Investors feel the heat1 min read

12/Sep/2019

According to a new index of the greatest threats to world economic growth, global temperature changes have become the leading extreme risk for investors.

In a report from the Thinking Ahead Institute that categorises rare events that could have a high impact on world growth and asset returns, weather hazards, a collapse in global trade and cyberwarfare were ranked as the greatest risks .

Biodiversity collapse, the abandonment of fiat money and cyberwarfare have all moved into the top 15 risks for the first time, while deflation, insurance crises and terrorism have all dropped out.

Those that have risen up the rankings this year are infrastructure failure (up eight places) and global trade collapse (up three places).

According to the report, extreme risks that are less of a threat than in 2013 include stagnation, which has fallen eight places, as well as resource scarcity, which lost top spot by falling three places.

“Our extreme risks ranking has seen the emergence of a general trend with financial risks falling down the rankings and non-financial extreme risks growing in significance,” said Tim Hodgson, head of the Thinking Ahead Group.

He added: “Global temperature change becomes the highest ranked risk due to our assessment of higher likelihood coupled with significant impact – in the extreme this would mean mass extinction.”

This report originally appeared in City AM.

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