Companies more worried about recession than new virus outbreak

A prolonged global recession brought about by the impact of Covid-19 is considered a greater threat to the world over the next 18 months than a fresh outbreak of the disease, according to a study by the World Economic Forum.

The Geneva-based organisation has also suggested that “there is an opportunity to embed greater societal equality and sustainability into the recovery, which would unleash a new era of prosperity”.

The remarks are contained in the WEF’s Covid-19 Risks Outlook report, which surveyed 350 corporate risk professionals about the biggest threats they perceive over the next year and a half for their company and the world. The report was produced in conjunction with consultants Marsh & McLennan and Swiss insurance group Zurich.

Each respondent was given a list of 31 different potential threats arising from the pandemic, and asked to rank the right they felt were most worrisome for their company and also the world, as well as the eight threats most likely for the world.

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A prolonged global recession was considered the greatest concern for the world, as selected by 58.5 per cent of respondents. This compared to another outbreak of Covid-19 or a similar pandemic, which was ranked third on just over 40 per cent.

High levels of structural unemployment among the world’s youth was listed as a bigger concern than a fresh coronavirus outbreak at 43 per cent.

A greater proportion, 66.3 per cent, selected a global recession as the most worrisome threat for their company, as opposed to the world. The risk of another outbreak fell down to seventh on this list, topped by concerns over bankruptcies, cyberattacks, disrupted supply chains and restrictions on travel.

About 30 per cent of respondents think that another pandemic of the new coronavirus or something similar is likely over the next 18 months.

Climate risks

The report also homed in on environmental and climate risks due to the pandemic. The environmental risk considered most likely to occur by the survey’s respondents was a “shortfall of investment in climate action”. It was cited by 18 per cent of respondents.

"Covid-19 has shown it is crucial to keep existential risks in focus, and climate change is one of these," said Peter Giger, group chief risk officer at Zurich Insurance. "As we reboot our economies, changes in working practices and in attitudes towards travelling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future."