civil society
actors may be prohibited from receiving
foreign donations, while businesses
are encouraged to seek foreign
investment.5 However, civil society
organizations, media and corporate
actors have all expressed growing
concern about the closing of civic
space.6 In 2015, CIVICUS found serious
threats to one or more civic freedoms
including the freedom of association,
freedom of assembly and freedom
of expression in 109 countries, up
Restrictions affect both organizations

and individual citizens, including
journalists and media outlets
particularly those who challenge
economic and political elites.10
Methods of restrictions include verbal
and physical actions (vilification of
civil society groups,11 crackdowns on
protest,12 violence against individual
activists);13 regulatory measures
(burdensome reporting requirements
such as on the management of foreign
funding);14 and technological intrusions
(e.g. digital rights restrictions).15
Some organizations have closed
down or reduced their operations as
a result.16 Furthermore, in addition
to human rights and advocacy
organizations, academic, philanthropic
and humanitarian entities, as well as
journalists, have also been affected by
closing civic space.17
Triggers and contextual factors

Factors behind the closing space for
civil society vary per region, though
Table 2.2.1 summarizes some common
dynamics. In some cases, security
concerns, protectionism and the
changing global aid landscape have
been used as reasons for reducing
dissent. In other cases, restrictions
on freedom have been unintended
byproducts of well-intentioned security
packages. While it is possible to try
to distinguish between the trend in
authoritarian or semi-authoritarian and
democratic countries, worrying trends
are seen even in democratic countries.
29
Part 3
from 96 in 2014.7 Restrictions on press

freedom are intensifying around the
world, with a range of methods from
physical violence to legal intimidation
to new laws criminalizing speech being
widely used by a number of actors to
undermine freedom of expression and
free flow of information.8
Part 2
2.2: Fraying Rule of Law and Declining

Civic Freedoms: Citizens and Civic
Space at Risk
Part 1
Figure 2.2.1: Regional Breakdown of CIVICUS Monitor Ratings by Region,

October 2016 - Number of countries in each category
7
Africa
Part 2
Americas
Asia
Europe
Middle East
14
4
5
The Role of Technology

2
10
3
10
Part 3
;-51.,"
Closed
Repressed
Obstructed
<.64.11.,"
=>124392.,"
?0445@.,"
=6.A"
Narrowed
Open
Source: CIVICUS Monitor Findings Report, October 2016.
Table 2.2.1: Contextual Factors

Security concerns
and counterterrorism measures
The sensitive geopolitical context, the rise of cyberattacks

and major data breaches and hacks, as well as the global
insurgency of violent extremism and radicalization have led
many countries to adopt security measures and counterterrorism laws that have increased scrutiny and restrictions
on the participation of societal actors, including civil society
and individual citizens, sometimes including restrictions on
dissenting voices.1
Rising nationalism
Civil society actors often challenge decision-makers on issues

tied to security and identity, such as the response to terrorism
or the refugee crisis, or the treatment of minorities. Nationalist
sentiment has fuelled the closing of civic space in an attempt
to reduce such criticism.2 The argument against foreign
funding also has nationalistic undercurrents: some nongovernmental organizations that take foreign funding have
been accused of being unpatriotic or anti-development.3
Changing scene of
development aid
Developing and emerging countries are often less dependent

on foreign aid than they have been in the past, and less
tolerant of external influence over the spending of aid money.4
Claiming ownership of development aid is an important step
towards reducing aid dependence but some governments
have used it to exert control over civil society activities in their
country.5
Market
fundamentalism
At times the push for economic growth has contributed to

restricting the civic space by nurturing in certain geographical
contexts the distrust and repression of civil society actors who
have criticized business or foreign investors, and who have
consequently been labelled anti-development or
anti-national interest.6
Carothers and Brechenmacher 2014, p. 9; Greenslade 2011; OHCHR 2014b.

Palumbo-Liu 2016; Sokatch 2013.
Such accusations have been made in several countries, including India, Pakistan, and Malawi (see Doane 2016;
ICNL 2016a; Jafar 2011, p. 133).
4
Green 2015.
5
Rutzen 2015, p. 7.
6
Doane 2016; Funders Initiative for Civil Society 2016, p. 9; United Nations Special Rapporteur 2016. In India,
the Intelligence Bureau claimed, in a leaked report, that civil society prevents GDP growth by 23% per year.
2
3
30
Genuine problems among a subset of

civil society actors such as a lack of
transparency and links to terrorism do
exist, but responses are drafted widely
enough to affect reliable organizations
delivering benefits to society.
Technological advances have

expanded civic space by providing
citizens and organizations with new
opportunities to make their voices
heard, express their grievances and
demand their rights, and innovative
ways to hold decision-makers to
account. They offer virtual platforms
for citizens to engage and mobilize on
issues they care about. At the same
time, ICT and other technological tools
benefit individuals or groups seeking to
leverage technology for the spreading
of hate, misinformation and extremism,
and present challenges for law
enforcement and other governmental
authorities attempting to monitor
terrorist activity.
Technological tools are also being used
to increase surveillance and control over
citizens, whether for legitimate security
concerns or in an attempt to eradicate
criticism and opposition. Restricting
new opportunities for democratic
expression and mobilization,19 and by
consequence the digitally enabled
array of civil, political and economic
rights (such as the right to work and
education; freedom of expression)20
just as citizens have become more
connected and engaged creates a
potentially explosive situation.
Implications for Citizens

and Society
Closing the space for civil society not
only reduces the number of actors
and operations that are protecting
and promoting the common good in
society, but it also potentially increases
the likelihood and impact of the risks,
including:

diminishing public trust in

institutions;
more resources devoted to
national interests over citizens
well-being, in a context where
governments pursue specific
agendas without ample prior
consultation with societal actors;21
Part 1
Implications for Business

Civil society actors are increasingly
looking to the private sector for support
expanding their space to operate.27 The
Societal freedom is economically

beneficial for several reasons. Data
suggest it reduces corruption,29
which imposes costs on business:
the International Monetary Fund (IMF)
puts the annual cost of bribery alone at
around US$1.5 to US$2 trillion, nearly
2% of global GDP, and this is only one
form of corruption.30 Additionally, it is
often the case that restrictions on civil
society represent just the initial sign of
more authoritarian systems impacting
all economic and societal actors.31
Civil society helps to hold economic
actors to account for respecting
basic rights, promoting competition
by creating a more equal playing
field. Indeed, in some countries with
less open societies, companies are
collaborating with civil society actors
to facilitate human rights compliance
reporting and demonstrate compliance
with international standards even if this
is not required by domestic legislation.
Companies operating in countries
where human rights are not respected
Figure 2.2.2: The Top Performers on the World Banks Doing Business Survey:
Mostly Free Countries
25
20
20
15
15
10
10
5
4
0
Top 25 performers
Free
Partly Free
Bottom 25 performers
Not Free
Sources: World Bank, Doing Business; Freedom House, Freedom in the World.
Note: The top-25 and bottom-25 rankings are based on the World Bank 2015 Distance to Frontier indicator.
The freedom categories are taken from the Freedom House 2015 Freedom in the World report.
and civil society is suppressed run a

potentially high reputational risk from
being associated with environmental or
human rights violations in supply chains
or at production sites.32
Evidence shows that workforce
diversity is good for business,33
implying that busineses benefit from
being located in societies that value
diversity. Brain drain fuelled by unstable
and corrupt environments means that
business loses out on the countrys
top human potential.34 From a talent
management perspective, it can only
be good for companies to be able
to freely move their human capital
across countries, knowing their staff
will not be held back by legal and/or
cultural restrictions challenging global
corporate diversity policies.35
Finally, against the backdrop of ongoing
pressure on economic and societal
actors to deliver on the SDGs through
partnerships and cooperation, it is in
the interest of corporations to promote
an open space where civil society
actors can thrive and cross-sectoral
partnerships develop. Restrictions
to the civic space risks endanger the
ability of businesses to achieve their
SDG targets.
How Could Business Help to Keep

the Civic Space Open?
It is not always straightforward for
business leaders to understand
the nature of their contribution to
promoting open and democratic
systems. There are, however, some
interesting examples of businesses
promoting an inclusive civic space.
Business leaders can promote space
for civil society behind the scenes, for
example through lobbying in meetings
with governmental authorities. At the
local level, business associations
which are also affected by closing
civic space can help to coordinate
actions such as awareness raising and
lobbying the government.36 In some
cases, companies have assisted civil
society groups by providing in-kind
support, such as meeting space for
activists, or indirect support, including
quietly resisting discriminatory local
practices.37
There are also examples of businesses
publicly working against specific
attempts to limit civil society activities,
31
Part 3
A world with limited freedoms and

closing civil space is additionally
deprived of the important economic
value contributed by civil society
organizations. The economic
importance of civil society organizations
is under-researched,25 but some studies
find evidence of impact that could be
lost as their space to operate shrinks.
Back in the 1990s, the Johns Hopkins
Comparative Non-profit Sector Project
quantified the non-profit sectors
economic contribution in the 22 nations
examined as $1.1 trillion, with nearly 19
million full-time employees and average
expenditure totalling 4.6% of the gross
domestic product. These figures are
likely to be larger now.26
case for business leaders to promote

openness is not always immediately
apparent, because shrinking civil
society space may not directly impact
their core business in the short term.
But studies show a long-term link
between democratic systems and
increases in GDP per capita,28 and
most of the top performers in the World
Banks Doing Business ranking are free
countries (Figure 2.2.2).
Part 2
corruption, as quantitative
and qualitative studies attest to
the contribution of civil society
organizations in reducing illicit
activities;22,23
polarization of views, due to
misinformation or asymmetry of
information across countries and
societal groups;24 and
socio-political and economic
instability as discontent around
governance systems that are not
participatory and accountable
manifests as protests.
Part 1
Part 2
as illustrated by technology companies

pulling out of countries over internet
censorship; diamond companies
speaking out against the prosecution
of activists; sportswear manufacturers
publicly supporting the work of
human rights defenders;38 and food
associations bailing out civil society
leaders who had been investigating
abuses in the food industry.39
Part 3
Considering the complex nature of

this challenge, some businesses have
preferred to come together in coalitions
to collectively raise their voice for the
promotion of rights and freedoms in
the contexts they operate. Examples
include the Open for Business
coalition,40 which supports LGBT
(lesbian, gay, bisexual, transgender)
diversity across the world.
Increased international solidarity
with affected civil society and
stronger coalitions of businesses to
advance and advocate for human
rights promotion are concrete
recommendations that have been
identified by many organizations as
priorities for action.41
Conclusions
Despite the global nature of closing
civil society space, there is still not
much awareness among businesses,
decision-makers and a good part of
societal actors about this worrisome
pattern and the potential risks it can
engender: increased social and
economic instability, augmented social
polarization, more fragile governance,
and major detriment to basic civil
and political rights that have been
gainfully acquired by many countries
in the past 50 years. More investment
should be put to further study this
phenomenon and quantify it in terms of
lost economic and social opportunities.
With technological innovation creating
new opportunities for social inclusion
and civic empowerment, time is
ripe for all actors to come together
and enable an open civic space by
collectively taking measures and
engaging technology to address this
risk effectively.
Chapter 2.2 was contributed by Silvia Magnoni, World
Economic Forum, and Kira Youdina, World Economic
Forum.
32
Endnotes
The Economist 2016; Kerry 2015; Sherwood 2015; Stone 2015.
The World Bank definition for civil society refers to the wide array of nongovernmental and not-for-profit organizations that have a presence in public life,
expressing the interests and values of their members or others, based on ethical,
cultural, political, scientific, religious or philanthropic considerations. Civil Society
Organizations (CSOs) therefore refer to a wide of array of organizations: community
groups, non-governmental organizations (NGOs), labor unions, indigenous groups,
charitable organizations, faith-based organizations, professional associations, and
foundations. See World Bank 2013.
3
United Nations General Assembly 2016.
4
United Nations General Assembly 2015.
5
CIVICUS 2016c, pp. 5, 8.
6
Assis 2015; CIVICUS 2016a; Roth 2016;Unmig 2016. Resolutions regarding
enabling civil society space have been adopted at the UN Human Rights Council,
and the Officer of the High Commissioner for Human Rights created a handbook on
enabling civil society space: http://www.ohchr.org/Documents/AboutUs/CivilSociety/
CS_space_UNHRSystem_Guide.pdf
7
CIVICUS 2016b; Sriskandarajah 2016. Indexes can also be found in USAIDs CSO
Sustainability Indexes for Sub-Saharan Africa, Asia, Europe and Eurasia, and Middle
East and North Africa.
8
The International Press Institute has recorded increased repression and hostilities
towards critical and investigative reporting in the past few years, with journalists
being detained and killed, or opposition newspapers suspended/shutdown; see
http://www.freemedia.at/
9
CIVICUS Monitor 2016.
10
ISHR 2015.
11
There are many examples of the vilification of or smear campaigns against civil
society organisation, painting them as working against the interest of citizens. See
Green 2016; Hungary Matters 2015; UN News Centre 2016.
12
Widespread protest movements, empowered by new technologies, have
threatened those in power, thus triggering clampdowns. See Green 2015; Minder
2016; Sherwood 2015.
13
The organisation Frontline Defenders currently has 220 active cases of
actions taken against human rights defenders, including violence. https://www.
frontlinedefenders.org/open-cases
14
Civil society actors do not deny the need for transparency, but regulations
have made it impossible for some organisations to function due to an overload of
reporting requirements. See ICNL 2016b. Restrictions on receipt of foreign funding
have also ensured that organisations have to scale down or stop their activities;
see The Economist 2014. The Financial Action Task Force requirements, an antiterrorism response, has also limited the money that civil society organisations can
receive: see the Global NPO Coalition of FATF at http://fatfplatform.org/civil-societyconcerns/
15
Examples include interrupting the internet before or during protests, blocking
certain websites, or mass surveillance impinge on digital rights. Numerous cases
exist around the world: see Article 19 2015; Mavhinga 2016; Ramdani 2011; RFE/RL
2016; Sutter 2012.
16
Boon 2015; ICNL 2016b; Sherwood 2015.
17
As an example, the Scholars at Risk Network, which helps place scholars in
universities around the world when they are under threat in their home countries,
reports an increase in attacks on scholars: see SARN 2016 at https://www.
scholarsatrisk.org/wp-content/uploads/2016/10/SAR-2016-Global-CongressReport.pdf
18
It has to be noted that available research on the incidence of NPO (non-profit
organisations) abuse for terrorist financing and money laundering is limited and of
low quality, and no study has been able to reliably quantify this risk of abuse.
19
Green 2015; Omidyar 2014; Treisman 2014.
20
OHCHR 2016.
21
Oxfam International 2016; SIPRI 2016.
22
Themudo 2013.
23
Florini and Simmons 2000; McCoy and Heckel 2001; Ralchev 2004.
24
Bequelin 2014. Reporting on political issues, corruption and economic trends
becomes difficult (see Otis 2013).
25
Researchers are still debating and clarifying the methodological approaches to
defining civil society and measuring its impact (see Enjolras 2015).
26
Salamon et al. 1999.
27
CAF 2016.
28
De Lombaerde and Garay 2006.
29
Wasow 2011.
30
IMF 2016.
31
In Venezuela, for instance, a repressive and populist regime has, over time,
imposed its controls on companies, seizing private businesses and farms and
restricting the economic influence of major corporate actors. See Forero 2016.
32
Wilshaw 2015.
1
2
Part 1
34
Doane, D. 2016. The Indian government has shut the door on NGOs. The
Guardian, 7 September 2016. https://www.theguardian.com/global-developmentprofessionals-network/2016/sep/07/the-indian-government-has-shut-the-door-onngos
The Economist. 2014. Donors: Keep out. The Economist, 13 September 2014.
http://www.economist.com/news/international/21616969-more-and-moreautocrats-are-stifling-criticism-barring-non-governmental-organisations.
. 2016. Free speech under attack: Curbs on free speech are growing tighter.
It is time to speak out. The Economist, 4 June 2016. http://www.economist.com/
news/leaders/21699909-curbs-free-speech-are-growing-tighter-it-time-speakout-under-attack http://www.economist.com/news/leaders/21699909-curbs-freespeech-are-growing-tighter-it-time-speak-out-under-attack
Enjolras, B. 2015. Measuring the impact of the third sector: From concept
to metrics. TSI Working Paper No. 5, Seventh Framework Programme (grant
agreement 613034), European Union. Brussels: Third Sector Impact.
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Holodny, E. 2014. Russias brain drain is astounding. Business Insider UK, 2
December 2014. http://uk.businessinsider.com/russia-brain-drain-putin-ukrainecrimea-2014-12?r=US&IR=T
Hungary Matters. 2015. Amnesty yearly report notes smear campaign against
NGOs in Hungary. Politics.hu, 25 February 2015. http://www.politics.hu/20150225/
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Hunt, V., D. Layton, and S. Prince. 2015. Why diversity matters. McKinsey &
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ISHR (International Service for Human Rights). 2015. Angola: Drop charges against
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http://www.ishr.ch/news/angola-drop-charges-against-journalist-and-corporateaccountability-activist-rafael-marques
Jafar, A. 2011. Womens NGOs in Pakistan. New York: Palgrave Macmillan.
33
Part 3
Florini, A. M. and P. J. Simmons. 2000. What the world needs now? In The
Third Force: The Rise of Transnational Civil Society, Ann M. Florini, ed. Tokyo and
Washington, DC: Japan Center for International Exchange and Carnegie Endowment
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Part 2
Hunt, Layton, and Prince 2015.

