The Global Risks 2014 report highlights how global risks are not only interconnected but also have systemic impacts. To manage global risks effectively and build resilience to their impacts, better efforts are needed to understand, measure and foresee the evolution of interdependencies between risks, supplementing traditional risk-management tools with new concepts designed for uncertain environments. If global risks are not effectively addressed, their social, economic and political fallouts could be far-reaching, as exemplified by the continuing impacts of the financial crisis of 2007-2008.

The systemic nature of our most significant risks calls for procedures and institutions that are globally coordinated yet locally flexible. As international systems of finance, supply chains, health, energy, the Internet and the environment become more complex and interdependent, their level of resilience determines whether they become bulwarks of global stability or amplifiers of cascading shocks. Strengthening resilience requires overcoming collective action challenges through international cooperation among business, government and civil society.

This year, the report includes a special section on "Strategies for Managing Global Risks" based on findings from a Wharton research project that interviewed over 100 high-level executives in S&P 500 companies to examine the variety of ways in which firms identify and manage risks.  Based on these preliminary findings, the report suggests strategies for firms and governments to build resilience to shocks from systemic global risks that, through interdependencies, may impact them in unexpected ways.

This inclusion is important as the community of risk thought leaders moves beyond the tasks of identifying risks, increasingly focusing on building resilience capacity that creates measurable value for firms and countries. A critical component in preparing for disasters is to create incentives that encourage risk managers to engage in long-term deliberative thinking. Techniques such as scenario analysis, stress tests and ranking/scoring metrics can help overcome myopia, inherent in human decision-making. This new mindset is entering the boardroom in a much more significant way today than when the Global Risks initiative began almost 10 years ago.

The Global Risks 2014 report can be found at:  Global Risks Report 2014