Tariffs and AI's downside pose top global risks for business, World Economic Forum says

The World Economic Forum (WEF) has released its Global Risks Report, highlighting significant threats to businesses as the world heads toward 2026. Leading the concerns are intensifying global power rivalries and strategic conflicts, with nearly half of the surveyed business executives anticipating challenging times ahead. Only a mere 1% expect a calm environment, indicating a growing sense of unease. The report paints a grim picture, suggesting that geoeconomic tensions have surged to the forefront of business fears, driven by fierce competition and the use of economic instruments such as tariffs and regulations. This escalation could potentially lead to a notable decrease in global trade, warns economist Saadia Zahidi, managing director of the WEF. As countries grapple with high debt, inflation, and unstable markets, the specter of an economic downturn looms large. John Doyle, CEO of Marsh, which collaborates with WEF on this report, described the current climate as one characterized by multiple crises, pointing to trade wars, cultural conflicts, rapid technological changes, and severe weather as pressing challenges for businesses. The report also highlights misinformation and societal polarization as significant risks, with inequality emerging as the foremost interconnected threat over the next decade. These issues hinder the necessary cooperation to mitigate economic shocks effectively. Notably, concerns regarding the adverse effects of artificial intelligence have surged dramatically. Once ranked 30th among short-term risks, AI has climbed to the 5th position for long-term risks in the latest survey. Issues such as labor displacement could exacerbate income inequality and societal divides, leading to reduced consumer spending and increased economic and social unrest. While technological advancements in machine learning and quantum computing are advancing rapidly, the report cautions that this could create scenarios where human oversight diminishes. Additionally, the impact of extreme weather continues to be a top concern, with predictions of insured losses from natural disasters exceeding $107 billion by 2025. Doyle emphasized the urgent need for regulations that reflect real risks to attract investment in the insurance sector, particularly in light of recent wildfires in California. He urged for improved building codes and the deployment of technology to manage risks effectively. The report concludes with a call for collaborative efforts between governments, academia, businesses, and citizens to build resilience and address the most pressing global challenges amidst an evolving risk landscape.