Such countries are mirred by corruption and political instability, which is linked to
brain drain according to research (see Dimant, Krieger, and Meierrieks 2013Brain
drain, for instance, is heavily affecting Russia-based enterprises (see Holodny 2014).
35
Smedley 2015.
36
One such example includes the Bishkek Business Club, which lobbied the
Kyrgyz government not to accept a foreign agent bill that aimed to restrict foreign
funding for non-profit organisations. The club argued that the bill went against the
Constitution, principles of good governance, and enabling conditions for sustainable
economic growth.
37
In private interviews, activists indicate that they have been able to partner with
progressive corporations in some of the most difficult environments. Other examples
include businesses standing up for LGBT rights all over the world; see Griffin 2015.
38
adidas Group 2016.
39
Lazala 2015.
40
See https://www.open-for-business.org/
41
ACT Alliance and CIDSE 2014; intrac for civil society 2014; Mendelson 2015.
33
Part 1
Part 2
Kerry, J. F., US Secretary of State. 2015. Secretarys Preface: Country Reports

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ngos-face-restrictions-laws-human-rights-generation
Lazala, M. 2015. Despite the odds: Businesses speaking out for human
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despite-the-odds-businesses-speaking-out-for-human-rights
SIPRI (Stockholm International Peace Research Institute). 2016. World military

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SIPRI Military Expenditure Database attests an increase in world military spending
Mavhinga, D. 2016. Dispatches: Zimbabwe blocks internet amid police

crackdown. Human Rights Watch: Dispatches, 6 July 2016. https://www.hrw.org/
news/2016/07/06/dispatches-zimbabwe-blocks-internet-amid-police-crackdown
McCoy, J. and H. Heckel. 2001. The emergence of a global anti-corruption norm.
International Politics 38 (1): 6590.
Part 3
Mendelson, S. E. 2015. Why Governments Target Civil Society and What Can Be
Done in Response. A Report of the CSIS Human Rights Initiative. Washington, DC:
Center for Strategic & International Studies. http://www.ohchr.org/Documents/
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The New York Times. 24 February 2016. http://www.nytimes.com/2016/02/25/
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com/2016/02/25/world/europe/spain-europe-protest-free-speech.html
OHCHR (Office of the United Nations High Commissioner for Human Rights). 2014a.
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. 2014b. UN experts urge Ethiopia to stop using anti-terrorism legislation
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NewsEvents/Pages/DisplayNews.aspx?NewsID=15056&LangID=E
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digital age. http://www.ohchr.org/EN/Issues/FreedomOpinion/Pages/
Privatesectorinthedigitalage.aspx
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social-media-enemy-of-the_b_4867421.html
Otis, J. 2014. Venezuela tries to suppress reports of economic upheaval. Blogpost.
Document2https://cpj.org/x/57aa
Oxfam International. 2016. Rich country goverments put national interests ahead of
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pressroom/reactions/rich-country-governments-put-national-interests-ahead-worldspoorest
Palumbo-Liu, D. 2016. Indias crackdown on anti-nationalism on campus and how
it can affect universities here. The Huffington Post, 17 February 2016. http://www.
huffingtonpost.com/david-palumboliu/indias-crackdown-on-anti-nationalism-oncampus-and-how-it-can-affect-universities-here_b_9251262.html
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kazakhstan-protests/27748591.html
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http://foreignpolicy.com/2016/01/27/the-great-civil-society-choke-out-human-rightsdemocracy-india-russia-china-kenya/
Rutzen, D. 2015. Aid barriers and the rise of philanthropic protectionism.
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34
Smedley, T. 2015. Risks abound as companies export their pride globally. Financial
Times, 20 October 2015. https://www.ft.com/content/ddc082ba-71b2-11e5-9b9e690fdae72044
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Part 1
2.3: The Future of Social Protection

Systems
The Future of Work

and Other Challenges
Impacting Social
Protection
The Fourth Industrial Revolution is
fundamentally changing the ways that
people work and live in three main
ways. First, it is untethering some
types of work from a physical location,
making it easier to remotely connect
workers in one region or country to
jobs in another but also making it less
clear which set of employment laws
and taxes apply, creating greater global
competition for workers, potentially
weakening employment protections
and draining public social protection
coffers.
Finally, the nature of the contract

between employer and employee is
changing, at the same time that the
move to a sharing and collaborative
economy increases the prevalence
of jobs that fall outside the standard
employment contract model. The shift
has some positive implications for
workers, as it potentially offers more
control over when and whether to work
and opportunities to supplement their
incomes renting out a room through
Airbnb, for example, or driving part-time
for a service such as Uber.
But this shift also has negative
implications: it means workers
can expect more volatility in their
earnings and leaves them without the
employment protections enjoyed by
standard employees. The rise of zerohour contracts is one manifestation of
this change. Some governments, such
as the government of New Zealand,
have already banned their use. New
employment models also hinder the
collection of taxes from both employer
and worker, reducing the amount
governments have available to fund
social protections (see Box 2.3.1).
These three transformations are
coinciding with four seismic challenges.
First, demographic pressures are
further straining formal and informal
safety nets. The OECD expects oldage dependency ratios in member
countries to double by 2075 as
populations age and birth rates fall.4
Although there is no agreed-upon

definition of a nonstandard worker,
making it difficult to track and
compare numbers globally, the
International Labour Organization
reports that a vast number of
individuals participate in nonstandard
work arrangements of one kind or
another: one-fifth of Chinas workforce
holds temporary jobs; roughly 11%
of the workforce in the OECD
countries is in temporary employment;
and a significant proportion of the
workforce in emerging economies
such as the Philippines (42%) and
Vietnam (68%) have non-agricultural
informal jobs without basic social or
legal protections or employment
benefits.1
Note
1
See George and Chattopadhyay 2015.
Although this is primarily a problem in

the developed world, Chinas elderly
population is projected to almost
double by 2030, and its fertility rate has
dropped from 5.7 in 1969 to 1.6 today.5
The result will be a tripling of Chinas
elderly dependency ratio by 2050.6 The
UN expects improvements in longevity
and advances in healthcare treatments
to double aggregate expenses of
the elderly by 2050.7 These factors
put intense pressure on pension and
healthcare systems, and are spurring
countries to increase retirement ages
and encourage older workers to remain
economically active for longer.
Second, persistently low interest rates
are eating into pension value and
exacerbating the funding gap. Chiles
pension system, for example, currently
pays a replacement income of less than
42% for most retirees, while longevity
has increased by almost 15 years
since 1980. By some calculations,
Chileans may need to increase their
pension contributions to 18% of salary
for men and 14% for women just to
maintain the status quo.8 Without such
supplements, increased life expectancy
could see future generations pensions
reduced by almost half.
35
Part 3
The Fourth Industrial Revolution is

threatening to bring this evolution full
circle: severely underfunded state
social systems are at a breaking point,
employers are backing away from
traditional employment models and
social protection contributions, and
individuals once again are shouldering
a larger share of the risks. As longevity
trends continue to increase and
the threat of the automation of jobs
becomes very real, the sharing of this
risk needs careful rebalancing in order
to minimize potential human suffering.
Second, human labour is being

displaced by automation, robotics
and artificial intelligence. Opinions
differ on the extent of what is possible:
Frey and Osbornes (2013) study
found that 47% of US employment is
at high risk of being automated over
the next two decades,1 while a 2016
study of 21 Organisation for Economic
(OECD) countries, using a different
methodology, concluded that only 9%
of jobs are automatable.2 In general,
lower-skilled workers are more likely to
see their jobs disappear to automation,
increasing their vulnerability and
exacerbating societal inequality.3
Part 2
Social protection systems consist of

policies and programmes designed
to reduce poverty and vulnerability
by helping individuals manage key
economic and social risks, such as
unemployment, exclusion, sickness,
disability and old age. Although
individuals bore virtually all risk
for their own financial well-being
during the First Industrial Revolution
(beginning in 1784), the introduction
of social protections and risk-sharing
among individuals, employers and
governments became increasingly
prevalent in the developed world over
the course of the Second (beginning
in 1870) and Third (1969) Industrial
Revolutions.
Box 2.3.1: The Nonstandard

Worker: A Working Definition
Part 1
Part 2
Part 3
Third, mass migration of labour poses

challenges for social protection.
Migration is generally seen as a
net economic positive: the OECD
estimated that immigration in 17 OECD
countries from 2007 to 2009 added
0.35% to GDP on average (0.46% in
the United Kingdom).9 However, large
and sudden inflows of people can put
additional and unpredictable strain
on social systems and resources. In
Europe, for example, the influx of over
1 million migrants in 2015 was more
than four times the number in 2014.10
The United Kingdoms recent Brexit
decision has been widely perceived
as representing a backlash to the

uncontrolled movement of labour.
China has started requiring foreign
workers to contribute to social security,
although the rules on how pension
benefits can be cashed out remain
unclear.
Finally, increasing levels of wealth and
income inequality in many countries
across the developed and developing
world are putting even greater
pressure on fragile or inadequate social
protections, particularly for vulnerable
lower-income groups. In China, the
wealthiest 1% of households own a
third of the countrys wealth, while in

India, the top 1% grew its share of the
countrys wealth from almost 37% in
2000 to 53% in 2016.11 The share of
income going to workers performing
low-skill jobs is decreasing: in the
United States, it declined from 38% to
23% between 1968 and 2013.12 Inability
to address these challenges adequately
through social security systems could
have explosive impacts on social
stability (Box 2.3.2).
Box 2.3.2: Advanced versus Emerging Economies: Differing Challenges and Opportunities
Advanced and emerging economies face different challenges and opportunities for developing social protections that support
economic growth and social stability in the context of the Fourth Industrial Revolution.
Advanced economies have had the resources to create layered social safety nets, with costs shared across individuals,
employers and government, resulting in many more people than in the developing world enjoying some level of protection
today. For example, the US Social Security programme, funded by employers and workers, was providing benefits to 60 million
people at the end of 2015, while Medicare and Medicaid covered healthcare for 55 million. But such programmes were not
designed for the extreme demographic shifts, chronic healthcare challenges, and the effects of the Fourth Industrial Revolution
that are reshaping societies. Advanced economies face the challenge of reforming them without incurring a crippling debt
burden.
Many emerging market economies arguably have an opportunity to avoid these pitfalls, potentially leapfrogging their wealthier
neighbours by formulating sustainable social protection systems that are responsive to the risks of the Fourth Industrial
Revolution. Brazil, for example, has implemented the largest cash transfer programme in the world, the Bolsa Familia, which
today reaches 55 million of its poorest citizens, costs 30% less per person than more traditional aid programmes, and has
helped lift 36 million people out of extreme poverty.1
Nonetheless, the varying demographic profiles of growth economies pose different challenges. Asia Pacific is the worlds
fastest ageing region, with a 71% increase in the number of people aged 65 years and above projected by 2030. Singapores
elderly population will rise from 11% to 20% in the next 15 years; in France, the same shift took 49 years. A rapidly contracting
workforce and reallocation of resources towards elderly healthcare weakens these economies fiscal position and erodes the
adequacy and sustainability of pension and social security systems.2
Conversely, India has significant potential to reap a demographic dividend, but its limited capacity to create employment poses
a serious challenge: between 1991 and 2013 the size of the working-age population increased by 300 million, yet the number of
employed only increased by 140 million.3 By 2017, a staggering 93% of Indians will hold jobs without social security benefits.4
Solutions are being sought, as the government launches three mega social security schemes accident coverage, life
insurance and pensions.
Sub-Saharan Africa is growing faster than any other region, with an average birth rate of five to seven children per mother and
little effective birth control.5 This scale of growth undermines efforts to reduce poverty or to create jobs, and youth
unemployment is high 50% in South Africa. The ability of nations in Sub-Saharan Africa to create sustainable safety nets will
require both political will and economic activity sufficient to create the necessary resources.
Notes
1
Tepperman 2016.
2
Marsh & McLennan Companies APRC 2016.
3
UNDP 2016.
4
Waghmare 2016.
5
UNICEF 2014.
36
Part 1
New systems will need to address gaps

in social protection across typical life
events including periods of education,
raising families, work including career
gaps, retirement, and later elder care
(see Figure 2.3.1). Systems will need to
provide sufficient flexibility to support
individuals following substantially
different life and career paths while
maintaining some inter-group equity,
and bolster individual resilience.
1. Untethering health and income

protection from individual
employers or jobs

Intermittent, part-time and informal
employment or self-employment,
with frequent career changes, is
becoming the norm in developed
as well as developing economies,13
but most pension systems are still
built on the model of continued
employment throughout life.14
Health benefits are provided
irrespective of employment in most
European nations and Canada,
but continue to be largely tied to
employment in the United States.
A sustainable social protection system

needs to address the changes and
challenges described above, ensuring
fair payments from employees and
employers during times of earning to
fund payments that ensure appropriate
income support when earnings are
Potential responses include

creating portable health and
pension plans to maintain coverage

as workers move geographically
and between employers, or
between periods of formal
employment by an employer
and periods of unemployment or
self-employment; and ensuring
that risk and responsibility for
social protection continue to be
shared by the state, employer
and employee. Employers
contributions to funding social
protections could be recast to
benefit society as a whole rather
than their employees only.
Part 3
not possible. New social protection

systems could include a range of
approaches, with selected innovations
set out below.
2. Revamping pension models

in line with the new realities of
work and ageing

Typically, pension systems,
whether state or occupational,
are diminishing in value because
of worsening tax concessions, a
lower interest-rate environment,
Figure 2.3.1: A Whole-of-Life Approach to Social Protection Needs in the Fourth Industrial Revolution Era
Source: Mercer 2016.

Part 2
New Social Protection

Systems: A Whole-of-Life
Approach
37
Part 1
Part 2
increasing life expectancy,

and increasing regulation and
complexity. Compounding
the problem is the shortened
lifespan of companies,15 which is
undermining the sustainability of
funds from company-sponsored
pension systems.

Part 3
One potential response is to

introduce simpler and more flexible
plans linked to better advice and
guidance. Products need to be
more accessible and flexible to
accommodate unique retiree
needs, providing a secure income
and the flexibility to access capital
when needed for life events other
than retirement. They need to
incorporate affordable options
that allow individuals to manage
longevity and provide better
information about the need to
finance later life, with robo-advice
likely to become the norm.
Another response is for employers
to provide pensions on an optout only basis with default asset
allocations, so the default position
is that employees contribution and
investment levels should create
sufficient income in later life.
3. Implementing policies to
increase flexicurity

The changing needs of businesses
and individuals in the Fourth
Industrial Revolution require giving
employers access to a flexible
labour force while providing
individuals with the security of
a safety net and active help in
securing employment.

38
One way to do this is to increase

public spending on active labour
market policies (ALMPs) that either
reduce the cost of labour or help
people find jobs. For example,
Denmark brings together more
flexible rules for hiring and firing
workers with generous guaranteed
unemployment benefits, and
spends 1.5% of its GDP on active
labour market policies to offer
guidance, education, or access to
a job to all unemployed workers
who are looking for one.16
Equalizing rights and benefits for
employees and self-employed
would incentivize entrepreneurship
and provide personalized pathways

through the social protection
system rather than offering distinct
protections for different types of
labour. A battle around this issue is
already underway as, for example,
Uber drivers challenge their status
as self-employed independent
contractors in the UK courts.17
4. Implementing alternative models
of income distribution

There are an increasing number of
proposals for fundamentally new
models of income distribution,
which do not tie welfare benefits to
being out of work. These include
a negative income tax, in which
people earning below a certain
threshold receive supplemental
pay from the government;
wage supplements, in which
the government makes up the
difference between what a person
earns and a recognized minimum
income; and a universal basic
income paid to all members of
society regardless of their means.18
Such income distribution systems
would make it much easier for
people to take on part-time work or
intermittent work as desired.

