Climate change called world's biggest economic risk

The World Economic Forum, which meets annually in Davos, Switzerland, began ranking global risks just over a decade ago. And this year, the environment has reached the top of the list.

The failure to mitigate climate change and adapt to it was named as the risk with the greatest potential impact in 2016 in the survey of nearly 750 experts, who assessed 29 separate global dangers for both impact and likelihood over a 10-year horizon.

"Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks," said Cecilla Reyes, chief risk officer of Zurich Insurance Group, said in a news release.

"Geopolitical instability is exposing businesses to cancelled projects, revoked licenses, interrupted production, damaged assets and restricted movement of funds across borders," she said. "These political conflicts are in turn making the challenge of climate change all the more insurmountable -- reducing the potential for political co-operation, as well as diverting resource, innovation and time away from climate change resilience and prevention."

Environmental risk was viewed as having greater potential damage than weapons of mass destruction, which ranked second; water crises, which placed third; large-scale involuntary migration, which came in fourth; and severe energy price shocks, which came in fifth.

The top risk in 2016 in terms of likelihood is large-scale involuntary migration, followed by extreme weather events, failure of climate change mitigation and adaptation, international conflicts with regional consequences and major natural catastrophes.

"We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways," said Margareta Drzeniek-Hanouz, head of Global Competitiveness and Risks for the World Economic Forum. "Mitigation measures against such risks are important, but adaptation is vital."

Such a broad risk landscape is unprecedented in the 11 years the report has been gauging global risks, the forum said in a news release. For the first time, four out of five categories -- environmental, geopolitical, societal and economic -- feature among the top five risks with the most impact. Technological risk placed 11th in both likelihood and impact.