Business World

Saturday 15 December 2018

Davos elite sees war and cyberattacks as top risks

President Trump set to upset Swiss gathering with his 'America First' agenda, writes Stephen Morris

A police sniper secures a roof next to the Congress Centre on the eve of the opening day of the World Economic Forum in Davos last year. Photo: AFP/Getty Images
A police sniper secures a roof next to the Congress Centre on the eve of the opening day of the World Economic Forum in Davos last year. Photo: AFP/Getty Images

Stephen Morris

The threat of large-scale cyberattacks and a "deteriorating geopolitical landscape" since the election of US President Donald Trump have jumped to the top of the global elite's list of concerns, the World Economic Forum said ahead of its annual meeting in Davos, Switzerland.

The growing cyber-dependency of governments and companies, and the associated risks of hacking by criminals or hostile states, has replaced social polarisation as a main threat to stability over the next decade, according to the WEF's yearly assessment of global risks. The Davos forum starts on Tuesday in the Swiss ski resort.

While the economic outlook has improved, 90pc of those surveyed said they expect political or trade clashes between major powers to worsen. Some 80pc saw an increased chance of war.

"Cybersecurity is the issue most on the minds of boards and executives, given the visibility of state-sponsored attacks in an environment of increasing geopolitical friction," said John Drzik, president of global risk and digital at Marsh, which contributed to the study. As companies "invest in things like artificial intelligence, they are widening their attack surface".

Drzik said recent high-profile security breaches that have fuelled this perception include the WannaCry ransomware attack, which infected more than 300,000 computers across 150 countries, and NotPetya, which caused two companies losses in excess of $300m. The cost of cybercrime to firms over the next five years could reach $8trn, the WEF said.

Similarly, thousands of attacks every month on critical infrastructure from European aviation systems to US nuclear power stations show state-sponsored hackers are attempting to "trigger a breakdown in the systems that keep societies functioning," the WEF said.

In the preview, which would suggest Davos attendees are in for one of the bleaker forums in recent memory, almost two-thirds of global leaders saw risks intensifying from 2017.

Climate change and extreme weather remained the greatest concerns of those surveyed. Economic worries receded as a unified pickup in growth and stocks at record highs suggest the world may finally be recovering from the financial crisis, a decade on.

Trump's appearance at the WEF's annual meeting is sure to dominate proceedings, as well as ruffle feathers. Treasury Secretary Steve Mnuchin has said Trump and his advisers will use the event to talk about their 'America First' agenda, arguing that an economy that's good for the US is good for everyone else.

However 'America First' is interpreted, Marsh's Drzik said "unilateral, protectionist policies and nationalism are another key risk" that Davos attendees have identified, and one that clashes with the WEF's core philosophy.

"To address complex issues like climate change, cyberwarfare and food security requires a multilateral response, but the political direction is going in exactly the opposite way," Drzik said. "Trump is an example of this, but far from the only one."

The report singled out the US on trade after Trump pulled out of the Trans-Pacific Partnership and sought a renegotiation of the North American Free Trade Agreement.

Around the world in 2016, about three-quarters of so-called interventions - such as imposing tariffs, or blocking imports of certain goods to protect domestic jobs - were protectionist in nature, and the trend appears to have continued through last year, the WEF said.

"What would be instructive is to hear from the new US administration that it is interested and understands there are serious risks of the ilk we discuss in the report, and sees an important role for international co-operation," Richard Samans, a member of the WEF's managing board, said at a press conference.

The Global Risks Perception Survey quizzed 999 business leaders, politicians and academics - of whom 70pc were male - on 30 potential global risks, ranging from deflation and asset bubbles to natural disasters, terrorist attacks and water crises.

They identified trends that could exacerbate those risks, including an ageing population and income inequality.

The report also delineated some more far-fetched dangers, including fleets of AI-controlled pirate drone ships that decimate the ocean's fish stocks.

Societal polarisation - 2017's headline risk, after the populist wave led to Brexit and Trump's victory - slipped down the rankings, but remained one of the main destabilising forces, according to the report.

The report will provide the backbone for the talks in Davos, whose theme this year is Creating a Shared Future in a Fractured World.

That slogan might clash with some of the realities of the $50,000-a-head event, which takes place in a sealed-off Alpine retreat guarded by thousands of soldiers and police.

Famed for lavish, booze-fuelled, corporate-sponsored parties with tight guest lists that take place after the official meetings are done for the day, the WEF has drawn criticism over whether it's an appropriate forum to discuss solutions to society's biggest problems.


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