Voters in Switzerland recently

rejected a proposal for a universal
basic income,19 but the idea is
attracting growing interest around
the world. The government of
Finland is considering a pilot
programme that would guarantee
citizens a partial basic income
whether or not they work.20 Other
recent experiments include a pilot
programme funded by UNICEF in
eight villages in Madhya Pradesh,
India, in which every man, woman
and child was provided a monthly
payment without conditions for 18
months. Improvements in the pilot
villages, compared with control
villages, were seen in the areas
of sanitation, access to drinking
water, food sufficiency, number of
hours worked, childrens nutrition,
and enrolment levels in secondary
schools, particularly for girls.21
5. Providing greater support for

working into old age

Increasing longevity combined
with reduced pensions means that
many people will need to work into
later life: retirement will become
more of a process than an event,

with part-time or self-employment
continuing possibly well into ones
80s. Typically, women will be even
more financially disadvantaged
in retirement than men because
women live longer and have
accrued lower pensions because
of career breaks and unequal pay.
Reskilling and lifelong learning
opportunities are one policy
implication, but social protection
systems will also need to be more
flexible.

Among the possible responses

from government and employers
are providing incentives for
deferring retirement, supporting
senior job seekers, and allowing for
partial pension payments while a
worker in retirement works parttime. In Japan, the private sector
hobbled by the countrys severe
shortage of young workers is
leading the effort to push back
retirement, with Honda raising its
retirement age to 65, nine years
in advance of the governments
planned countrywide increase.
Japans government invests in
connecting people over 60 to jobs
through specially designated job
resource centres.22 The United
Kingdom offers government
workers the option of increasing
their state pension in exchange
for deferring retirement, with an
increase of almost 6% for each
year deferred.23
As an ageing workforce brings the

challenge of higher disability levels,
another response is to make work
compatible with increasing levels
of disability: the EU Labour Force
Survey (2011) found that 48% of
those reporting a longstanding
health problem were aged 5564,
and only 12% were aged 1524.24
In Germany, which faces one of the
worlds most rapidly ageing and
shrinking populations, employers
such as BMW are designing
plants with the physical needs
and limitations of older workers in
mind.25 In Japan, Toyota is making
work more manageable for older
workers by reducing the hours of
retired re-hires.
Part 1
The Time to Act Is Now
Endnotes
As the Fourth Industrial Revolution

accelerates, many individuals
including lower-skilled workers more
easily displaced by automation,26
part-time and self-employed workers
without access to employer-sponsored
protections, and older workers and
retirees without sufficient savings or
pensions face a potential crisis.27
There is an urgent need to develop a
comprehensive and interconnected set
of options that adapt social protection
to new-style employment patterns,
reskill workers, and respond to the
opportunities and threats posed by
increasing longevity.
Part 3
27
Part 2
A failure to take action risks both the

deterioration of government finances
and the exacerbation of social unrest,
especially at this time of slow economic
growth and widening inequality.
The transition from current to new
models will be fragmented and slow,
given political and financial challenges,
and will require collaboration across
all sectors of society public, private
and civil society. That makes it is all the
more imperative to begin now.

Arntz, Gregory, and Zierahn 2016.
3
Arntz, Gregory, and Zierahn 2016.
4
OECD 2015, http://www.oecd-ilibrary.org/social-issues-migration-health/pensionsat-a-glance-2015/old-age-dependency-ratio_pension_glance-2015-23-en
5
See the UN DESA Population Division of the World Population Prospects, the 2015
Revision, at https://esa.un.org/unpd/wpp/Graphs/DemographicProfiles/?
6
Zhai 2015.
7
OECD 2015, http://www.oecd-ilibrary.org/social-issues-migration-health/pensionsat-a-glance-2015/old-age-dependency-ratio_pension_glance-2015-23-en
8
FIAP 2011.
9
The Migration Observatory 2016.
10
Clayton and Holland 2015.
11
Poddar and Bagchi 2016.
12
Eden and Gaggl 2014
13
World Economic Forum 2016, p. 26.
14
ILO 2015.
15
Innosight 2012.
16
Denmark, Official Website.
17
GMB 2016.
18
Tanner 2015.
19
Switzerland, the Federal Council Portal of the Swiss government, https://www.
admin.ch/gov/en/start/documentation/votes/20160605/unconditional-basic-income.
html
20
Kela 2016.
21
SEWA Bharat 2014.
22
Flynn 2014.
23
United Kingdom, Gov.UK 2016.
24
Eurostat Statistics Explained 2014.
25
Loch et al. 2010.
26
Arntz Gregory, and Zierahn 2016.
2
Guy Carpenter 2015/16.
References
Arntz, M., T. Gregory, and U. Zierahn. 2016. The risk of automation for jobs
in OECD countries: A comparative analysis. OECD Social, Employment and
Migration Working Papers No. 189. Paris: OECD Publishing. http://dx.doi.
org/10.1787/5jlz9h56dvq7-en
Clayton, J. and H. Holland. 2015. Over one million sea arrivals reach Europe in
2015. UNCHR. http://www.unhcr.org/en-us/news/latest/2015/12/5683d0b56/
million-sea-arrivals-reach-europe-2015.html
Denmark. Official Website. Flexicurity (definition). The Official Website of Denmark.
http://denmark.dk/en/society/welfare/flexicurity
Eden, M, and P. Gaggl. 2015. On the welfare implications of automation. Policy
Research Working Paper No. WPS 7487. Washington, DC: World Bank Group.
http://documents.worldbank.org/curated/en/273551468178456630/On-the-welfareimplications-of-automation
Eurostat Statistics Explained. 2014. Disability statistics health. Data extracted
in September 2014. http://ec.europa.eu/eurostat/statistics-explained/index.php/
Disability_statistics_-_health
FIAP (International Federation of Pension Fund Administrators). 2011. Advancing
in the Strengthening and Consolidation of the Individually-Funded Pension
Systems. Santiago, Chile: FIAP. http://www.fiapinternacional.org/wp-content/
uploads/2016/01/libro_fiap_2011_eng.pdf
Flynn, M. 2014. Lessons from Japan: Helping the older unemployed back into
work. The Guardian, 17 July 2014. https://www.theguardian.com/careers/careersblog/retirement-ageing-workforce-japan-jobs
Employment.pdf
Chapter 2.3 was contributed by Yvonne Sonsino,

Mercer, and Ian Veitch, Zurich Insurance Group.
George, E. and P. Chattopadhyay. 2015. Non-Standard Work and Workers:

Organizational Implications. Geneva: International Labour Office. http://www.ilo.org/
wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/
wcms_414581.pdf
39
Part 1
GMB. 2016. GMB fight employment case of the year against Uber. GMB, 20 July
2016. http://www.gmb.org.uk/newsroom/gmb-fight-against-uber
Guy Carpenter. 2015. A Clearer View of Emerging Risks: Interactive PDF Instructions.
Emerging Risks Report September 2015. Marsh & McLennan Companies. http://
www.guycarp.com/content/dam/guycarp/en/documents/dynamic-content/A_
Clearer_View_of_Emerging_Risks.pdf
Part 2
ILO (International Labour Organization). 2015. Employment and Social Protection

Update. http://www.social-protection.org/gimi/gess/ShowTheme.action;jsessi
onid=RtnXXgVGWnBgJG4jhdC2p47mc3hnC7bGJK3dRbS91GqqJRjsKFYV!475661094?id=3185&lang=EN
Innosight. 2012. Creative destruction whips through corporate America: S&P 500
lifespans are shrinking. http://www.innosight.com/innovation-resources/strategyinnovation/upload/creative-destruction-whips-through-corporate-america_final2015.
pdf
Kela. 2016. Experimental study on a universal basic income. Updated 26 October
2016. http://www.kela.fi/web/en/experimental-study-on-a-universal-basic-income
Part 3
Loch, C., F. J. Sting, N. Bauer, and H. Mauermann. 2010. The globe: How BMW
is defusing the demographic time bomb. Harvard Business Review, (March 2010).
https://hbr.org/2010/03/the-globe-how-bmw-is-defusing-the-demographic-timebomb
Marsh & McLennan Companies APRC (Asia Pacific Risk Center). 2016. Advancing
into the Golden Years: Cost of Healthcare for Asia Pacifics Elderly. http://www.mmc.
com/content/dam/mmc-web/Files/APRC/APRC%20Ageing%20report%20FULL.pdf
The Migration Observatory. 2016. The fiscal impact of immigration. Update.
http://www.migrationobservatory.ox.ac.uk/resources/briefings/the-fiscal-impact-ofimmigration-in-the-uk/
OECD (Organisation for Economic Co-operation and Development). 2015. Old-age
dependency ratio. In Pensions at a Glance 2015: OECD and G20 Indicators. Paris:
OECD Publishing. http://www.oecd-ilibrary.org/social-issues-migration-health/
pensions-at-a-glance-2015/old-age-dependency-ratio_pension_glance-2015-23-en
Poddar, S., and S. Bagchi. 2016. The inequality trap threatens Asian economic
miracle. Brink Asia, 28 August 2016. http://www.brinknews.com/asia/theinequality-trap-threatens-asian-economic-miracle/
SEWA Bharat. 2014. A Little More, How Much It Is: Piloting Basic Income Transfers
in Madhya Pradesh, India. New Delhi: SEWA Bharat, supported by UNICEF,
India Office. http://sewabharat.org/wp-content/uploads/2015/07/Report-onUnconditional-Cash-Transfer-Pilot-Project-in-Madhya-Pradesh.pdf
Switzerland, the Federal Council Portal of the Swiss government. Unconditional
Basic Income Popular Initiative. https://www.admin.ch/gov/en/start/documentation/
votes/20160605/unconditional-basic-income.html
Tanner, M. D. 2015. The pros and cons of a guaranteed national income. CATO
Institute Policy Analysis No. 773. http://www.cato.org/publications/policy-analysis/
pros-cons-guaranteed-national-income
Tepperman, J. 2016. Brazils antipoverty breakthrough: The surprising success of
Bolsa Famlia. Foreign Affairs (January/February 2016). https://www.foreignaffairs.
com/articles/brazil/2015-12-14/brazils-antipoverty-breakthrough
UNDP (United Nations Development Programme). 2016. Asia-Pacific Development
Report Shaping the Future: How Changing Demographics Can Power Human
Development. New York: United Nations Development Programme.
UNICEF (United Nations Childrens Fund). 2014. Generation 2030 / Africa. UNICEF,
Division of Data, Research, and Policy. https://www.unicef.org/publications/files/
Generation_2030_Africa.pdf
United Kingdom, Gov.UK. 2016 State Pension: Delay (defer) your State Pension.
https://www.gov.uk/deferring-state-pension/what-you-get
Waghmare, A. 2016. 6 indicators of Indias looming demographic disaster.
IndiaSpend, 2 May 2016. http://www.indiaspend.com/cover-story/6-indicators-ofindias-looming-demographic-disaster-99797
World Economic Forum. 2016. The Human Capital Report 2016. Geneva: World
Economic Forum. http://reports.weforum.org/human-capital-report-2016/
Zhai, Z. 2015. Ageing in China: Trend, process and character. Renmin University of
China. http://www.unescap.org/sites/default/files/Session1_Mr.ZhaiZhenwu_China.
pdf
40
Part 1
Part 2
Part 3
41
Part 1
Part 2
Part 3:
Emerging
Technologies
Part 3
42
Part 1
3.1: Understanding the Technology

Risks Landscape
Table 3.1.1: Twelve Key Emerging Technologies

Technology
Description
3D printing
Advances in additive manufacturing, using a widening range of materials and methods; innovations
include 3D bioprinting of organic tissues.
Advanced materials and

nanomaterials
Creation of new materials and nanostructures for the development of beneficial material
properties, such as thermoelectric efficiency, shape retention and new functionality.
Artificial intelligence and

robotics
Development of machines that can substitute for humans, increasingly in tasks associated with
thinking, multitasking, and fine motor skills.
Biotechnologies
Innovations in genetic engineering, sequencing and therapeutics, as well as biologicalcomputational interfaces and synthetic biology.
Energy capture, storage and

transmission
Breakthroughs in battery and fuel cell efficiency; renewable energy through solar, wind, and tidal
technologies; energy distribution through smart grid systems, wireless energy transfer and more.
Blockchain and distributed

ledger
Distributed ledger technology based on cryptographic systems that manage, verify and publicly
record transaction data; the basis of "cryptocurrencies" such as bitcoin.
Geoengineering
Technological intervention in planetary systems, typically to mitigate effects of climate change by

removing carbon dioxide or managing solar radiation.
Ubiquitous linked sensors
Also known as the "Internet of Things". The use of networked sensors to remotely connect, track
and manage products, systems, and grids.
Neurotechnologies
Innovations such as smart drugs, neuroimaging, and bioelectronic interfaces that allow for reading,
communicating and influencing human brain activity.
New computing technologies
New architectures for computing hardware, such as quantum computing, biological computing or
neural network processing, as well as innovative expansion of current computing technologies.
Space technologies
Developments allowing for greater access to and exploration of space, including microsatellites,
advanced telescopes, reusable rockets and integrated rocket-jet engines.
Virtual and augmented

realities
Next-step interfaces between humans and computers, involving immersive environments,

holographic readouts and digitally produced overlays for mixed-reality experiences.
Source: The 12 emerging technologies listed here and included in the GRPS are drawn from World Economic
Forum Handbook on the Fourth Industrial Revolution (forthcoming, 2017).
43
Part 3
Too often the debate about emerging

technologies takes place at the
extremes of possible responses:
among those who focus intently
on the potential gains and others
who dwell on the potential dangers.
The real challenge lies in navigating
between these two poles: building
understanding and awareness of the
trade-offs and tensions we face, and
making informed decisions about how
to proceed. This task is becoming
more pressing as technological change
deepens and accelerates, and as we
Over the years The Global Risks

Report has repeatedly highlighted
technological risks. In the second
edition of the Report, as far back as
2006, echoes of current concerns
were noted in one of the technology
scenarios we considered, in which the
elimination of privacy reduces social
cohesion. This was classified as a
worst-case scenario, with a likelihood
of below 1%. In 2013, the Report
discussed the risk of the rapid spread
of misinformation, observing that trust
was being eroded and that incentives
were insufficiently aligned to ensure
the maintenance of robust systems of
Part 2
The emerging technologies of the

Fourth Industrial Revolution (4IR)
will inevitably transform the world in
many ways some that are desirable
and others that are not. The extent
to which the benefits are maximized
and the risks mitigated will depend
on the quality of governance the
rules, norms, standards, incentives,
institutions, and other mechanisms
that shape the development and
deployment of each particular
technology.
become more aware of the lagged

societal, political and even geopolitical
impact of earlier waves of innovation.
Part 1
quality control or fact-checking. Four

years later, this is a growing concern; in
Chapter 2.1, the Report considers the
potential impact of similar trends on the
very fabric of democracy.
Figure 3.1.1: Perceived Benefits and Negative Consequences of 12 Emerging

Technologies
Part 2
In 2015, emerging technology was

one of the Reports risks in focus,
highlighting, among other things, the
ethical dilemmas that exist in areas
such as artificial intelligence (AI) and
biotechnology.
Part 3
This year, the Global Risks Perception

Survey (GRPS) included a special
module on 12 emerging technologies
(see Table 3.1.1). The results suggest
that respondents are broadly optimistic
about the balance of technological
risks and benefits. Figure 3.1.1 shows
that the average score is much higher
for perceived benefits than it is for
negative consequences. However, as
Figure 3.1.2 makes clear, respondents
still identify clear priorities for better
governance of emerging technologies.
The remainder of this chapter highlights
the particular challenges involved
in creating governance regimes for
fast-moving technologies, and then
summarizes the key results of this
years GRPS special module on
emerging technology. The chapter
concludes with a discussion of
the profound changes that new
technologies will entail for businesses
and of the cascading effects these
changes may have on the global risk
landscape.
Governance Dilemmas
How to govern emerging technologies
is a complex question. Imposing overly
strict restrictions on the development
of a technology can delay or prevent
potential benefits. But so can continued
regulatory uncertainty: investors will be
reluctant to back the development of
technologies that they fear may later
be banned or shunned if the absence
of effective governance leads to
irresponsible use and a loss of public
confidence.
Ideally, governance regimes should
be stable, predictable and transparent
enough to build confidence among
investors, companies and scientists,
and should generate a sufficient
44
Source: World Economic Forum Global Risks Perception Survey 2016.

