I fear a great risk stems from the temporal disconnect between short-term political and business leaderhip tenures, and the long-term nature of the key decisions that have to be made in our time. This risk manifested in Copenhagen, and is bound to do so again. Perhaps we are entering an era where unfettered democracy, especially the populist version, will need to be tempered by a new system with a greater focus on custodianship?

1. Trade protectionism comes back into the stream, resulting in heightened trade frictions. 2. Any treaty about nuclear security, if any, is not executed by all members, leading to the increased risk for nuclear catastrophe.

We need to go back to the basic principles taught by Adam Smith in The Wealth of Nations and live the simple law of the harvest. Allow people and businesses to fail, learn from it, and come back stronger. Be charitable to others but don’t allow the idler to eat the bread of the worker. Most of the answers to the toughest issues are simple but hard. We don’t like to hear them so we make up complicated formulas to solve problems the easy way then look for someone else to blame when they don’t work.

Try this: “I am responsible for my own support, opportunities, health, safety, and choices. I am also primarily responsible for the support, opportunities, health, safety, and choices of my immediate family. If I find myself unable to meet my needs I will turn to my extended family, friends, church, and private charities organizations before I turn to the government for help. I will treat the tax dollars of my neighbors and fellow citizens as sacred.“

— Robert McCauley.

Our understanding of risk is largely confined to the definition, quantifiable and qualitative levels. We have yet to really grasp how to implement a culture which is rewarded on compliance to short-, mid-, and long-range wins across multiple industries. Banks are not the only source of major risk (and not all short-range decision making is high risk)—we have many organisations who drive the economy—either directly or indirectly yet fail to govern their actions. Risk has become strategy in the 70’s; it’s attractive but not really understood or executed seriously.

The greatest risk is the continual failure to learn from the past. Not to use finite knowledge of the past to predict the infinite possibilities of the future (which is generally wrong) but to recognise that the likelihood of world wars, stock market crashes and tsunami’s, etcetera, display no mean nor normal distribution. We need to be more resilient against any event. To not only bounce back but to bounce forward.

The greatest risk is our own pessimistic attitude that will become a self fulfilling prophecy. The second greatest risk is deflation all around the world.

A huge risk to society is a growing lawlessness born out of distrust in our governments.

China’s ever-wider gap in wealth distribution accompanied by a burst of much higer living costs due to unavoidable hyper inflation.

1)The lack of a regulation for derivatives products and for the “shadow banking system”—the hedge funds. Of course there’s a trade off between regulation and free markets and a proper solution must be in the middle. 2) Correction of unbalanced international macroeconomics. At some time in the future, private demand must replace the goverment expanses to stimulate the economies because it’s not possible for the deficit to be so huge. 3) Unemployment will remain high this year and as result a weak USD will finance this unemployment.

Leaders and managers are woefully unskilled at thinking about risk in a way that translates the thing too big to contemplate into something day to day that will have a measurably positive effect on the mega risk. The continuing focus on short-term financial results precludes skill building for long-term benefit.

Primarily, the foremost risk would the economic and political in-stability that would have to be controlled by countries while trying to roll back the various stimulus packages rolled out during the last year and a half.

Restoring consumer trust and confidence in business, but especially the banks and the regulators, by visible actions and responsible behaviour will be one of the biggest issues that the markets will face.

The number one risk is the motivation of the staff: the loss of morale in the market may lead to demotivation and lower dedication to the company/business. Shareholder value and earnings per share is placed above all, and that may hit the working climate negatively, if you see that the personal contribution is only appreciated (if at all) in the first 7 minutes after the months closing... before you are pushed and pressured already for the next months forecasting. In my opinion, the “peace of mind” of the individual can not be held up by contributing to “enrich” people and a system, that is mainly responsible for the turmoil we are in.

The risks as present here all make sense to the majority of businesses and regulatory bodies. However, our myopia continues to ensure that short-term strategies, built around time frames more or less dictated by political needs, may distort our ability to truly identify risk. Our reliance on the same “tried and tested” strategies are our biggest risk as we watch our governments run out of ideas. Copenhagen demonstrated the inability of governments to address an issue they all claim to be a priority. Davos looks like it will do slightly better but still not reach far enough. Our problems and risks have changed little in the past decade, but we seem to be making little ground in resolving these. Is it time for a new approach?

An important risk we face in the United States is the failure to create meaningful jobs for our highly educated workforce. The United States is educating a generation of students for jobs that won’t exist in their field. How do we measure the risk associated with high numbers of disillusioned, unemployed students?

The biggest risk is the political inability to execute and drive the fundamental reforms required to change society for a new demographical reality when faced with the continuous threat of the voters.

Illiteracy or singularly focused religious education for 25-and-under populations in developing and emerging markets poses an enormous barrier to comity in global relations, which poses material risks to long-term prosperity in global markets.

