By DPA
Geneva : Global financial risks along with food and energy insecurity top the list of major potential threats to the world economy this year, according to a report published by the World Economic Forum (WEF) Wednesday.
The Global Risks 2008 report said the prospect of a US recession provoked by the US subprime mortgage crisis demonstrated the need for new thinking in response to revolutionary changes in the financial markets in the past two decades. It called for a new framework to manage the risks.
The Geneva-based economic think tank also warned that food security would become an increasingly complex political and economic problem in the next few years. With the price of crude oil reaching record highs, it also recommended an improved approach to securing viable energy supplies.
The report was compiled with input from more than 100 top business leaders, decision makers and leading academics and published in conjunction with a number of financial companies including Citigroup, global re-insurer Swiss Re and risk experts Marsh & McLennan Companies (MMC).
MMC Vice-Chairman David Nadler said shaky financial systems were the “most severe risk” facing the global economy.
“With so many potential consequences of the 2007 liquidity crunch unresolved, the outlook at the beginning of 2008 is more uncertain than it was a year ago,” he said.
The report calls for an increased intervention in financial markets to mitigate the risks and better global governance through a network of country risk officers.
“The interconnectedness of global risks discussed in this report reflects the need for a collaborative framework for response,” said WEF founder and Executive Chairman Professor Klaus Schwab.
The discussion was due to be taken up at the upcoming WEF annual meeting due to be held in Davos in Switzerland at the end of the month.