Note: See Appendix B for more details on the methodology.
level of trust and awareness among

the general public to enable users
to evaluate the significance of early
reports of negative consequences.
For example, autonomous vehicles
will inevitably cause some accidents;
whether this leads to calls for bans will
depend on whether people trust the
mechanisms that have been set up to
govern their development.
But governance regimes also need to
be agile and adaptive enough to remain
relevant in the face of rapid changes in
technologies and how they are used.
Unexpected new capabilities can
rapidly emerge where technologies
intersect, or where one technology
provides a platform to advance
technologies in other areas.1
Currently, the governance of emerging
technologies is patchy: some are
regulated heavily, and others hardly at
all because they do not fit under the

remit of any existing regulatory body.
Mechanisms often do not exist for
those responsible for governance to
interact with people at the cutting edge
of research. Even where insights from
the relevant fields can be combined, it
can be hard to anticipate what secondor third-order effects might need to be
safeguarded against: history shows
that the eventual benefits and risks of a
new technology can differ widely from
expert opinion at the outset.2
To the extent that potential trade-offs of
a new technology can be anticipated,
there is scope for debate about how
to approach them. There may be
arguments for allowing a technology to
advance even if it is expected to create
some negative consequences at first, if
there is also a reasonable expectation
that other innovations will create new
ways to mitigate those consequences.
Part 1
Figure 3.1.1 plots respondents

perceptions of the potential benefits
and negative consequences of the 12
technologies included in the GRPS.
As noted above, the average score for
benefits is much higher than it is for
adverse consequences,3 suggesting
that respondents are optimistic
about the net impact of emerging
technologies as a whole.4 Technologies
considered to have above-average
risks and below-average benefits, in
the upper left quadrant of the figure,
tended to be those where respondents
felt least confident of their own
assessments and also least confident
of the publics understanding.
Three technologies occupy the
upper-right quadrant of Figure 3.1.1,
indicating an above-average score
for both potential benefits and risks:

artificial intelligence (AI) and robotics,
biotechnologies, and new computing
technologies. Analysis of media
coverage resonates with respondents
high ranking for the risk associated
with AI: from 2013 to 2016 there was a
steady rise in reporting on whether we
should fear AI technologies.5
Respondents also cited artificial
intelligence (AI) and robotics most
frequently when asked how the 12
emerging technologies exacerbate
the five categories of global risk
covered by The Global Risks Report.
As Figure 3.1.2 illustrates, this was
seen as the most important driver of
risks in the economic, geopolitical and
technological categories.
In Figure 3.1.3, two technologies stand
out as requiring better governance in
the view of GRPS respondents: both
artificial intelligence (AI) and robotics
Figure 3.1.2: How Emerging Technologies Exacerbate Global Risks

Note: Respondents were asked to select the three emerging technologies that they believe will most significantly exacerbate global risks in each category.
45
Part 3
The growing popular awareness of the

dilemmas associated with governing
new technologies is revealed by media
analysis: relevant mentions of such
quandaries in major news sources
doubled between 2013 and 2016.
But which technologies should we
be focusing on? In the latest GRPS,
we asked respondents to assess 12
technologies on their potential benefits
and adverse consequences, public
understanding and need for better
governance.
Technologies that Need

Better Governance
Part 2
Even if there is widespread desire to

restrict the progress of a particular
technology such as lethal
autonomous weapons systems there
may be practical difficulties in getting
effective governance mechanisms in
place before the genie is out of the
bottle.
Part 1
Figure 3.1.3: Emerging Technologies Perceived as Needing Better Governance
Part 2
Part 3
Note: Respondents were asked to select the three emerging technologies that they believe most need better governance. The figure presents the percentage of
respondents who selected each technology.
and biotechnologies were cited by

more than 40% of respondents. These
two technologies differ greatly in terms
of the current state of their governance.
Biotechnologies, which involve the
modification of living organisms for
medicinal, agricultural or industrial
uses, tend to be highly regulated.6
Biotech became a global governance
issue in 1992 with the Convention
on Biological Diversity, now ratified
by 196 countries.7 AI and robotics,
meanwhile, are only lightly governed
in most parts of the world. As general
purpose technologies, in the words
of economic historian Gavin Wright,8
they have applications in many fields
that already have their own governance
regimes. For example, where machine
learning is used in areas such as
online translation, internet search and
speech recognition, it comes under
governance related to the use of
data. Industrial robots are governed
by International Organization for
Standardization (ISO) standards,9 while
domestic robots are primarily governed
by existing product certification
regulations. There is increasing debate
about the governance of AI given
the risks involved, which are further
discussed in Chapter 3.2.
46
The Disruptive Impact of

Emerging Technologies
The potential of emerging technologies
to disrupt established business
models is large and growing. It is
tempting to think of technological
disruption as involving dramatic
moments of transformation, but in
many areas disruption due to emerging
technologies is already quietly under
way, the result of gradual evolution
rather than radical change. Consider
autonomous vehicles: we are not yet
in a world of vehicles that require little
or no human intervention, but the
technologies that underpin autonomy
are increasingly present in our
ordinary cars.
As the technological changes entailed
by the 4IR deepen, so will the strain
on many business models. The
automotive sector remains a good
example. It has been clear for some
time that car manufacturers need
to plan ahead for a world in which
many of the factors that determine
current levels of car ownership may
no longer be present. Increasing
evidence of this planning is now
starting to shape commercial decisionmaking. For example, in December
2016, Volkswagen launched a new
mobility services venture, MOIA, in
recognition of an ever-stronger trend

away from owning a vehicle towards
shared mobility as well as mobility on
demand.10
The deep interconnectedness of
global risks means that technological
transitions can exert a multiplier effect
on the risk landscape. This does
not apply only to newly emerging
technologies: arguably much of the
recent social and political volatility that
is discussed in Parts 1 and 2 of this
years Global Risks Report reflects,
in part at least, the lagged impact of
earlier periods of technological change.
One obvious channel through which
technological change can lead to
wider disruption is the labour market,
with incomes pushed down and
unemployment pushed up in affected
sectors and geographical regions. This
in turn can lead to disruptive social
instability, in line with the GRPS finding
this year that the most important
interconnection of global risks is the
pairing of unemployment and social
instability.
Another prism through which to look
at the interaction of risks and emerging
technologies is that of liability or, to
put it another way, the question of
who is left bearing which risks as a
result of technological change. There
are multiple potential sources of
Part 1
Endnotes
Alford, Keenihan, and McGrail 2012.
Juma 2016.
3
The overall average response for benefits to emerge from emerging technologies
was 5.6, equating to a likelihood of above 55% and below 75%. This contrasts
sharply with the average of 3.8 for negative consequences, equating to an assessed
likelihood of between 25% and 45%.
4
It is noteworthy that no single technology was, on average, assessed to present
negative consequences at a higher likelihood than its benefits. The technology with
the lowest net benefits in this regard was Geoengineering, with the fourth highest
assessment of negative consequences overall and the lowest assessment of
benefits. At the other end of the scale, the technology with the greatest assessed net
benefit was Energy capture, storage and transmission.
5
Quid analysis performed by the World Economic Forum on key search terms
across major news sources, November 2016.
6
In the United States, the White House Office of Science and Technology Policy
issued its first federal framework for biotech regulation in 1986.
7
United Nations 1992, Convention on Biological Diversity, Article 8.
8
Wright 2000.
9
See, for example, ISO 10218-1 (2011) and ISO 10218-2 (2011).
10
Volkswagen 2016.
1
2
Part 3
11
Part 2
disruption here. The insurance sector

is an obvious example when talking
about liability; just as car manufacturers
must prepare for a future of driverless
vehicles, so the reduction in accidents
this future would entail means
insurance companies must prepare
for plummeting demand for car
insurance.11 But the idea of liability can
also be understood more broadly, to
include the kind of social structures and
institutions discussed in Chapter 2.3
on social protection. Already there are
signs of strain in these institutions, such
as mounting uncertainty about the
rights and responsibilities of workers
and employers in the gig economy.
One of the challenges of responding
to accelerating technological change
in the 4IR will be ensuring that
the evolution of our critical social
infrastructure keeps pace.
KPMG 2015.
References
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technologies: challenges and opportunities for science foresight and governance in
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Juma, C. 2016. Innovation and Its Enemies: Why People Resist New Technologies.
New York: Oxford University Press.
Karembu, M., D. Otunge, and D. Wafula. 2010. Developing a Biosafety Law:
Lessons from the Kenyan Experience. Nairobi: ISAAA AfriCenter.
KPMG. 2015. Marketplace of change: Automobile insurance in the era of
autonomous vehicles. White Paper, October 2015. https://home.kpmg.com/
content/dam/kpmg/pdf/2016/05/marketplace-change.pdf
Nuffield Council on Bioethics. 2016. Genome Editing: An Ethical Review. London:
Nuffield Council on Bioethics.
Volkswagen. 2016. MOIA: The Volkswagen Groups new mobility services
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Wright, G. 2000. Review of Helpman (1998). Journal of Economic Literature 38
(March 2000: 16162; cited in Brynjolfsson, E. and A. McAfee. 2014. The Second
Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies.
New York and London: W. W. Norton & Company.
Chapter 3.1 was contributed by Nicholas Davis,

World Economic Forum, and Thomas Philbeck, World
Economic Forum.
47
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Part 2
Part 3
3.2: Assessing the Risk of Artificial

Intelligence
with novel but effective tactics (Box

3.2.1). In combination with robotics,
AI applications are already affecting
employment and shaping risks related
to social inequality.8
Every step forward in artificial

intelligence (AI) challenges assumptions
about what machines can do.
Myriad opportunities for economic
benefit have created a stable flow
of investment into AI research
and development, but with the
opportunities come risks to decisionmaking, security and governance.
Increasingly intelligent systems
supplanting both blue- and white-collar
employees are exposing the fault lines
in our economic and social systems
and requiring policy-makers to look for
measures that will build resilience to the
impact of automation.
AI has great potential to augment

human decision-making by countering
cognitive biases and making rapid
sense of extremely large data sets:
at least one venture capital firm has
already appointed an AI application
to help determine its financial
decisions.9 Gradually removing human
oversight can increase efficiency and
is necessary for some applications,
such as automated vehicles. However,
there are dangers in coming to depend
entirely on the decisions of AI systems
when we do not fully understand
how the systems are making those
decisions.10
Leading entrepreneurs and scientists

are also concerned about how to
engineer intelligent systems as these
systems begin implicitly taking on
social obligations and responsibilities,
and several of them penned an Open
Letter on Research Priorities for Robust
and Beneficial Artificial Intelligence
in late 2015.1 Whether or not we are
comfortable with AI may already be
moot: more pertinent questions might
be whether we can and ought to
build trust in systems that can make
decisions beyond human oversight that
may have irreversible consequences.
Growing Investment,
Benefits and Potential Risk
By providing new information and
improving decision-making through
data-driven strategies, AI could
potentially help to solve some of the
complex global challenges of the 21st
century, from climate change and
resource utilization to the impact of
population growth and healthcare
issues. Start-ups specializing in AI
applications received US$2.4 billion
in venture capital funding globally in
2015 and more than US$1.5 billion
in the first half of 2016.2 Government
programmes and existing technology
companies add further billions (Figure
3.2.1). Leading players are not just
hiring from universities, they are hiring
the universities: Amazon, Google
48
and Microsoft have moved to funding

professorships and directly acquiring
university researchers in the search for
competitive advantage.3
Machine learning techniques are now
revealing valuable patterns in large data
sets and adding value to enterprises
by tackling problems at a scale beyond
human capability. For example,
Stanfords computational pathologist
(C-Path) has highlighted unnoticed
indicators for breast cancer by
analysing thousands of cellular features
on hundreds of tumour images,4 while
DeepMind increased the power usage
efficiency of Alphabet Inc.s data
centres by 15%.5 AI applications can
reduce costs and improve diagnostics
with staggering speed and surprising
creativity.
The generic term AI covers a wide
range of capabilities and potential
capabilities. Some serious thinkers
fear that AI could one day pose an
existential threat: a superintelligence
might pursue goals that prove not
to be aligned with the continued
existence of humankind. Such fears
relate to strong AI or artificial general
intelligence (AGI), which would be the
equivalent of human-level awareness,
but which does not yet exist.6 Current
AI applications are forms of weak
or narrow AI or artificial specialized
intelligence (ASI); they are directed
at solving specific problems or
taking actions within a limited set of
parameters, some of which may be
unknown and must be discovered and
learned.
Tasks such as trading stocks, writing
sports summaries, flying military planes
and keeping a car within its lane on the
highway are now all within the domain
of ASI. As ASI applications expand,
so do the risks of these applications
operating in unforeseeable ways or
outside the control of humans.7 The
2010 and 2015 stock market flash
crashes illustrate how ASI applications
can have unanticipated real-world
impacts, while AlphaGo shows how
ASI can surprise human experts
Risks to Decision-Making,
Security and Safety
In any complex and chaotic system,
including AI systems, potential
dangers include mismanagement,
design vulnerabilities, accidents and
unforeseen occurrences.11 These
pose serious challenges to ensuring
the security and safety of individuals,
governments and enterprises. It may
be tolerable for a bug to cause an AI
mobile phone application to freeze or
misunderstand a request, for example,
but when an AI weapons system
or autonomous navigation system
encounters a mistake in a line of code,
the results could be lethal.
Machine-learning algorithms can also
develop their own biases, depending
on the data they analyse. For example,
an experimental Twitter account
run by an AI application ended up
being taken down for making socially
unacceptable remarks;12 search engine
algorithms have also come under fire
for undesirable race-related results.13
Decision-making that is either fully
or partially dependent on AI systems
will need to consider management
protocols to avoid or remedy such
outcomes.
AI systems in the Cloud are of particular
concern because of issues of control
and governance. Some experts
Part 1
Figure 3.2.1: Global Financing for AI Start-Ups, 20112015