The agency problem and its implications for the political process are still the greatest risks. Agents are supposed to represent the interests of their principals, but in fact, they tend to put their own interests ahead of the interests of those whom they are supposed to represent. Politicians continue to be more prone to support who has financed the campaign more than the citizen they should represent.

We cannot ignore the risks associated with the changing dietary habits of 1.3 bn Chinese and 1 bn Indian nationals. Once their standard of living rises, world agriculture will be pushed beyond its limits. And how about energy risk—what will be the gap between supply and demand in 20 or 30 years? Waste disposal—we are filling up the planet pretty quickly and if we do not come up with an eco-friendly solution for this where will we end up? Internet and media usage—this is a hot one! How will content be controlled, how will the new media shape the education and value systems of the next generations?

The biggest risk is one of “method.” It is the inability of the risk methodologies to deal with the high levels of complexity and uncertainty inherent in transnational threats, be the threat terrorism, pandemic, natural disasters, financial bubbles, or the contaminated supply chain. Meeting these threats means “re-wiring how we think” and embracing tools and risk paradigms based on complexity science and resilience.

In my opinion, the most important risk our human race needs to deal with in a more consistent and integrative way is the risk of global warming. It could be the ever most critical issue for public and private leaders in this decade. It may sound strange but maybe the earth is sending us a message, now in a louder voice through tsunami, storms, earthquakes, etcetera, that we should stop following those who exploit the earth for short-sighted economic reasons and indifference towards its sustainability. Let’s not wait for another decade before it’s too late to avoid our race becoming extinct.

All the resources and capacity involved in business pose their share of the risk and the same with the economy. But the most critical risk of anytime and all the time would be market risk, as the market is the buyer and seller of both the product and finances. The economies around the world have been in a protective mode with lower interest rates, just this single change had it own effects in different economies—India experienced unabated inflation, China might face deflation, and once the interest rates are corrected to previous levels each economy may face growth risk. The US might experience exchange rate risk on its investment in securities. The protective financial policy poses immense risk in its withdrawl.

The biggest risk in my opinion would be the resistance to change of the business models which showed lot of weaknesses during the crisis. Unless some wise regulation towards corporate governance is introduced, unpleasant mistakes may occur again.

There might be risk arising out of overly conservative country work-visa policies; either the work would need to be outsourced or there would be a need to import trained manpower.

The greatest risk is the meta-effect of the law of unintended consequences. Think back to why CDOs even exist—it’s because we tried to draw a bright line at the investment versus speculative grade fixed income. That created the arb that turned $100 of junk into $90 of “AAA” and $9 of equity, letting banks take a “free” $1 out of the game. Likewise, hedge funds exist almost solely because pensions and endowments were forbidden to go short. A simple 130/30 strategy takes away all the excuses to pay the hedge funds their 2 and 20%. And of course, when a real AAA and a fake “AAA” asset both draw an 8% bank capital charge, no surprise what the bankers dive into. So the real issue in 2010 will be: How will regulatory intrusions interact badly, this time?

The greatest risk (for all time not just in 2010) stems from quickly forgetting lessons from the past. And, making future predictions that ignore common sense and common good.

Enron, Tyco, Parmalat, and also the recent global economic crisis, food crisis, energy crisis, global warming, all point to insufficient governance conduct and implementation, encompassing public and corporate governance. Without committed implementation of public and corporate governance from the heart of leaders and only stay on the check list level of governance conduct, I do think that those risks will continue to appear in 2010 and in the future.

ROSC (Research on Observance of Standard Compliance), the joint effort of The WorldBank and IMF, and the corporate governance scorecard of OECD (Organization for Economic & Corporate Development) needs to be enhanced proportionately and globally to mitigate those 2010 and future global risks to come.

All the usual suspects and the risky persistent belief by many that we can control them instead of scenario planning, mapping stakeholders, devising strategies to mitigate impact and holding the course in a forever uncertain world.

In addition to the risk of political inestability that The Economist described, I think the effect of Venezuela could be very serious, not only on the political side. Its economy is collapsing, and the oil production will be in danger for the missmanagement of the state-owned company PDVSA.

In general different risks pose different threats to different entities. A general major threat is, not having recognized and interpreted major risks in due time. In such case, one can get hit by a train without ever knowing.

Most experienced risk managers see these type of reports as being too generic and the consensual view. Therefore totally lacking in any imagination of the likely future risks which their orgainsations will face.

