Picture: 123RF/alphaspirit
Picture: 123RF/alphaspirit

If you were to answer the question "What is the biggest risk facing the world today?", what would you say? Would your answer be different if you were asked what the global elite think is the biggest risk?

Every year, the World Economic Forum (WEF) publishes the results of a questionnaire it sends to participants of the feature Davos event, asking the first question, and so we know the answer to the second. It’s "Extreme weather events". What?

On the face of it, this is a curious result. Of course, climate change is a fantastically important issue, but is it really the most important current risk, outweighing matters like the rise in political populism, trade wars, inequality, job losses due to digital disruption and the countless other problems the world faces?

The survey says so — and it’s not just extreme weather events but environmental issues in general. This year, the 14th in which the survey has been done, environmental concerns accounted for three of the top five risks by likelihood and four by impact.

The preface author, WEF president Børge Brende, says respondents are increasingly worried about environmental policy failure: the issue fell in the rankings after the Paris Agreement was signed, but the risk described in the questionnaire as "failure of climate-change mitigation and adaptation" jumped back to No 2 in terms of impact this year.

Economic and geopolitical risks are still present in the survey, but it’s interesting how risk assessment has changed. In the early 2010s, the biggest risk by likelihood was asset price collapse, and for almost the next eight years the biggest risks concerned systemic risks in the financial system. This gave way to income disparity and migration, but these have both slipped down the list. This year, economic issues are not even in the top five.

According to Financial Times columnist Gillian Tett, an optimist would claim this constitutes progress because it suggests the financial system has been stabilised. A pessimist might point out that the Davos elite do spot danger but can be dangerously complacent, as they were prior to the Great Recession.

"So, to my mind, the fact that the global elite is not worrying about financial risk, the growth outlook or rising debt levels is a signal that investors should wake up to these issues," Tett writes.

But there is another interpretation: once recognised, risks have a way of getting fixed. Many criticise Davos as an elitist talk shop. This is a legitimate criticism, but helping to create a more stable financial system might be an equally legitimate response. Now, about climate change …