397
307
Part 2
196
131
$2,177
$2,388
67
$282
$415
2011
2012
$757
2013
2015
Part 3
Disclosed investment (US$m)
2014
Number of deals
Source: CB Insights 2016.
Box 3.2.1: Artificial Intelligence and the Future of Warfare - by Jean-Marc Rickli, Geneva Centre for Security
Policy
One sector that saw the huge disruptive potential of AI from an early stage is the military. The weaponization of AI will
represent a paradigm shift in the way wars are fought, with profound consequences for international security and stability.
Serious investment in autonomous weapon systems (AWS) began a few years ago; in July 2016 the Pentagons Defense
Science Board published its first study on autonomy, but there is no consensus yet on how to regulate the development of
these weapons.
The international community started to debate the emerging technology of lethal autonomous weapons systems (LAWS) in
the framework of the United Nations Convention on Conventional Weapon (CCW) in 2014. Yet, so far, states have not
agreed on how to proceed. Those calling for a ban on AWS fear that human beings will be removed from the loop, leaving
decisions on the use lethal force to machines, with ramifications we do not yet understand.
There are lessons here from non-military applications of AI. Consider the example of AlphaGo, the AI Go-player created by
Googles DeepMind division, which in March last year beat the worlds second-best human player. Some of AlphaGos
moves puzzled observers, because they did not fit usual human patterns of play. DeepMind CEO Demis Hassabis
explained the reason for this difference as follows: unlike humans, the AlphaGo program aims to maximize the probability
of winning rather than optimizing margins. If this binary logic in which the only thing that matters is winning while the
margin of victory is irrelevant were built into an autonomous weapons system, it would lead to the violation of the principle
of proportionality, because the algorithm would see no difference between victories that required it to kill one adversary or
1,000.
Autonomous weapons systems will also have an impact on strategic stability. Since 1945, the global strategic balance has
prioritized defensive systems a priority that has been conducive to stability because it has deterred attacks. However, the
strategy of choice for AWS will be based on swarming, in which an adversarys defence system is overwhelmed with a
concentrated barrage of coordinated simultaneous attacks. This risks upsetting the global equilibrium by neutralizing the
defence systems on which it is founded. This would lead to a very unstable international configuration, encouraging
escalation and arms races and the replacement of deterrence by pre-emption.
We may already have passed the tipping point for prohibiting the development of these weapons. An arms race in
autonomous weapons systems is very likely in the near future. The international community should tackle this issue with the
utmost urgency and seriousness because, once the first fully autonomous weapons are deployed, it will be too late to go
back.
49
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Part 3
propose that robust AI systems should

run in a sandbox an experimental
space disconnected from external
systems but some cognitive services
already depend on their connection
to the internet. The AI legal assistant
ROSS, for example, must have access
to electronically available databases.
IBMs Watson accesses electronic
journals, delivers its services, and
even teaches a university course via
the internet.14 The data extraction
program TextRunner is successful
precisely because it is left to explore
the web and draw its own conclusions
unsupervised.15
On the other hand, AI can help solve
cybersecurity challenges. Currently
AI applications are used to spot
cyberattacks and potential fraud in
internet transactions. Whether AI
applications are better at learning
to attack or defend will determine
whether online systems become more
secure or more prone to successful
cyberattacks.16 AI systems are already
analysing vast amounts of data from
phone applications and wearables;
as sensors find their way into our
appliances and clothing, maintaining
security over our data and our
accounts will become an even more
crucial priority. In the physical world,
AI systems are also being used in
surveillance and monitoring analysing
video and sound to spot crime, help
with anti-terrorism and report unusual
activity.17 How much they will come to
reduce overall privacy is a real concern.
Can AI Be Governed
Now or in the Future?
So far, AI development has occurred in
the absence of almost any regulatory
environment.18 As AI systems inhabit
more technologies in daily life, calls
for regulatory guidelines will increase.
But can AI systems be sufficiently
governed? Such governance
would require multiple layers that
include ethical standards, normative
expectations of AI applications,
implementation scenarios, and
assessments of responsibility and
accountability for actions taken by or
on behalf of an autonomous AI system.
50
AI research and development presents

issues that complicate standard
approaches to governance, and
can take place outside of traditional
institutional frameworks, with both
people and machines and in various
locations. The developments in AI
may not be well understood by policymakers who do not have specialized
knowledge of the field; and they may
involve technologies that are not an
issue on their own but that collectively
present emergent properties that
require attention.19 It would be difficult
to regulate such things before they
happen, and any unforeseeable
consequences or control issues may
be beyond governance once they

occur (Box 3.2.2).
One option could be to regulate
the technologies through which
the systems work. For example,
in response to the development
of automated transportation that
will require AI systems, the U.S.
Department of Transportation has
issued a 116 page policy guide.20
Although the policy guide does not
address AI applications directly,
it does put in place guidance
frameworks for the developers of
automated vehicles in terms of safety,
control and testing.
Box 3.2.2: Aligning the Values of Humans and AI Machines - by

Stuart Russell, University of California, Berkeley
Few in the field believe that there are intrinsic limits to machine intelligence, and
even fewer argue for self-imposed limits. Thus it is prudent to anticipate the
possibility that machines will exceed human capabilities, as Alan Turing posited in
1951: If a machine can think, it might think more intelligently than we do. [T]his
new danger is certainly something which can give us anxiety.
So far, the most general approach to creating generally intelligent machines is to
provide them with our desired objectives and with algorithms for finding ways to
achieve those objectives. Unfortunately, we may not specify our objectives in such
a complete and well-calibrated fashion that a machine cannot find an undesirable
way to achieve them. This is known as the value alignment problem, or the King
Midas problem. Turing suggested turning off the power at strategic moments as
a possible solution to discovering that a machine is misaligned with our true
objectives, but a superintelligent machine is likely to have taken steps to prevent
interruptions to its power supply.
How can we define problems in such a way that any solution the machine finds will
be provably beneficial? One idea is to give a machine the objective of maximizing
the true human objective, but without initially specifying that true objective: the
machine has to gradually resolve its uncertainty by observing human actions,
which reveal information about the true objective. This uncertainty should avoid
the single-minded and potentially catastrophic pursuit of a partial or erroneous
objective. It might even persuade a machine to leave open the possibility of
allowing itself to be switched off.
There are complications: humans are irrational, inconsistent, weak-willed,
computationally limited and heterogeneous, all of which conspire to make learning
about human values from human behaviour a difficult (and perhaps not totally
desirable) enterprise. However, these ideas provide a glimmer of hope that an
engineering discipline can be developed around provably beneficial systems,
allowing a safe way forward for AI. Near-term developments such as intelligent
personal assistants and domestic robots will provide opportunities to develop
incentives for AI systems to learn value alignment: assistants that book employees
into US$20,000-a-night suites and robots that cook the cat for the family dinner
are unlikely to prove popular.
Part 1
Superintelligence could potentially also

be achieved by augmenting human
intelligence through smart systems,
biotech, and robotics rather than by
being embodied in a computational
or robotic form.23 Potential barriers to
integrating humans with intelligenceaugmenting technology include
peoples cognitive load, physical
acceptance and concepts of personal
identity.24 Should these challenges be
overcome, keeping watch over the
state of converging technologies will
become an ever more important task
as AI capabilities grow and fuse with
other technologies and organisms.
Advances in computing technologies
such as quantum computing,
parallel systems, and neurosynaptic
computing research may create new
opportunities for AI applications or
unleash new unforeseen behaviours in
computing systems.25 New computing
technologies are already having an
impact: for instance, IBMs TrueNorth
chip with a design inspired by the
human brain and built for exascale
computing already has contracts
from Lawrence Livermore National
Conclusion
Both existing ASI systems and the
plausibility of AGI demand mature
consideration. Major firms such as
Microsoft, Google, IBM, Facebook and
Amazon have formed the Partnership
on Artificial Intelligence to Benefit
People and Society to focus on
ethical issues and helping the public
better understand AI.27 AI will become
ever more integrated into daily life as
businesses employ it in applications
to provide interactive digital interfaces
and services, increase efficiencies and
lower costs.28 Superintelligent systems
remain, for now, only a theoretical
threat, but artificial intelligence is here
to stay and it makes sense to see
whether it can help us to create a better
future. To ensure that AI stays within the
boundaries that we set for it, we must
continue to grapple with building trust
in systems that will transform our social,
political and business environments,
make decisions for us, and become an
indispensable faculty for interpreting
the world around us.
Part 3
The creation of AGI may depend on

converging technologies and hybrid
platforms. Much of human intelligence
is developed by the use of a body and
the occupation of physical space, and
robotics provides such embodiment
for experimental and exploratory AI
applications. Proof-of-concept for
muscle and braincomputer interfaces
has already been established:
Massachusetts Institute of Technology
(MIT) scientists have shown that
memories can be encoded in silicon,21
and Japanese researchers have used
electroencephalogram (EEG) patterns
to predict the next syllable someone
will say with up to 90% accuracy,
which may lead to the ability to control
machines simply by thinking.22
Laboratory in California to work on

nuclear weapons security.26 While
adding great benefit to scenario
modelling today, the possibility of a
superintelligence could turn this into a
risk.
Part 2
Scholars, philosophers, futurists

and tech enthusiasts vary in their
predictions for the advent of artificial
general intelligence (AGI), with timelines
ranging from the 2030s to never.
However, given the possibility of an AGI
working out how to improve itself into a
superintelligence, it may be prudent
or even morally obligatory to consider
potentially feasible scenarios, and how
serious or even existential threats may
be avoided.
Chapter 3.2 was contributed by Nicholas Davis,

World Economic Forum, and Thomas Philbeck, World
Economic Forum.
51
Part 1
Endnotes
Russell, Dewey, and Tegmark 2015.
CB Insights 2016.
3
Mizroch 2015.
4
Martin 2012.
5
Clark 2016.
6
Bostrom 2014.
7
Scherer 2016.
8
9
Sherpany 2016.
10
Bostrom 2014; Armstrong 2014.
11
Wallach 2015.
12
Hunt 2016.
13
Chiel 2016.
14
Maderer 2016.
15
Talbot 2009.
16
Russell, Dewey, and Tegmark 2015, p. 111
17
Bloomberg 2016.
18
US regulatory policy is aimed at end products such as automated vehicles rather
than the underlying technical system or its development.
19
Scherer 2016, p. 359.
20
U.S. Department of Transportation 2016.
21
Cohen 2013.
22
Kelly 2016.
23
Bostrom 2014, Chapter 3.
24
Conversation with Aldo Faisal, Senior Lecturer in Neurotechnology, Imperial
College London, 29 September 2016.
25
Yirka 2016.
26
Lawrence Livermore National Laboratory 2016.
27
Hern 2016.
28
Kime 2016.
1
2
Part 2
Part 3
References
Armstrong, S. 2014. Smarter than Us: The Rise of Machine Intelligence. Berkeley,
CA: Machine Intelligence Research Institute.
Bloomberg. 2016. Boston Marathon Security: Can A.I. Predict Crimes? Bloomberg
News, Video, 21 April 2016. http://www.bloomberg.com/news/videos/b/d260fb95751b-43d5-ab8d-26ca87fa8b83
Bostrom, N. 2014. Superintelligence: Paths, Dangers, Strategies. Oxford: Oxford
University Press.
CB Insights. 2016. Artificial intelligence explodes: New deal activity record for
AI startups. Blog, 20 June 2016. https://www.cbinsights.com/blog/artificialintelligence-funding-trends/
Chiel, E. 2016. Black teenagers vs. white teenagers: Why Googles algorithm
displays racist results. Fusion, 10 June 2016. http://fusion.net/story/312527/
google-image-search-algorithm-three-black-teenagers-vs-three-white-teenagers/
Clark, J. 2016. Google cuts its giant electricity bill with deepmind-powered
AI. Bloomberg Technology, 19 July 2016. http://www.bloomberg.com/news/
articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai
Cohen, J. 2013. Memory implants: A maverick neuroscientist believes he has
deciphered the code by which the brain forms long-term memories. MIT Technology
Review. https://www.technologyreview.com/s/513681/memory-implants/
Frey, C. B. and M. A. Osborne. 2015. Technology at work: The future of innovation
and employment. Citi GPS: Global Perspectives & Solutions, February 2015. http://
www.oxfordmartin.ox.ac.uk/downloads/reports/Citi_GPS_Technology_Work.pdf
Hern, A. 2016. Partnership on AI formed by Google, Facebook, Amazon, IBM and
Microsoft. The Guardian Online, 28 September 2016. https://www.theguardian.com/
technology/2016/sep/28/google-facebook-amazon-ibm-microsoft-partnership-onai-tech-firms
Hunt, E. 2016. Tay, Microsofts AI chatbot, gets a crash course in racism
from Twitter. The Guardian, 24 March 2016. https://www.theguardian.com/
technology/2016/mar/24/tay-microsofts-ai-chatbot-gets-a-crash-course-in-racismfrom-twitter
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Kelly, A. 2016. Will Artificial Intelligence read your mind? Scientific research analyzes
brainwaves to predict words before you speak. iDigital Times, 9 January 2016.
http://www.idigitaltimes.com/will-artificial-intelligence-read-your-mind-scientificresearch-analyzes-brainwaves-502730
Kime, B. 3 Chatbots to deploy in your busines. VentureBeat, 1 October 2016.
http://venturebeat.com/2016/10/01/3-chatbots-to-deploy-in-your-business/
Lawrence Livermore National Laboratory. 2016. Lawrence Livermore and IBM
collaborate to build new brain-inspired supercomputer, Press release, 29 March
2016. https://www.llnl.gov/news/lawrence-livermore-and-ibm-collaborate-build-newbrain-inspired-supercomputer
Maderer, J. 2016. Artificial Intelligence course creates AI teaching assistant.
Georgia Tech News Center, 9 May 2016. http://www.news.gatech.edu/2016/05/09/
artificial-intelligence-course-creates-ai-teaching-assistant
Martin, M. 2012. C-Path: Updating the art of pathology. Journal of the
National Cancer Institute 104 (16): 120204. http://jnci.oxfordjournals.org/
content/104/16/1202.full
Mizroch, A. 2015. Artificial-intelligence experts are in high demand. Wall Street
Journal Online, 1 May 2015. http://www.wsj.com/articles/artificial-intelligenceexperts-are-in-high-demand-1430472782
Russell, S., D. Dewey, and M. Tegmark. 2015. Research priorities for a robust and
beneficial artificial intelligence. AI Magazine Winter 2015: 10514.
Scherer, M. U. 2016. Regulating Artificial Intelligence systems: Risks, challenges,
competencies, and strategies. Harvard Journal of Law & Technology 29 (2):
35498.
Sherpany. 2016. Artificial Intelligence: Bringing machines into the boardroom, 21
April 2016. https://www.sherpany.com/en/blog/2016/04/21/artificial-intelligencebringing-machines-boardroom/
Talbot, D. 2009. Extracting meaning from millions of pages. MIT Technology
Review, 10 June 2009. https://www.technologyreview.com/s/413767/extractingmeaning-from-millions-of-pages/
Turing, A. M. 1951. Can digital machines think? Lecture broadcast on BBC Third
Programme; typescript at turingarchive.org
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transportation.gov/AV/federal-automated-vehicles-policy-september-2016
Wallach, W. 2015. A Dangerous Master. New York: Basic Books.
Yirka, B. 2016. Researchers create organic nanowire synaptic transistors that
emulate the working principles of biological synapses. TechXplore, 20 June 2016.
https://techxplore.com/news/2016-06-nanowire-synaptic-transistors-emulateprinciples.html
Part 1
3.3: Physical Infrastructure Networks

and the Fourth Industrial Revolution
Because physical infrastructure

networks are often natural monopolies
as a result of barriers to entry, the
public sector typically either provides
those barriers or regulates them on
behalf of their users. Regulators have
to tread the delicate line between
setting affordable tariffs and ensuring
that capital can be found to invest in
maintaining and renewing networks.
The pendulum has swung between
private and public capital funding of
Figure 3.3.1: The Falling Price of Photo-Voltaic Modules

100
1980
Price (US$/W)
The value of a physical infrastructure

network increases with its scope. In
communications (transport, digital), the
more people a network connects, the
more useful it becomes. In resource
networks (energy, water), connecting
more people can help build resilience
and leverage economies of scale.
Costs are high relative to returns in
the early stages of building a network,
and also later when connecting
geographically remote areas with
low population density: extending
coverage to such areas usually requires
government intervention, although
4IR technologies may shake up that
economic logic by drastically cutting
the costs of connectivity.
With tight public finances, governments

and regulators are having to devise
mechanisms for leveraging private
finance while seeking to avoid the
inflexibility and questions over value for
money that have dogged public-private
infrastructure finance in the past. It
is still unclear how the enormous
investment needs for some kinds of
infrastructure are going to be met.
All of that is now changing. Collapsing

prices of photo-voltaic cells make solar
panels price-competitive with largescale generation (Figure 3.3.1). The cost
of offshore wind is also dropping fast,
with firms such as DONG Energy and
Vattenfall bidding prices down as low
as 60 per Megawatt hour. Innovation
in storage technology is helping with
intermittency challenges from largescale storage to household battery
1990
10
2000
2010
1
0
10
100
1,000
10,000
100,000
1,000,000
Cumulative installed capacity (MW)
Source: Bloomberg New Energy Finance.

