Supply Chain and the Most Serious Global Risks Linda Conrad, Zurich, Chloe Demrovsky, DRI International

STRUCTURAL CHALLENGES The world is beset by multiple near-term instabilities as longer-term structural challenges become ever clearer GLOBAL INSTABILITIES STRUCTURAL CHALLENGES Source: World Economic Forum, Global Risks Report 2016

A weak response to climate change and involuntary migration are among the most damaging and most likely risks 5.5 Economic Environmental Geopolitical Societal Technological Water crises Weak climate change response WMDs Biodiversity loss Fiscal crises Involuntary migration Energy price shock Asset bubbles 5.0 Cyber attacks Food crises Interstate conflicts Infectious diseases Terrorist attacks Social instability Impact if the risk were to occur (score) Extreme weather High unemployment 4.5 Data fraud or theft Natural catastrophes Nat. governance failures Illicit trade Note: Entire scale is from 1-7. Top 20 risks in terms of overall impact and likelihood are shown 4.0 3.5 4.0 4.5 5.0 5.5 6.0 Likelihood to occur over the next ten years (score) Source: World Economic Forum, Global Risks Report 2016

Geopolitical and societal risks dominate short term, but societal and environmental risks are of most concern in the long term Rank Next 18 months 10-year horizon Category Involuntary migration Water crises State collapse or crisis Failure of climate change mitigation and adaption Interstate conflict Extreme weather events High structural un- or underemployment Food crises Failure of national governance Profound social instability 1 1 Economic Environmental Geopolitical Societal Technological 2 2 3 3 4 4 5 5 Source: World Economic Forum, Global Risks Report 2016

The Despite regional differences, structural unemployment and national governance failure are the most widely expected risks Economic Environmental Geopolitical Societal Technological Large-scale cyber attacks Extreme weather events Data fraud or theft North America 1 3 Large-scale involuntary migration Structural un- or under-employment Fiscal crises Europe 2 Inter-state conflict Failure of national governance MENA, Central Asia and Russia Profound social instability LatAm and Caribbean Failure of critical infrastructure Sub-Saharan Africa Natural catastrophes S. Asia, E. Asia, and the Pacific 173001719 (01/16) TCL Source: World Economic Forum, Global Risks Report 2016

Social instability is a center-piece for risk interconnectivity Weak climate change response Extreme weather Economic Environmental Geopolitical Societal Technological Biodiversity loss Water crises Food crises Involuntary migration High unemployment State collapse 173001719 (01/16) TCL Social instability Interstate conflict Fiscal crises Nat. governance failures Illicit trade Terrorist attacks Adverse technological consequences Cyber attacks Source: World Economic Forum, Global Risks Report 2016

The issues raised in the Global Risks Report illustrate why companies need a holistic risk management approach

DRI Future Vision Committee: 2016 Predictions and Trends Report “Test your assumptions against extreme examples of what might happen. ‘What if’ rather than ‘how to’ should be the question that motivates our professional activities.” Available in the DRI Library: www.drii.org/crm/presentationlibrary.php