The world is in no position to face major, new shocks. The financial crisis has reduced global economic resilience,

while increasing geopolitical tension and heightened social concerns suggest that both governments and societies

are less able than ever to cope with global challenges. Yet, as this report shows, we face ever-greater concerns

regarding global risks, the prospect of rapid contagion through increasingly connected systems and the threat of

disastrous impacts.

In this context, Global Risks 2011, Sixth Edition reveals insights stemming from an unparalleled effort on the part of

the World Economic Forum to analyse the global risk landscape in the coming decade.1

Two risks are especially significant given their high degrees of impact and interconnectedness. Economic disparity2

and global governance failures3 both influence the evolution of many other global risks and inhibit our capacity to

respond effectively to them.

In this way, the global risk context in 2011 is defined by a 21st century paradox: As the world grows together, it is

also growing apart.

Globalization has generated sustained economic growth for a generation. It has shrunk and reshaped the world,

making it far more interconnected and interdependent. But the benefits of globalization seem unevenly spread – a

minority is seen to have harvested a disproportionate amount of the fruits. Although growth of the new champions is

rebalancing economic power between countries, there is evidence that economic disparity within countries is

growing.

Issues of economic disparity and equity at both the national and the international levels are becoming increasingly

important. Politically, there are signs of resurgent nationalism and populism as well as social fragmentation. There is

also a growing divergence of opinion between countries on how to promote sustainable, inclusive growth.

To meet these challenges, improved global governance is essential. But this is another 21st century paradox: The

conditions that make improved global governance so crucial – divergent interests, conflicting incentives and differing

norms and values – are also the ones that make its realization so difficult, complex and messy. As a result, we see

failures such as the Doha Development Round of the World Trade Organization (WTO) and the lack of international

agreement at the Copenhagen Conference on climate change. The G20 is seen as the most hopeful development in

global governance but its efficiency in this regard has not been proven.

1 For more information see Appendix 2 of the report.

2 Wealth and income disparities, both within countries and between countries.

3 Weak or inadequate global institutions, agreements or networks.

Beyond these two cross-cutting global risks, three important clusters of risks have emerged in this year’s analysis:

The “macroeconomic imbalances” nexus: A cluster of economic risks including macroeconomic imbalances and

currency volatility, fiscal crises and asset price collapse arise from the tension between the increasing wealth and

influence of emerging economies and high levels of debt in advanced economies. Savings and trade imbalances

within and between countries are increasingly unsustainable while unfunded liabilities create extreme long-term

pressure on fiscal positions. One way out of these imbalances would be coordinated global action but this is

challenging given the conflicting interests of different states.

The “illegal economy” nexus: This nexus examines a cluster of risks including state fragility, illicit trade, organized

crime and corruption. A networked world, governance failures and economic disparity create opportunities for such

illegal activities to flourish. In 2009, the value of illicit trade around the globe was estimated at US $1.3 trillion and

growing. These risks, while creating huge costs for legitimate economic activities, also weaken states, threatening

development opportunities, undermining the rule of law and keeping countries trapped in cycles of poverty and

instability. International cooperation – both on the supply side and on the demand side – is urgently needed.

The “water-food-energy” nexus: A rapidly rising global population and growing prosperity are putting

unsustainable pressures on resources. Demand for water, food and energy is expected to rise by 30-50% in the next

two decades, while economic disparities incentivize short-term responses in production and consumption that

undermine long-term sustainability. Shortages could cause social and political instability, geopolitical conflict and

irreparable environmental damage. Any strategy that focuses on one part of the water-food-energy nexus without

considering its interconnections risks serious unintended consequences.

Five risks have been designated as “risks to watch”, as survey respondents assessed them with high levels of

variance and low levels of confidence while experts4 consider they may have severe, unexpected or

underappreciated consequences:

• Cyber-security issues ranging from the growing prevalence of cyber theft to the little-understood possibility of allout

cyber warfare

• Demographic challenges adding to fiscal pressures in advanced economies and creating severe risks to social

stability in emerging economies

• Resource security issues causing extreme volatility and sustained increases over the long run in energy and

commodity prices, if supply is no longer able to keep up with demand

• Retrenchment from globalization through populist responses to economic disparities, if emerging economies

do not take up a leadership role

• Weapons of mass destruction, especially the possibility of renewed nuclear proliferation between states

Effective risk response is not only about proactively reducing the downsides associated with global risks; it is also

about seizing the opportunities for innovation and growth that may arise. Throughout this report, a series of risk

response strategies are explored that can help stakeholders achieve both goals.

4 Unless otherwise noted, in this report “experts” refers to the Global Agenda Council members and other contributors who are acknowledged at the end of this report.

They provided input through various means, including participating in the Global Risks Survey, taking part in workshops, reviewing the report and providing individual

advice and counsel.

Retrenchment

from globalization

Space security

Extreme consumer

price volatility

Threats from

Ocean governance

Extreme energy

Geopolitical conflict

Migration

Air

pollution

Critical information

infrastructure

breakdown

Slowing Chinese Economy

Weapons of

mass destruction

Regulatory

failures

Food security

Higher perceived

Higher perceived

Higher perceived

Global imbalances and

currency volatility

Fiscal crises

imbalances volatility

collapse

Illicit trade

Corruption

Organized crime

Fragile states

price volatility

Food security

Water security

new

technologies

Online data and

information security

Infrastructure

fragility

price volatility

Climate change

Fiscal crises

Extreme commodity

price volatility

Earthquakes Storms cyclones

Terrorism

Illicit trade

Corruption

Organized crime

Demographic Fragile states

diseases

Chronic diseases

Water security

Global imbalances and

currency volatility

Liquidity

/

credit crunch

Asset price collapse

Ec

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rr

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Ret e

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fr

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Infectious

Dem

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Terr

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Biodiversity loss

Flooding

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Storm

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Earthqua

volcanic

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eruptions

Asset price col

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Global imbalan

lapse

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Cor

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Extreme energy

Climate change