Note: Prices are in constant 2015 US$.
53
Part 3
The Economic
Characteristics of
Infrastructure Networks
infrastructure: for example, private

financiers backed the creation of
railway networks in Europe and North
America in the 19th century, some
losing their shirts. But much of todays
ageing physical infrastructure in
advanced economies was built with
public funding during the 20th century.
Britain led the way in utility privatization
in the 1980s and 1990s, and it has
generally improved asset management
and reduced costs for customers. On
the other hand, private finance has
typically shied away from large and
risky new assets, such as nuclear
reactors. Uncertainties related to the
4IR play a part in that reluctance.
Electricity powered the Second

and Third Industrial Revolutions, as
networks achieved economies of
scale by connecting large plants over
high-voltage transmission grids to
local distribution networks reaching
many users. This aggregation of users
helped to smooth out much of the
local variation in demand, so steadyrunning base-load plants could be
the workhorses of the network, with
extra capacity patched in to deal with
daily and seasonal peaks. Prohibitively
high barriers to entry meant there was
little competitive pressure to reduce
the significant amount of energy
lost as waste heat in the generation,
transmission and distribution of
electricity.
Part 2
Since the appearance of railways and

canals, industrial revolutions have been
characterized by the transformation
of physical infrastructure networks as
much as by production methods. Now
the Fourth Industrial Revolution (4IR) is
shaking up the interdependent set of
critical physical infrastructure networks
on which we all depend, including
transport (road, rail, waterways,
airports); energy (electricity, heat, fuel
supply: gas, liquid and solid); digital
communications (fixed, mobile);
water (supply, waste water treatment,
flood protection); and solid waste
(collection, treatment, disposal). This
process brings huge opportunities for
innovation, but also complex risks.
The Revolution
Part 1
units and plugged-in electric vehicles,

which will provide an additional buffer.
The 4IR is moving electricity networks
away from needing to be large-scale,
top-down systems.
Part 2
Part 3
Technological innovations will

increasingly offer households and
firms the possibility of going off-grid
entirely but even if they increasingly
generate their own power, most are still
likely to want to remain connected to
the high-voltage networks that are the
backbone of todays electricity supply
systems. Indeed, the rising use of
solar, wind and tide power with their
associated intermittency issues and
their greater need to tap the energy
storage possibilities of hydropower in
mountainous regions will increase
the appeal of high-voltage connections
over long distances. But the growing
scope for businesses and homes to
supply and store their own electricity
will make electricity networks multiscale and less lumpy in terms of their
capital requirements.
Beyond supply and storage,

technology is improving efficiency by
integrating supply and demand. Until
very recently, energy suppliers and
network operators have had to rely on
crude methods to forecast demand for
electricity. Big data, pervasive sensors
and the Internet of Things are making it
easier for users to monitor and control
their energy demand, and for grids to
predict and manage energy supply. In
a world of prosumers and distributed
suppliers, the challenges are how to
synchronize supply and demand and
pay for resilience.
Water could also transition from
centralized networks towards more
distributed systems. New materials and
sensor technologies allow treatment
at the household or community level,
creating opportunities to harvest
rainwater and directly reuse waste
water. For the time being, economies
of scale still favour large, centralized
plants in existing urban areas: they
also allow utilities to monitor water
quality centrally and address failures

quickly. Relying on localized water
storage would also create challenges
in prolonged periods of drought. But
centralized networks are costly to
create, and the balance of costs and
benefits is beginning to tip in favour of
distributed water systems if cities can
be planned for these systems from the
outset.
Regarding communications, the
4IR will continue to shift the balance
between mobile and fixed networks.
To improve mobile broadband, 5G
technologies are envisaged to provide
much faster data transfer (>1 Gigabyte
per second) and reduced end-to-end
latency (sub-1ms). By consolidating
existing layers of technology, such as
2G, 3G, 4G and Wi-Fi, 5G will also
improve coverage and always-on
reliability it is an ensemble of different
technologies, rather than a single
type of new technology. Although
the experience of those previous
technologies suggests that new uses
Figure 3.3.2: Usage Scenarios for Mobile Technologies

Enhanced mobile broadband
Gigabytes in a second
3D video, UHD screens
Work and play in the cloud
Smart home/building
Augmented reality
Industry automation
Voice
Mission critical application
Smart city
Self driving car
Future IMT
Massive machine type

communications
Source: ITU 2015.
54
Ultra-reliable and low latency

communications
Part 1
While improving some infrastructure

assets, the 4IR promises to ease
pressure on others by finding
alternative ways to deliver the same
functionality. For example, meeting
in virtual reality is becoming an
increasingly acceptable substitute for
physical business travel, while drones
may substitute for delivery vans in
cities. Satellite technologies will help to
fill the gaps in digital connectivity where
fixed or terrestrial mobile technologies
are not cost-effective. Where energy
companies once defined themselves
by their physical infrastructure assets,
they increasingly see themselves as
being in the business of providing
specific services such as heating and
lighting. As the 4IR creates new ways
to deliver services, it may begin to
challenge whether infrastructure should
be seen as a special category at all.
In theory, greater connectivity

brings intrinsic resilience: electricity
networks with more supply points,
for example, should be less prone
to failure. However, as different
infrastructure networks become more
interdependent, there is also growing
scope for systemic failures to cascade
across networks and affect society in
multiple ways. In particular, electricity

networks are now assuming an
increasingly central role in many areas
of life, such as road transportation and
heating (taking over from gas and liquid
fuels).
Systemic risks can come from
many directions whether these are
cyberattacks or software glitches,
solar storms or even just unexpectedly
Box 3.3.1: Mapping Infrastructure Vulnerability to Natural

Hazards
Part 3
Governments are facing a difficult

decision about whether to be first
movers in rolling out 5G or wait to
learn lessons from first movers, in the
expectation that costs will decrease.
For now, the bandwidth of fibre-optic
cables remains hard to beat but it
is also expensive in towns and cities:
80% of the costs are attached not to
the technology itself but to the labourintensive process of digging trenches
and laying ducts. Uncertainty about
future technological development can
inhibit investment: is it better to dig
trenches for cables or wait for 5G? The
same dilemma applies to other types of
infrastructure for example, in the time
it takes to roll out smart metres, new
and better metres are being developed.
The Risks
An infrastructure criticality hotspot is defined as a geographical location

where there is a concentration of critical infrastructure, measured according to
the number of customers directly or indirectly dependent upon it. In the map of
China below, red spots indicate where the highest numbers of people and
businesses would be affected if a natural disaster caused infrastructure failure.
According to this research, from the Environmental Change Institute at the
University of Oxford, Chinas top infrastructure hotspots are Beijing, Tianjin,
Jiangsu, Shanghai and Zhejiang.
Given the scale of Chinas manufacturing production and its role in the global
supply chain, the business impacts of natural disasters could be astronomical:
flooding in the more economically developed coastal provinces already
accounts for more than 60% of the countrys losses due to flooding.1 The
Oxford study finds that severe flooding events could disrupt infrastructure (rail,
aviation, shipping and water) services for an average of 103 million people,
while drought could affect an average of 6 million electricity users.
Chinese border
0 295 590
1,180
1,770
2,360
Kilometers
Infrastructure vulnerability hotspots

1
2
3
4
5
6
7
8
Source: Hu et al. 2016

Note: http://www.mwr.gov.cn/zwzc/hygb/zgshzhgb/201311/t20131104_515863.html
Part 2
for 5G will emerge after deployment,

two key roles are already anticipated for
5G: providing gigabit connectivity for
businesses and consumers for a range
of content, applications and services
(the top of the pyramid); and enabling
ultra-reliable, low latency machineto-machine (M2M) communication
(the bottom of the pyramid), which
will help to achieve objectives in other
infrastructure systems, such as easing
congestion (Figure 3.3.2).
55
Part 1
Part 2
Part 3
widespread and persistent clouds

and the increased complexity
bring brought about by the 4IR
makes the severity of those risks
very difficult to estimate (Box 3.3.1).
Society is increasingly dependent
on information and communication
technology networks in particular, and
these have their own dependencies
and vulnerabilities. In a 20th-century
electricity network, it is possible to
analyse the consequences of any
given sub-station failing. That becomes
impossible when every household
is supplying and storing electricity
and constantly adapting how much
it uses based on price signals: we
may suspect that our networks are
acceptably resilient, but we cannot
model them accurately enough to be
sure.
Because the 4IR intensifies networks
reliance on each other, there is a need
for information sharing utility providers
tend to understand their own systems
well, while often being more or less
in the dark about the resilience of the
systems to which they are connected.
However, concerns about commercial
confidentiality and security increase
the challenge of developing protocols
for information sharing that would help
dependent customers to understand
their risks. Not only infrastructure
providers but also businesses need to
understand risks and resilience more
fully: analysis of supply chain risk tends
to focus more on physical sites than
the infrastructure networks that sustain
those sites and move goods and
services between them.
Governance of
Infrastructure Networks in
the 4IR
Like infrastructure networks
themselves, arrangements for their
governance have evolved incrementally
and mostly siloed by sector not least
because ownership arrangements can
be so different, ranging from highly
competitive privatized markets (e.g.
in mobile phone provision) through
regulated monopolies, public-private
partnerships, state-owned enterprises
and direct public provision.1
Governments are increasingly
recognizing that this fragmented
approach is becoming unfit for purpose
56
in the 4IR. As networks become

interconnected for example, as
digital technologies enable the routing
of vehicles and the management
of electricity and water demand a
system-of-systems approach to
governance is needed. That requires
appropriate sharing of information
among network operators, and also
requires regulators adopting common
principles across networks.
Just as network operators and
businesses need to better understand
and manage systemic risks,
governments and regulators need to
take a wider view. Examples of new
governance structures that recognize
the need for a more integrated
approach include the National
Infrastructure Commission in the United
Kingdom, Infrastructure Australia, and
the National Infrastructure Unit in New
Zealand. These new entities are having
to navigate tensions between taking
a national-level strategic approach to
articulating needs for infrastructure to
support growth and productivity and
creating space for competition and
innovation.
While the 4IR is creating complex
new challenges for planners and
regulators, it is also providing powerful
new tools for monitoring and analysing
system performance at hitherto
unprecedented spatial and temporal
scales and testing resilience through
simulation. Modelling exercises in
a virtual environment will never give
infallible results, but in itself the exercise
of constructing and testing models can
help to expose vulnerabilities in system
resilience. Alongside their traditional
role of minimizing the harmful effects
of natural monopolies, infrastructure
regulators in the 4IR should be paying
more attention to systemic risks,
building technical capabilities and
standards for information sharing and
stress testing.
Chapter 3.3 was contributed by Jim Hall, Oxford

Martin School, University of Oxford.
Part 1
Endnotes
1
OECD 2015.
Part 2
References
Hu, X, Hall, J.W., Shi, P. and Lim, W-H. 2016. The spatial exposure of the Chinese
infrastructure system to flooding and drought hazards. Natural Hazards 80 (2):
1083118. doi:10.1007/s11069-015-2012-3
ITU (International Telecommunication Union). 2015. IMT vision: Framework
and overall objectives of the future development of IMT for 2020 and beyond.
Recommendation ITU-R M.2083. http://www.itu.int/dms_pubrec/itu-r/rec/m/R-RECM.2083-0-201509-I!!PDF-E.pdf
57
Part 3
OECD (Organisation for Economic Co-operation and Development). 2015. Towards

a Framework for the Governance of Infrastructure. Paris: OECD. https://www.oecd.
org/gov/budgeting/Towards-a-Framework-for-the-Governance-of-Infrastructure.pdf
Conclusion
The 12th edition of The Global Risks

Report is published at a time when
deep-rooted social and economic
trends are manifesting themselves
increasingly disruptively across the
world. Persistent inequality, particularly
in the context of comparative global
economic weakness, risks
undermining the legitimacy of market
capitalism. At the same time,
deepening social and cultural
polarization risks impairing national
decision-making processes and
obstructing vital global collaboration.
Technology continues to offer us the
hope of solutions to many of the
problems we face. But the pace of
technological change is also having
unsettling effects: these range from
disrupting labour markets through
automation to exacerbating political
divisions by encouraging the creation
of rigid communities of like-minded
citizens. We need to become better at
managing technological change, and
we need to do it quickly.
Above all, we must redouble our efforts
to protect and strengthen our systems
of global collaboration. Nowhere is this
more urgent than in relation to the
environment, where important strides
have been made in the past year but
where much more remains to be done.
This is a febrile time for the world. We
face important risks, but also
opportunities to take stock and to work
together to find new solutions to our
shared problems. More than ever, this
is a time for all stakeholders to
recognize the role they can play by
exercising responsible and responsive
leadership on global risks.
58
59
Appendices
60
Appendix A: Descriptions of Global Risks, Trends and

Emerging Technologies 2017
Global Risks
A global risk is defined as an uncertain event or condition that, if it occurs, can cause significant negative impact for several
countries or industries within the next 10 years.
Environmental Risks
Economic Risks
Global Risk
Description
Asset bubbles in a major economy
Unsustainably overpriced assets such as commodities,

housing, shares, etc. in a major economy or region
Deflation in a major economy
Prolonged near-zero inflation or deflation in a major

economy or region
Failure of a major financial mechanism or institution
Collapse of a financial institution and/or malfunctioning of a

financial system that impacts the global economy
Failure/shortfall of critical infrastructure
Failure to adequately invest in, upgrade and/or secure

infrastructure networks (e.g. energy, transportation and
communications), leading to pressure or a breakdown with
system-wide implications
Fiscal crises in key economies
Excessive debt burdens that generate sovereign debt

crises and/or liquidity crises
High structural unemployment or underemployment
A sustained high level of unemployment or underutilization

of the productive capacity of the employed population
Illicit trade (e.g. illicit financial flows, tax evasion,

human trafficking, organized crime, etc.)
Large-scale activities outside the legal framework such

as illicit financial flows, tax evasion, human trafficking,
counterfeiting and/or organized crime that undermine
social interactions, regional or international collaboration,
and global growth
Severe energy price shock (increase or decrease)
Significant energy price increases or decreases that place

further economic pressures on highly energy-dependent
industries and consumers
Unmanageable inflation
Unmanageable increases in the general price levels of

goods and services in key economies
Extreme weather events (e.g. floods, storms, etc.)
Major property, infrastructure and/or environmental

damage as well as loss of human life caused by extreme
weather events
Failure of climate-change mitigation and adaptation
The failure of governments and businesses to enforce

or enact effective measures to mitigate climate change,
protect populations and help businesses impacted by
climate change to adapt
Major biodiversity loss and ecosystem collapse

(terrestrial or marine)
Irreversible consequences for the environment, resulting

in severely depleted resources for humankind as well as
industries
Major natural disasters (e.g. earthquake, tsunami,

volcanic eruption, geomagnetic storms)
Major property, infrastructure and/or environmental

damage as well as loss of human life caused by
geophysical disasters such as earthquakes, volcanic
activity, landslides, tsunamis, or geomagnetic storms
Man-made environmental damage and disasters

(e.g. oil spills, radioactive contamination, etc.)
Failure to prevent major man-made damage and disasters,

including environmental crime, causing harm to human
lives and health, infrastructure, property, economic activity
and the environment
61
Technological Risks
Societal Risks
Geopolitical Risks
Global Risk
62
Description
Failure of national governance (e.g. failure of rule of

law, corruption, political deadlock, etc.)
Inability to govern a nation of geopolitical importance as a

result of weak rule of law, corruption or political deadlock.
Failure of regional or global governance
Inability of regional or global institutions to resolve issues of

economic, geopolitical or environmental importance
Interstate conflict with regional consequences
A bilateral or multilateral dispute between states that

escalates into economic (e.g. trade/currency wars,
resource nationalization), military, cyber, societal or other
conflict.
Large-scale terrorist attacks
Individuals or non-state groups with political or religious

goals that successfully inflict large-scale human or material
damage.
State collapse or crisis (e.g. civil conflict, military

coup, failed states, etc.)
State collapse of geopolitical importance due to internal

violence, regional or global instability, military coup, civil
conflict, failed states, etc.
Weapons of mass destruction
The deployment of nuclear, chemical, biological and

radiological technologies and materials, creating
international crises and potential for significant destruction
Failure of urban planning
Poorly planned cities, urban sprawl and associated

infrastructure that create social, environmental and health
challenges
Food crises
Inadequate, unaffordable, or unreliable access to

appropriate quantities and quality of food and nutrition on a
major scale
Large-scale involuntary migration
Large-scale involuntary migration induced by conflict,

disasters, environmental or economic reasons
Major social movements or protests (e.g. street riots,

social unrest, etc.) that disrupt political or social stability,
negatively impacting populations and economic activity
Rapid and massive spread of infectious diseases
Bacteria, viruses, parasites or fungi that cause uncontrolled

spread of infectious diseases (for instance as a result of
resistance to antibiotics, antivirals and other treatments)
leading to widespread fatalities and economic disruption
Water crises
A significant decline in the available quality and quantity of

fresh water, resulting in harmful effects on human health
and/or economic activity
Adverse consequences of technological advances
Intended or unintended adverse consequences of

technological advances such as artificial intelligence,
geo-engineering and synthetic biology causing human,
environmental and economic damage
Breakdown of critical information infrastructure and

networks
Cyber dependency that increases vulnerability to outage

of critical information infrastructure (e.g. internet, satellites,
etc.) and networks, causing widespread disruption
Large-scale cyberattacks
Large-scale cyberattacks or malware causing large

economic damages, geopolitical tensions or widespread
loss of trust in the internet
Massive incident of data fraud/theft
Wrongful exploitation of private or official data that takes

