Respondents in Australia and globally have ranked the current cost of living crisis as the top risk in terms of likely severity for the next two years, according to the World Economic Forum’s latest report. 

Natural disasters and extreme weather events placed second, followed by geoeconomic confrontation, failure to mitigate climate change and erosion of social cohesion and societal polarisation, according to the Global Risks Report which is produced in partnership with Zurich and Marsh McLennan. 

Rounding out the top-10 short-term risk list are large scale environmental damage incidents, failure of climate change adaptation, widespread cybercrime and cyber insecurity, natural resource crises and large scale involuntary migration. 

“In the near term, cost of living is the key issue in Australia and around the world, particularly given the impact it has on economic inequality and general social & political cohesion,” Zurich Australia and New Zealand Chief Risk Officer Jaimie Sach said. 

“Over the longer term, it’s not surprising that the top-10 risks are dominated by environmental concerns.” 

Mr Sach says of “particular interest” in an Australian context is the increasing risk around resource competition, specifically in critical “new-economy” minerals of which the country is a key global supplier. 

“This will be a significant area of future economic and geopolitical interest,” he said. 

The report’s chapter on Resource Rivalries explores a potential cluster of interrelated environmental, geopolitical and socioeconomic risks relating to the supply and demand for natural resources. 

It says shortages in key materials remain a near and mid-term concern, given time lags to production. 

“Further, environmental concerns have limited domestic extraction in several advanced and some emerging economies, as well as by multinational mining companies headquartered in the West,” the report says. 

“For example, since the early 2020s, the expansion of lithium mining in Portugal has been significantly delayed due to environmental approvals; projects in Canada and Australia have slowed based on concerns relating to Indigenous communities.” 

The report says critical metals and minerals are a key area of geopolitical confrontation due to their geographic concentration. 

“These resources are not only essential to renewable energy capture, storage and efficiency, but also continue to be leveraged for a wide range of other industrial applications, including technological and military end-uses,” the report says. 

Australia has about 26% of the world’s known reserves of lithium, 18% of cobalt and 22% of nickel, according to the report.