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Faster, Smarter, Together: Adaptation Lessons from the Global Risks Report

Climate risks are top of mind among risk professionals. This should catalyze a regime shift in adaptation

AI-generated via DALL-E

The World Economic Forum’s annual Global Risks Report launch is a January tradition. Each year, risk professionals, policymakers, and other stakeholders pore over the report’s findings — which often make for scary reading.

This year was no exception. The results of the Global Risks Perception Survey (GRPS), which provides the raw material for the report, show that most risk professionals have a gloomy outlook for the world over the next two years. Over the 10-year horizon, nearly two-thirds expect things to be “stormy” or “turbulent”, meaning they anticipate global catastrophes to cause major upheavals.

The GRPS respondents expect climate impacts to be major instigators of these catastrophes. “Extreme weather events” top the chart for the most severe global risk over a 10-year time horizon, and take the second-place spot over the two-year horizon, just behind “Misinformation and disinformation.”

It’s clear why extreme weather scores so highly. Countries worldwide are grappling with the impacts of these weather events — be they floods, wildfires, or storms — while our climate change adaptation efforts are failing to keep up with their increasing scale and intensity.

Things have to change if these climate impacts are to be prevented from turning back the clock on human progress. We need to adapt faster, adapt smarter, and adapt together.

Adapt Faster

The Global Risks Report 2024 doesn’t mince words when it comes to our current adaptation efforts: we’re lagging behind. While climate change barrels ahead, our societal and infrastructural adaptations are struggling to keep pace. 

Time is a constraining factor. The world is warming fast, and may trigger Global Tipping Points (GTPs) that accelerate the frequency and severity of extreme weather events, as well as longer term climatic changes. The rate of change may overtake the often ponderous pace of infrastructure renewal and adaptation policymaking.

Finance is another issue. The report underscores how adaptation efforts in developing countries are hamstrung by lack of funds, a situation that is only likely to get worse — particularly in those regions blighted by internal conflicts or cross-border fights over scarce resources. External investors may flee from such places, further diminishing their adaptive capacities.

Of course, developed economies are not immune to these pressures, either. Public finances are strained in many jurisdictions in the wake of COVID-19, while political turbulence is slowing the policymaking process to a crawl in the US, UK, and other western nations. 

[C]ountries are grappling with the impacts of record-breaking extreme weather, as climate-change adaptation efforts and resources fall short of the type, scale and intensity of climate-related events already taking place

Saadia Zahidi, Managing Director, World Economic Forum

However, efforts must be made to bust free of these constraints. For governments, this means finding ways to signal to the private sector that climate adaptation has to be embedded in business-as-usual. They also have to make adaptation investments attractive — even essential — components of financial portfolios.

One way to do this is to force companies to produce adaptation plans. These require firms to consider how climate impacts may affect them and communicate these risks to the capital markets. The UK’s Transition Plan Taskforce disclosure framework contains elements that could facilitate this communication. Governments could also be encouraged to cut some of the red tape around permitting and land use to expedite the development of shovel-ready resilience projects.

In addition, they can channel public sector investment in infrastructure and physical assets that prioritize resilience, in such a way that unlocks private sector capital. Think of credit enhancements and guarantees that help de-risk projects that banks and investors would otherwise shy away from. 

Financial institutions, for their part, don’t need to spin up fancy new products to start making a difference. They could start by adding “adaptation covenants” to bonds and loans provided to climate-vulnerable borrowers, which would incentivize them to invest in their own resilience. 

What matters is moving fast to get the cash flowing and spades in the ground. 

Adapt Smarter

Our climate is a complex system, and climate risks are complicated threats. This means we need clever tools to plan adaptation responses.

As the Global Risk Report states, today’s climate models are useful instruments, offering valuable insights into potential hazards. However, their scope is limited, leaving us blind to the full complexity of climate change impacts. We need to improve them. The next generation of climate models must be capable of integrating climate and ecological tipping points, which have the potential to shift us into a whole new risk regime. They should also consider the world’s environmental and social limits, something the Earth Commission is working on.

We also have to get better at translating complex scientific data into practical, actionable policies and strategies. Decision-makers need to clearly understand the implications of climate model outputs to the things that matter to them — revenues, asset values, supply chains, and so on. A cohort of scientifically literate but business savvy professionals could perform this role. Of course generative AI could lend a hand, too.

GRPS respondents also indicate a strong demand for enhanced research and development in understanding Earth system changes. We have to continue to push back the frontiers of knowledge to combat climate risks and build resilience. This means more scientific and academic funding from governments. Businesses and financial institutions can also help by setting up their own centers for climate resilience, modeled on the organizations some have built to focus on net zero goals.

Adapt Together

When asked which approaches they expect would be best to combat risks to Earth systems, GRPS respondents were clear. Around two-thirds said global treaties and agreements had the potential to be most effective.

This makes sense. Climate change is a global issue. Therefore fighting it demands a collaborative effort. After all, the best way to mitigate the likelihood of climate tipping points breaching and overwhelming adaptation measures is through worldwide emissions reductions. Hence why gatherings like the UN Climate Change Conference are important, even though they often only advance climate action inch by painful inch. 

The role of states and development banks is pivotal, too. They need to work hand-in-hand to de-risk investments and open new climate adaptation markets for private capital. 

Beyond finance and policy, a multilateral approach has to extend to sharing knowledge, technology, and best practices across borders. International research networks, technology incubators and standard-setters can help build adaptive capacity globally — fast — by pooling the resources of many jurisdictions.

Let’s Go

The Global Risks Report says “adaptation efforts are unlikely to radically progress over the next decade, particularly in the most climate-vulnerable economies.” It’s a dark prognosis, but given the scant progress made over the past few years, an understandable one.

Still, this is divination, not destiny. The scale and violence of extreme weather events in 2023 and early 2024 broke through into the public consciousness — think of the Canadian wildfires, New Zealand floods, and this month’s monster waves on the US West Coast.

These may have opened up the policy and fiscal space for us to get real on climate adaptation. At the very least, we know extreme weather events are top of mind among risk professionals. This suggests they will be highly receptive to ideas, solutions, and investments that address these risks today.

That means it’s time for climate resilience advocates to get in their faces and teach them how to adapt faster, smarter, and together.