place on an unprecedented scale
Trends
A trend is defined as a long-term pattern that is currently evolving and that could contribute to amplifying global risks and/
or altering the relationship between them.
Trend
Description
Ageing population
Ageing populations in developed and developing countries driven by declining fertility

and decrease of middle- and old-age mortality
Changing landscape of
international governance
Changing landscape of global or regional institutions (e.g. UN, IMF, NATO, etc.),
agreements or networks
Changing climate
Change of climate, which is attributed directly or indirectly to human activity, that alters
the composition of the global atmosphere, in addition to natural climate variability
Degrading environment
Deterioration in the quality of air, soil and water from ambient concentrations of
pollutants and other activities and processes
Growing middle class in

emerging economies
Growing share of population reaching middle-class income levels in emerging

economies
Increasing national
sentiment
Increasing national sentiment among populations and political leaders affecting

countries national and international political and economic positions
Increasing polarization of
societies
Inability to reach agreement on key issues within countries because of diverging or

extreme values, political or religious views
Rising chronic diseases
Increasing rates of non-communicable diseases, also known as chronic diseases,

leading to rising costs of long-term treatment and threatening recent societal gains in life
expectancy and quality
Rising cyber dependency
Rise of cyber dependency due to increasing digital interconnection of people, things and
organizations
Rising geographic
mobility
Increasing mobility of people and things due to quicker and better-performing means of
transport and lowered regulatory barriers
Rising income and wealth

disparity
Increasing socioeconomic gap between rich and poor in major countries or regions
Shifting power
Shifting power from state to non-state actors and individuals, from global to regional
levels, and from developed to emerging market and developing economies
Rising urbanization
Rising number of people living in urban areas resulting in physical growth of cities
Emerging Technology
Description
3D printing
Innovations in printing using various types of materials to move beyond prototyping and
towards increasingly distributed manufacturing and medical applications that range
from a greater use of technologies such as contour crafting in construction to the
opportunity to develop printed biological materials, such as organ tissues, bone and
muscle
Advanced materials and

nanomaterials
Innovation in chemistry and physics resulting in the creation of new material

substances, smart materials, 2D materials and other breakthroughs in properties and
fabrication ranging from thermoelectric properties and shape retention to magnetic and
mechanical functionalities
63
64
Emerging Technology
Description
Artificial intelligence and

robotics
Advances in automated processes ranging from manufacturing to driverless vehicles

and automated knowledge work, enabled by highly competent cyber-physical systems
and machines that can substitute for human beings to complete various tasks most
often associated with thinking, multitasking, and fine motor skills
Biotechnologies
Innovations in genome editing, gene therapies, and other forms of genetic manipulation
and synthetic biology resulting in additions to the registry of sequenced species of
animals as well as human DNA, the creation of previously non-existent organisms,
and modifications to microbes and organisms for medical, agricultural and industrial
applications, including integrating them with electronic and computing advancements
Energy capture, storage

and transmission
Breakthroughs in energy technologies, including advanced batteries and fuel cells,

orbiting solar arrays, tidal energy capture, wind and bioenergy, as well as advances in
nuclear fusion containment, smart grid systems, wireless energy transfer, and increased
fuel cell fabrication efficiencies
Blockchain and
distributed ledger
Developments in cryptographic systems that manage and verify distributed transaction

data on a public ledger, increasing transparency and securing an immutable record for
application to cryptocurrencies such as bitcoin as well as for verification of varieties of
transactions across industries, especially in financial technologies (FinTech)
Geoengineering
Creation and development of technological processes that intercede in the Earths

geological and climatic systems, ranging from land reclamation to atmospheric seeding
in order to influence weather patterns or remove carbon dioxide
Proliferation and
ubiquitous presence of
linked sensors
Proliferation and ubiquitous presence of linked sensors, also known as the Internet of
Things, combined with sophisticated large-scale data analytics that will connect, track
and manage physical products, logistics systems, energy grids and more by sending
and receiving data over widespread digital infrastructures
Neurotechnologies
Creation of new methods for insight into, and control of, the functionality and
processing dimensions of the human brain, allowing for the ability to read, influence and
communicate brain activity through various secondary technological dimensions such
as smart drugs, neuroimaging, bioelectronic interfaces, machine-brain interfaces and
brainwave decoding and manipulation
New computing
technologies
Innovations in materials and assemblages used to process or store digital information,

such as centralized cloud computing, quantum computing, neural network processing,
biological data storage, and optical computing, including new software development,
cryptography, and the cybersecurity processes associated with each
Space technologies
Technologies that can be used in space that will increase the ability of both public
and private entities to access, explore, and create new forms of value such as
microsatellites, reusable rockets, integrated rocket-jet engines, optical and imaging
technologies, sensor developments, resource exploitation, laser and communications
technologies, space exploration and habitat developments, and techno-scientific
breakthroughs that are transferable to the marketplace
Virtual and augmented

realities
Development of sophisticated immersive virtual environments that can range from

heads-up displays and holographic readouts to fully mixed digital and physical
environments and complete virtual worlds and interfaces
Appendix B: Global Risks Perception Survey and

Methodology 2016
Definitions and Changes

The Global Risks Report 2017 is based
on an improved methodology; however
the results are therefore largely
comparable. The Report adopts the
following definitions of global risk and
trend:
Global risk: an uncertain event or
condition that, if it occurs, can cause
significant negative impact for several
countries or industries within the next 10
years.
Trend: a trend is defined as a longterm pattern that is currently evolving
and that could contribute to amplifying
global risks and/or altering the
relationship between them.
The list of risks and trends assessed in
the Global Risks Perception Surveys
(GRPS) remains unchanged with the
exception of the addition of the global
risk Failure of regional or global
governance (defined as the inability of
regional or global institutions to resolve
issues of economic, geopolitical or
environmental importance). As a result,
the Report covers 30 global risks this
year.
Some of the names of the trends were
modified to better reflect long-term
pattern characteristic of trends (for
instance, the trend rise of chronic
diseases was edited to rising chronic
diseases). The definitions were mainly
unchanged.
This years GRPS included an entire
section on emerging technologies. After
consultations with experts, 12 critical
emerging technologies were identified;
selected findings are described in Part 3
of the Report.
The following section describes the
survey and methodology in greater
detail.
The Global Risks

Perceptions Survey
The Global Risks Perception Survey
(GRPS), discussed in Part 1, is the main
instrument used to assess global risks
in this Report. The survey was
conducted between early September
and mid-October 2016 (from 07
September to 15 October 2016) among
the World Economic Forums
multistakeholder communities of
leaders from business, government,
academia and non-governmental and
international organizations as well as
members of the Institute of Risk
Management.
This year, the GRPS is a key instrument
used as supporting data for the
elaboration of the Report. For this years
Report, the GRPS went through an
important review to ensure the quality of
the results. This process was performed
in collaboration with the Global Risks
Perception Survey Review Group on
The Global Risks Report 2017, a group
composed of experts in survey
methodology and risks perception (see
Acknowledgements section).
Among the most significant
improvements are the changes to the
scales of the Global Risks Landscape.
Indeed, the impact scale has changed
this year from an abstract 17 scale,
subject to interpretation and thus bias,
to a more substantive and meaningful
scale of impact measurement (i.e.
minimal, minor, moderate, severe,
catastrophic). On the likelihood scale,
the scale of 17 was kept but a
particular probability was attached to
each number in order to ensure that all
respondents had the same
understanding of the likelihood being
considered. Throughout the survey, the
questions were modified and the
phrasing was refined to reduce any
ambiguity.
Raw responses were cleaned in order to

improve overall data quality and
completeness. Surveys with a
completion rate below 50% were
dropped, reducing the number of
available responses from 989 to 745.
The respondents did not provide
sufficient information about their gender
or the sector in which they work in 92
and 119 cases, respectively. Similarly,
93 respondents did not indicate the
country in which they are based.
Figure B.1 presents the profile of the 745
survey respondents remaining in the
sample. To capture the voice of youth,
the survey also targeted the World
Economic Forums community of Global
Shapers.1 Respondents under 30
accounted for about one-fifth of total
respondents.
Analysis
The Global Risks Landscape 2017
(Figure 3)
Respondents were asked to assess the
likelihood and global impact of each of
the 30 risks. For each risk, they were
asked, What is the likelihood of [the
risk] occurring globally within the next
10 years? and What is the negative
impact for several countries or industries
within the next 10 years? For the first
question, the possible answers ranged
from 1 (extremely unlikely with an
associated probability of occurrence
lower than 5%) to 7 (extremely likely
with an associated probability of
occurrence greater than 95%). For the
question on impact, respondents could
select one of five choices: minimal,
minor, moderate, severe, or
catastrophic. These five alternatives
were turned into a 15 scale (1 =
minimal, 5 = catastrophic). It is worth
noting that, as a consequence of the
scale modification, the impact results
cannot be compared with those of
previous years.
65
Figure B.1: Survey Sample Composition

Organization
type
Expertise
Number of participants
745
Geopolitics
Academia
9.13%
9.40%
Society
18.66%
Economics
12.21%
Environment
7.92%
International organizations
Technology
15.97%
Other
31.68%
55.97%
4.83%
15.97%
Female
Male
10.60% 1.23%
NGO
46.98%
36.24%
Gender
Government
Business
Not informed
Not informed
12.08%
12.35%
Eurasia
Europe
Region
Age distribution
Not informed
2.28%
30.60%
12.48%
North America
East Asia
and the Pacific
14.09%
16.11%
Middle East
and North Africa
5.23%
17.85%
22.95%
<30
3039
20.94%
4049
14.63%
19.1%
8.86%
5059
6069
2.42%
>70
12.35%
Not informed
Latin America
and the Caribbean
10.07%
Oceania
Sub-Saharan Africa
1.2%
South Asia
4.16%
4.97%

Note: Reported shares are based on number of valid responses: Gender: 653 responses; Expertise: 655; Organization type: 626; Age distribution: 653; Region: 652.
Respondents could also choose No

Opinion if they felt unable to provide an
informed answer. Respondents could
also leave the question completely
blank. For each risk, partial responses
those assessing only the likelihood of
occurrence or only its impact were
dropped. A simple average for both
likelihood and impact for each of the 30
global risks was calculated on this
basis.
Formally, for any given risk i, its
likelihood and impact, denoted
N1i
respectively likelihood
and impacti, are:
i
1
likelihoodi,n
Ni N1i
n=1
1
likelihoodi likelihoodi,n
Ni
likelihoodi
n=1
N2i
1
impacti = impacti,n
Ni N2i
n=1
1
impacti = impacti,n
Ni
where N is the number
of respondents
n=1
for risk i, and likelihoodi,n and impacti,n

are, respectively, the likelihood
and
N
n=1 pairij,n n to risk
impact
assigned by=respondent
interconnection

ij
pairmaxon a scale
i. The likelihood is measured
N
pairij,n
n=1 a
of 17
and
the
impact
on
scale
interconnectionij =
of 15.
pair
max
Ni is the number of respondents
for risk i
who assessed both the likelihood and
impact of that specificN risk (the answers
66
pairmax = max (
ij
n=1
N
pairmax = max (
ij
n=1
pairij,n )
pairij,n )
of respondents who left one of the two

questions blank were not taken into
account).
The Global Risks Interconnections
Map 2017 (Figure 4) and the RisksTrends Interconnections Map 2017
(Figure 1)
To draw the Global Risks
Interconnections Map (Figure 4, inside
rear cover), survey respondents were
asked to answer the following question:
Global risks are not isolated and it is
important to assess their
interconnections. In your view, which are
the most strongly connected global
risks? Please select three to six pairs of
global risks.
Similarly, for the Risks-Trends
Interconnections Map 2017 (Figure 1,
inside front cover), respondents had to
identify up to three trends that they
consider important in shaping the global
agenda in the next 10 years and the
three risks that are driven by each of
those trends. For completeness, the
two questions read Which are the three
most important trends that will shape
global development in the next 10
years? and For each of the three
trends identified in the previous
question, select up to three global risks

that are most strongly driven by these
trends. The information thereby
obtained was used to construct the
Risks-Trend Interconnections Map 2017.
In both cases, a tally was made of the
number of times each pair was cited.
This value was then divided by the
count of the most frequently cited pair.
As a final step, the square root of this
ratio was taken to dampen
the long-tail
N11i
effect (i.e. a few very
links, and
i
1 Nstrong
likelihood
1and
to
likelihood
i
i,n
many weak
ones)
make
the
likelihood
likelihood
N
i
i
i,n
i n=1
differences more N
apparent
across the
n=1
weakest connections. Out of the 406
possible pairs of risks, 167 or 41% were
not cited. Similarly, out of the possible
N22i
377 trend-risk combinations,
33 or 9%
1 Ni
1 impact
impactFormally,
were not impact
cited.
the
intensity
of
i== N
i,n
impact
i N i
i n=1
the interconnection
betweeni,nrisks i and j
n=1
(or between trend i and risk j), denoted
interconnectionij, corresponds to:
NN
pairij,n
n=1pair
interconnectionij =n=1

interconnectionij = pairmaxij,n
pairmax
with
N
pairmax = max ( N pairij,n )

pairmax
= max
ij ( n=1pairij,n )
ij
n=1
1N
% concern =1 c
% concern =i Nc i,n
where N is the number of respondents.

Variable pairij,n is 1 when respondent n
selected the pair of risks i and j as part
of his/her selection. Otherwise, it is 0.
The value of the interconnection
determines the thickness of each
connecting line in the graph, with the
most frequently cited pair having the
thickest line.
Here again, respondents were given the governancei (the score) measures the
percentage of respondents selecting
option of choosing No Opinion if they
Ni
the emerging technology
i.
felt unable to provide an informed
1
benefitsi,n
benefitsi =
answer. Respondents could also leave
Ni
n=1to then answer a
the question completely blank. A simple The respondents had
question about which emerging
average of responses to the benefits,
technologies exacerbate
each of the five
negative consequences, and level of
Ni
1 risks. The question
categories of global
confidence questions was calculated. neg.consequences
=
neg.consequencesi,n
reads: For eachi question,
please select
Ni
Formally, for any given emerging
n=1
the three emerging technologies that
technology i, its benefits and negative
you believe will most significantly
consequences, denoted respectively
exacerbate global risks within the stated
benefitsi and neg.consequencesi, are:
N
risk category. By exacerbate
we mean
1
=
governance
governance
Ni
increase
the
likelihood
and/or
impact
i N
i,n of
Ni
11
n=1risk category, the
those
risks.
For
each
benefits
benefits
benefits
benefitsi =
i=N
i,n i,n
Nii n=1
results are computed as:
n=1
In the Global Risks Landscape and

Risks-Trends Interconnections Maps,
the size of each risk is scaled according
to the degree of weight of that node in
the system. Moreover, in the RisksTrends Interconnections Map, the size
of the trend represents the perception of
Ni
N
1 i
its importance in shaping global
neg.consequencesi = 1
neg.consequencesi,n
neg.consequencesi,n
Ni
development (answer to the first part of neg.consequencesi = N
i n=1
n=1
the question on trend, as explained
above); the biggest trend is the one
where Ni is the number of respondents
considered to be the most important in
N
for emerging technology
i, and benefitsi,n
1
shaping global development.
N governance
=
governance
and neg.consequences
i N
1 n=1 i,n are, i,n
governance
governance
respectively,
thei =benefits
and negative
i,n
N
The placement of the nodes in the
n=1
consequences assigned
by respondent
Global Risks-Trends Interconnections
n to the emerging technology
i and
N
Map was computed using ForceAtlas2,
1 from 1 to 7. N is
measured
on
a
scale
exacerbatei, a =
exacerbatei,a,n i
a force-directed network layout
N N
the number of respondents
for the
n=1
1
algorithm implemented in Gephi
emerging
technology
i
who
assessed
=
exacerbate
exacerbate
i, a
software, which minimizes edge lengths both the benefits
N the negativei,a,n
and
n=1
and edge crossings by running a
consequences
of
that
emerging
physical particle simulation.2
technology (the answers of respondents
who left one of the two questions blank
The Emerging Technologies Matrix
were not taken into account).
(Figure 3.1.1)
exacerbatei, a =
1
N
exacerbatei,a,n
n=1
where N is the number of respondents

to the survey and, for emerging
technology i for the risk category a
(economic risks, environmental risks,
geopolitical risks, societal risks, or
technological risks), variable
exacerbatei,a,n is 1 when respondent n
selected the pair of risks i and j as part
of his/her selection. Otherwise, it is 0.
As a result, exacerbatei,a is the score
assigned to emerging technology i for
risk category a and measured as a
percentage of respondents selecting
this emerging technology.
Other Emerging Technologies

