Wharton professors detail global risks in report

Two Wharton School professors have detailed a set of threats to the future prosperity of the global economy in the 2012 Global Risks Report.

Wharton professors Howard Kunreuther and Erwann Michel-Kerjan — who were the co-authors of the annual report — released their findings on Jan. 11.

In compiling the report, the World Economic Forum collaborated with Wharton’s Risk Management and Decision Processes Center, as well as organizations like Zurich Financial Services, Swiss Reinsurance Company and Marsh & McLennan Companies.

Michel-Kerjan, who serves as managing director of Wharton’s Risk Management and Decision Processes Center, underscored the imminence of global risks, such as income inequality.

“The world is looking at these global risks as being much more likely to happen in the next 10 years than what we thought five or 10 years ago,” he said.

Kunreuther, who is co-director of the center, noted the need for people to confront current global risks immediately, rather than putting them off indefinitely.

“We need to provide short-term incentives to get organizations and governments to pay attention to these global risks and think about the long term,” he said.

The report discusses 50 individual global risks that span across five risk categories and features a special report on the March 2011 earthquake in Japan.

Kunreuther and Michel-Kerjan used the responses of 469 experts in various industries worldwide as the basis of their findings.

The growing interconnectedness of the modern world through technology was one central issue the report brought to attention.

Wharton and College freshman Jilon Li believes this trend will ultimately inhibit face-to-face communication among one another.

He predicted that there will be an “anti-electronic” movement in the future due to a backlash against an increasingly digital world.

For Michel-Kerjan, “interviewing great leaders, challenging each other and revising your perception of some of these risks” was the most rewarding aspect of working on the report.

Kunreuther highlighted the interrelationships between the various topics the report addressed.

For example, in the section of the report that detailed Japan’s devastating earthquake, Kunreuther explained how the natural disaster epitomized the idea of a “smaller” world.

“The disaster had both a natural component and a technological component, illustrating the interconnectedness between natural and technological hazards,” he said.

Although Kunreuther acknowledged that the report deals with nuanced topics, College freshman Michelle Reap noted that some of the issues it addresses — especially environmental and climate conditions — have broad consequences for everyone.

“Once the day comes when we run out of oil, once all the glaciers melt, we’re not going to have all the supplies we need to take care of these problems,” she said.

Michel-Kerjan agreed.

“The more students think about these issues and work on them, the better the world will be,” he said.

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