15 November 2023
Zurich Financial Services Australia (Zurich) today released new data from the World Economic Forum (WEF) indicating economic threats – such as recession and inflation – rank among the most significant risks to Australia and other G20 nations.
The results, based on an Executive Opinion Survey conducted in collaboration with Zurich, gathered the views of more than 11,000 business leaders from over 110 countries on the key risks they believe pose a threat to their nation over the next two years.
Overall, the Survey finds that:
- An economic downturn (e.g. recession, stagnation) ranks as the top risk in nine out of 10 regions and in 13 of the G20 countries, including Australia & New Zealand;
- Inflation is among the top-three risks in all regions, including in Australia & New Zealand where it ranks second;
- Energy supply shortages are among the top-five risks in all regions, including in Australia & New Zealand where it ranks third;
- Extreme weather events (i.e. floods, storms, etc.) is one of the top-five risks in three regions – where in Australia & New Zealand it ranks fourth – making it the only top environmental risk in the regional rankings.
Rounding out the top-five risks for Australia & New Zealand was household debt, the priority of which diverged somewhat from aggregate global survey results where this factor ranked 20th.
Across the G20, societal threats such as the erosion of social cohesion and wellbeing were also identified as a top-five risk factor. Technological risks, including threats relating to cyber and artificial intelligence (AI), appear only three times in the G20 top-five rankings.
The results follow the recent release of Australia’s first ‘Climate Risk Index’ for the national energy generation sector by Zurich and Mandala Partners. The Index finds that currently more than a quarter of Australian energy generation is in the three highest climate risk categories. This is set to rise to around 35 per cent of generation capacity by 2050, with nearly 40 per cent of generation assets set to experience increased climate risk over this period.
Justin Delaney, Chief Executive Officer, Zurich Australia & New Zealand, said: “Our role as an insurer is to understand and help protect individuals and businesses from the increasingly complex risk landscape. Gaining insights into the risk perceptions of leaders from across the globe is now more important than ever as we collectively seek to build resilience to these threats.”
“As with previous years, many of the risks forecast in the last survey have already come to fruition. Considering the top ranked risks in this year’s survey, it is unsurprising to see economic threats causing the most concern. Likewise, energy supply shortages and extreme weather are both key and intertwined risks for Australia in the coming years.”
“In a broader context, the findings highlight strikingly common concerns between both advanced economies and emerging markets. This year’s survey highlights how, even before the current conflict in the Middle East, increasingly interconnected economic and societal risks were perceived as the biggest concerns across the G20 with a backdrop of escalating global political tensions and persistent inflation in many major economies,” Mr Delaney said.
The Executive Opinion Survey was conducted by the WEF’s Centre for the New Economy and Society between April and August 2023. Zurich Insurance Group and Marsh McLennan are partners of the Centre and the Global Risks Report series.