For the first time this year, the GRPS
Questions (Figure 3.1.3)
included questions on emerging
technologies. The first question asked in After the questions on the
this section was on the consequences
consequences of emerging technology,
of emerging technologies. For each of
the respondents had to select the three
the 12 emerging technologies identifies, emerging technologies that need better
respondents had to answer the
governance. The exact question is:
following questions: How likely is this
Please select the three emerging
emerging technology to bring
Ni
technologies where you
believe better
1
significant benefits within the next 10
governance
is
most
needed.
benefitsBy
benefitsi =
i,n
years? and How likely is this emerging governance we
Ni
mean
n=1 the rules, norms,
technology to bring severe negative
standards and/or institutions that allow
Reference
consequences within the next 10
stakeholders to take effective decisions
Ni
years? and finally How confident are
that maximize the1benefits and minimize
Jacomy, M., T. Venturini, S. Heymann, and M.
you about your responses for this
neg.consequences
=
neg.consequences
the negative consequences
of a
i N
i,n Bastian. 2014. ForceAtlas2: A Continuous Graph
i
emerging technology? For the first two
n=1
technology. The computation
for each
Layout Algorithm for Handy Network Visualization
questions, respondents could answer
Designed for the Gephi Software. PLoS ONE 9(6):
emerging technology i is:
e98679. doi:10.1371/journal.pone.0098679
from 1 (extremely unlikely) to 7
(extremely likely). Similar to the likelihood
N
1
questions used to build the Global Risks
governancei =
governancei,n
N
Landscape 2017, probabilities were
n=1
attached to each selected risk. For the
Endnotes
question on the level of confidence,
1
where N is the number of respondents
The Global Shapers Community is a network of
respondents could select an answer
N
hubs developed and led by young people who are
to
the
survey,
and
variable
governance
i,n
ranging from 1 (extremely low
1
exceptional in their potential, achievement and drive
is 1 exacerbate
when respondent
nexacerbate
selected i,a,n
the
i, a =
confidence) to 7 (extremely confident).
N
to make a contribution to their communities; see
pair of risks i and j asn=1part of his/her
http://www.weforum.org/community/global-shapers
selection. Otherwise, it is 0. As a result,
2
See Jacomy et al. 2014.
67
Acknowledgements

synthesizes the insights, ideas and
contributions of many individuals
through workshops, group calls and
research. The World Economic Forum
is grateful to all who took part in the
challenge to think about global risks.
Without their dedication, guidance
and support, it would not have been
possible to develop this Report.
The World Economic Forum would
like to thank our Strategic Partners
Marsh & McLennan Companies and
Zurich Insurance Group for their
guidance, input and support. We
also thank our Academic Advisers,
the National University of Singapore,
the Oxford Martin School at the
University of Oxford and the Wharton
Risk Management and Decision
Processes Center at the University of
Pennsylvania.
The project was led at the World
Economic Forum by Margareta
Drzeniek Hanouz and The Global Risks
Report 2017 team including Aengus
Collins (Content Lead), Galle Marti
(Project Manager), Ciara Browne (Head
of Partnerships), Attilio Di Battista,
Katharine Shaw, and Stphanie Verin.
governance is represented by the
Steering Board, the Advisory Board
and the Activation Board, all of which
have provided invaluable input and
guidance.
The Steering Board includes:
John Drzik, President, Global Risk and
Specialties, Marsh, United States
Richard Samans, Head of the Centre
for the Global Agenda, Member of the
Managing Board, World Economic
Forum, Switzerland
Cecilia Reyes, Group Chief Risk
Officer, Zurich Insurance Group,
Switzerland
The Advisory Board is composed of:
Rolf Alter, Organisation for Economic
(OECD)
Sharan Burrow, International Trade
Union Confederation (ITUC)
Winnie Byanyima, Oxfam International
Marie-Valentine Florin, International
Risk Governance Council (IRGC)
Al Gore, Generation Investment
Management
68
Donald Kaberuka, Harvard University

Steven Kou, National University of
Singapore
Julian Laird, Oxford Martin School
Pascal Lamy, Jacques Delors Institute
Ursula von der Leyen, Federal Minister
of Defence of Germany
Maleeha Lodhi, Ambassador and
Permanent Representative of Pakistan
to the United Nations
Gary Marchant, Arizona State University
Erwann Michel-Kerjan, Wharton Risk
Center, University of Pennsylvania
Nicolas Mueller, Federal Chancellery of
Switzerland
Moiss Nam, Carnegie Endowment for
International Peace
Kirstjen Nielsen, George Washington
University Center for Cyber and
Homeland Security
Naomi Oreskes, Harvard University
Jonathan Ostry, International Monetary
Fund
Nouriel Roubini, New York University
John Scott, Zurich Insurance Group
Richard Smith-Bingham, Marsh &
McLennan Companies
Michelle Tuveson, Centre for Risk
Studies, University of Cambridge Judge
Business School
Ngaire Woods, University of Oxford
Sandra Wu Wen-Hsiu, Japan Asia
Group Limited
The Activation Board includes:

Laura Castellano, Zurich Insurance
Group, Switzerland
Rosanna Cubelli, Zurich Insurance
Group, Switzerland
Jason Groves, Marsh & McLennan
Companies, United Kingdom
Gregory Renand, Zurich Insurance
Group, Switzerland
Pavel Osipyants, Zurich Insurance
Group, Switzerland
Stephen Szaraz, Marsh & McLennan
Companies, United States

Strategic Partners
Partner Content Leads
Richard Smith-Bingham, Director,
Global Risk Center, Marsh &
McLennan Companies, United
Kingdom
John Scott, Chief Risk Officer, Global

Corporate, Zurich Insurance Group,
Switzerland
Marsh & McLennan Companies (in
addition to those listed above)
Paul Beswick
Jo-Anne Bloch
Tessa Champion
Edwin Charnaud
Lucy Dalimonte
Bruno Dotti
Tom Garvey
Jason Israel
Don Mango
Tom Quigley
Maurizio Quintavalle
Philip Tenenbaum
Alex Wittenberg
Nick Zappia
Zurich Insurance Group (in addition
to those listed above)
David Anderson
Lori Bailey
Daniel Eherer
Karl Gray
Stefan Kroepfl

Academic Advisers (in addition to
those listed above)
National University of Singapore
Chorh Chuan Tan
Kok Kwang Phoon
Oxford Martin School, University of
Oxford
Achim Steiner
Wharton Risk Management and
Decision Processes Center,
University of Pennsylvania
Howard Kunreuther
The project team would like
to thank the following for their
contribution to the Report :
Part 1: Global Risks 2017
Aengus Collins, World Economic
Forum
Nicholas Davis, World Economic
Forum
Margareta Drzeniek Hanouz, World

Economic Forum
Daniel Gomez Gaviria, World
Economic Forum
Thomas Philbeck, World Economic
Forum
Philip Shetler-Jones, World Economic
Forum
Jahda Swanborough, World Economic
Forum
Dominic Waughray, World Economic
Forum
Part 2: Social and Political
Challenges
2.1 Western Democracy in Crisis?
Stefan Hall, World Economic Forum
Ngaire Woods, Blavatnik School of
Government, University of Oxford
2.2 Fraying Rule of Law and
Declining Civic Freedoms: Citizens
and Civic Space at Risk
Silvia Magnoni, World Economic
Forum
Kira Youdina, World Economic Forum
2.3 The Future of Social Protection
Systems
Yvonne Sonsino, Mercer
Ian Veitch, Zurich Insurance Group
Part 3: Emerging Technologies
3.1 Understanding the Risk
Landscape
Forum
Forum
3.2 Assessing the Risk of Artificial
Intelligence
Forum
Forum
3.3 Physical Infrastructure
Networks and the Fourth Industrial
Revolution
Jim Hall, Oxford Martin School,
University of Oxford
69
Boxes
Box 1.2: Climate Change and the 4IR
by Al Gore, Generation Investment
Management
Box 2.1.1: Social Media and the
Distortion of Information by Walter
Quattrociocchi, Northeastern
University
Box 3.2.1: Artificial Intelligence and the
Future of Warfare by Jean-Marc Rickli,
Geneva Centre for Security Policy
Box 3.2.2: Aligning the Values of
Humans and AI Machines by Stuart
Russell, University of California,
Berkeley
The Global Risks Team would like
to extend their gratitude to the
Global Risks Perception Survey
2016 review group
Chase Harrison, Department of
Government, Harvard University
Olivier Oullier, Word Economic Forum
Caroline Roberts, University of
Lausanne
Piet Sellke, University of Stuttgart and
Insights for Impact
Richard Smith-Bingham, Marsh &
McLennan Companies
The project team is grateful to the
respondents to the Global Risks
Perception Survey 2016, without
whom the production of this Report
would not have been feasible. The
respondents include the Forums
multistakeholder communities and
members of the Institute of Risk
Management Network.
A special thank you also goes to
the following for their contributions
and support of The Global Risks
Report:
At the World Economic Forum
Founder and Executive Chairman
Klaus Schwab
Executive Committee
David Aikman, Marco Albani, Pedro
Rodrigues de Almeida, Marisol
Argueta, Emma Benameur, Arnaud
Bernaert, Matthew Blake, Jennifer
Blanke, Roberto Bocca, Giancarlo
Bruno, Sebastian Buckup, Denise
Burnet, Nicholas Davis, Jean-Loup
Denereaz, Sean Doherty, Lisa Dreier,
Michael Drexler, Margareta Drzeniek
Hanouz, Silvio Dulinsky, Miroslav
70
Dusek, Diana El-Azar, Paolo Gallo,

Julien Gattoni, Malte Godbersen, Mike
Hanley, Lee Howell, Zara Ingilizian,
Jeremy Jurgens, Elsie Kanza, Martina
Larkin, Helena Leurent, Cheryl Martin,
Fon Mathuros Chantanayingyong,
Richard McGlone, Viraj Mehta, John
Moavenzadeh, Adrian Monck, Sarita
Nayyar, Derek OHalloran, Olivier
Oullier, Mel Rogers, Philipp Rsler,
Richard Samans, Hilde Schwab,
Olivier Schwab, Paul Smyke, Murat
Snmez, Mark Spelman, Masao
Takahashi, Terri Toyota, Jean-Luc
Vez, Dominic Waughray, Alex Wong,
Justin Wood, Saadia Zahidi, and Alois
Zwinggi.
The Global Risks Report 2017 Public
Engagement Team
Oliver Cann and Alem Tedeneke
Production Team
David Bustamante; Liam
Cathasaigh; Marta Chierego; Kamal
Kimaoui, World Economic Forum;
and Hope Steele, Freelance Editor;
Moritz Stefaner, Freelance Information
Visualizer; and Andrew Wright,
Freelance Writer.
The project team expresses its
gratitude to the colleagues from the
World Economic Forum who provided
feedback throughout the development
of The Global Risks Report 2017 (in
addition to those listed above):
Nanayaa Appenteng, Silja Baller,
Jonathon Cini, Roberto Crotti, Ushang
Damachi, Jonathan Eckart, Emmanuel
Engeli, Thierry Geiger, David Gleicher,
Daniel Gomez Gaviria, Stefan Hall,
Akanksha Khatri, Miso Lee, Silvia
Magnoni, Stephan Mergenthaler,
Pierre Saouter, Vesselina Stefanova
Ratcheva, Lisa Ventura, Jean-Luc
Vez, Regula Waltenspuel, and Olivier
Woeffray.
The project team would like to thank
the individuals who contributed to the
report by feeding into the discussion
around the global risks workstream
by providing thought leadership or
participating in the Forums workshops
on Global Risks:
Karl Aberer, cole Polytechnique
Fdrale de Lausanne; Natalia
Alonso, Oxfam International; Rolf
Alter, Organisation for Economic
(OECD); Jrme Amory, RATP;

Alison Bewick, Nestl; Wijnand De
Wit, Dalberg Global Development
Advisers; Grard Escher, cole
Polytechnique Fdrale de Lausanne;
Evgueni Ivantsov, European Risk
Management Council; Marie-Valentine
Florin, International Risk Governance
Council (IRGC); Bryan Ford, cole
Polytechnique Fdrale de Lausanne;
Thomas Gauthier, Geneva University
of Applied Sciences; Ian Goldin,
Oxford Martin School, University of
Oxford; Guillaume Grosso, Gavi,
the Vaccine Alliance; Jean-Marie
Guhenno, International Crisis Group
(ICG); Michael Ineichen, International
Service for Human Rights; Steven
Kou, National University of Singapore;
Quentin Ladetto, Armasuisse;
Hlne Lavoix, The Red (Team)
Analysis Society; Rupert Lewis, UK
Government Office for Science;
Mark Lutter, NeWAY Capital; Erwann
Michel-Kerjan, The Wharton School,
University of Pennsylvania; Nicolas
Mueller, Federal Chancellery; Tim
Noonan, International Trade Union
Confederation (ITUC); Yuichi Ono,
Tohoku University; Felicity Oswald,
Government Communications
Headquarters (GCHQ); Kok
Kwang Phoon, National University
of Singapore; Jack Radisch,
Organisation for Economic Cooperation and Development (OECD);
Jean-Marc Rickli, Geneva Centre for
Security Policy; Caroline Roberts,
University of Lausanne; John Scott,
Zurich Insurance Group; Piet Sellke,
University of Stuttgart and Insights
for Impact; Atraf Shehab, Office of
the Prime Minister of the United Arab
Emirates; Richard Smith-Bingham,
Marsh & McLennan Companies; Jrg
Stenzel, Federal Ministry of Defence
of Germany; Howard Stone, UPS;
Michelle Tuveson, Centre for Risk
Studies, University of Cambridge;
Barry Vaughan, Department of the
Taoiseach; Marcy Vigoda, United
Nations Office for the Coordination
of Humanitarian Affairs (OCHA); Nick
Wildgoose, Zurich Insurance Group;
and Carolyn Williams, Institute of Risk
Management.
The World Economic Forum,

committed to improving the
state of the world, is the
International Organization for
Public-Private Cooperation.
The Forum engages the
foremost political, business and
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What is the purpose of the Global Risks Report?

What is the purpose of the Global Risks Report?

What information does the report provide about risks?

What information does the report provide about risks?

Insight Report

The Global Risks

The Global Risks Report 2017, 12th Edition is

The information in this report, or on which

World Economic Forum

All rights reserved. No part of this publication

World Economic Forum

Figure 1: The Risks-Trends Interconnections Map

Source: World Economic Forum Global Risks Perception Survey 2016

Failed and failing

Oil and gas price

Oil price shock

Oil and gas

Oil price shock

Oil and gas

Oil price spikes

Breakdown of critical information infrastructure

Failure of climatechange mitigation

Failure of climatechange mitigation

Rapid and massive

Failure of climatechange mitigation

Failure of climatechange mitigation

Failure of climatechange mitigation

Source: World Economic Forum 20017-2017, Global Risks Reports

Top 5 Global Risks in Terms of Impact

Breakdown of critical information infrastructure

Top 5 Global Risks in Terms of Likelihood

Figure 2: The Evolving Risks Landscape, 2007-2017

Figure 3: The Global Risks Landscape 2017

Source: World Economic Forum Global Risks Perception Survey 2016

Figure 4: The Global Risks Interconnections Map 2017

Source: World Economic Forum Global Risks Perception Survey 2016

The Global Risks

Part 1: Global Risks 2017

Part 2: Social and Political Challenges

2.1 Western Democracy in Crisis?

2.2 Fraying Rule of Law and Declining Civic

2.3 The Future of Social Protection Systems

Part 3: Emerging Technologies

3.1 Understanding the Technology Risk Landscape

3.2 Assessing the Risk of Artificial Intelligence

3.3 Physical Infrastructure Networks and the Fourth

Appendix A: Description of Global Risks, Trends and

Appendix B: Global Risks Perception Survey 2016 and

As in previous years, the analysis

The year 2016 has seen profound

The Global Risks Report 2017

The year 2017 will present a pivotal

As one of the Forums flagship reports,

University Center for Cyber and

Margareta Drzeniek Hanouz

The Global Risks Report 2017

For over a decade, The Global Risks

The Global Risks

Global Risks 2015