Challenging Risks to Global Economy

Deteriorating fiscal positions, a hard landing in China, a collapse in asset prices, gaps in global governance and issues relating to natural resources and climate are the pivotal risks facing the world this year. According to the World Economic Forum’s (WEF) new Global Risks 2009 report, the economic outlook for 2009 is a grim one for most economies, as markets remain volatile, liquidity has not returned, unemployment is rising and consumer and business confidence has fallen to record lows. In this climate, risks become even more potent in their impact. The report notes that the financial crisis has exposed the lack of coordination among policymakers, regulators and supervisors, and that a key lesson to be learned from the crisis is the need to embed better risk governance globally. But while acknowledging the need for better governance globally, it warns against a knee-jerk over-reaction that would increase transaction and compliance costs and ultimately prove ineffective in the face of the next crisis. The WEF report is published in cooperation with Citigroup, MMC (Marsh & McLennan Cos), Swiss Re, the Wharton School Risk Center and Zurich Financial Services.  

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