2010 probably has opened account with the biggest liablities for us, ever. As correctly mentioned by Rajagopalan, corporate governance remains a very very big risk. Too many organisations have been behaving much like the now-maligned hedge funds or investment bankers, for long. As the spotlight was not shining on them, they have quickened their own paces, to mop up as much as possible. This includes bubbles forming in the real-estate market in India, the largest right now. Just like US this too will burst very loudly, taking many businesses down. At the same time, the issues and related discontent around unemployment are snowballing. Ambers are shooting flames, visible across the world. The large disparity between the “smart” guys still pulling fast ones and those on the other side is assuming larger divide. Almost beyond reproach. Security and threats, stemming from such large swathes of unhappy people is probably the biggest risk we will face and suffer from.

One emerging risk is in food security to people. The rising inflation due to mismatch between demand and supply is not managed by the international communities. Also, political instability in Asia-pacific region is causing the economic recovery to slow.

Democracy becoming alive through technology; in the not so distant future global grumpiness will turn to action. Reflecting the risk of widespread and coordinated people action against different types of unacceptable and irresponsible corporate and political behaviour—be it Japanese whaling, banker bonuses, or continued environmental destruction—it will be driven by the net generation’s growing ability to organise themselves and others using available technology. Somewhere, someone will pioneer a successful model to force change by using modern technology, and this approach will spread globally, be varied and applied rapidly to many lingering issues.

Most concerning is that the immediate, screaming risks to economic and financial stability globally will prevent serious action to address environmental damage. The result may be irreversible incapacity to maintain the health and wellbeing of our planet and its inhabitants.

The biggest risk for the years to come is in the quality of our information. 1,5 years into the credit crisis, we still don’t know how to measure our portfolio credit risks. The basis of our information, the source where we get it from, the claims about the performance of specific information, as well as its perishability will draw our attention. Although probably most people will only be obsessed by specific contents they signal.

One of the key risks the corporates and economies likely to face is the unpredictable behaviour of Governments in response to global events. This has the potential of thwarting the plans of corporates in ways they have not imagined.

The greatest risk is in business connectivity and interconnectedness among companies, especially when analysing credits of conglomerates and the need to meet business objectives and payoffs. This remains a focus point for business analysts, bankers, and risk undertakers among others, especially after any crises.

In my opinion, one of the risks faced by India is the fast deterioration of the quality of education (even in the prominent institutions), especially at the post graduation level. The ratings given by companies recruiting candidates indicate a sharp decline in the knowledge levels of the students graduating. Besides this, Indian institutes follow a highly flawed selection process of its candidates. Candidates without the required calibre can crack the selection tests with rigorous training resulting in them being unable to cope up with the requirements of the course. Quality is being mercilessly traded off to increase the student intake at most institutions. All this in turn marks a bleak future for the candidates while making it harder to find a quality workforce for the company while degrading the value of these degrees; its almost like trying to find a pin in a haystack.

The risk to global economic order comes from the inability of governments in various key countries to evolve rational measures to resolve the economic adversities facing the individual countries specifically and the world in general. As the governments dither, there is a risk of social order breaking down, at least in parts of the world, to the detriment of entire global economic order.

1. Focusing on the same things people/economists always do annually when evaluating risk—such as what you see in print all the time: the big concerns of China, Europe, the US, and how we are all getting along and who is supporting who. The dollar, oil, unemployment, technology, etcetera, and how all these interact and effect each developed nation within each other’s own agendas. These are important, of course, but not the end all.

2. The greater risk is not focusing on undeveloped nations to help them reach their potential to eventually incorporate them into more contributing partners in the global community. One day the economists and other traditional folks are going to wake up and Africa will be a leading continent and they won’t know what hit them. It’s time to shift our energy focus. It’s time to stop listening to the general consensus of old stigmatism and focusing on numbers/stats that won’t improve until more people are willing to take risks in these undeveloped nations in the first place. If the media was ordered not to write anything about China or Europe and only write about Africa or Latin America, we would be having a different discussion in 2011. We are led by what is in print. But we are the ones who determine what will make print and what won’t. Our thoughts lead our actions, but our thoughts are sometimes our greatest risk.

One of the most disturbing trends over the past few decades has been the demand of citizens in the US (and elsewhere) for more and better services without being willing to pay for them. One of the most dramatic illustrations of this is California, where initiatives requiring additional expenditures regularly win and the tax increases to pay for them regularly lose. Another is the US healthcare system. The government is now paying for more than 50% of healthcare through Medicare, Medicaid, and the VA system, costs are escalating without end, insurance companies are highly profitable, and “rationing” is used as a scare tactic. My fellow citizens do not want to face the fact that a limitless “free” good will bankrupt us as a society.

Our essential risk remains not sharing collective knowledge for either good or best practices in risk mitigation. We sometimes shrink from collaboration in the name of competitive advantage. Key metrics including risk and mitigation performance indicators can be anonymized and more broadly shared if we are to identify opportunities for incremental if not continuous improvement.

Leading indicator research and identification is also all-important. Interoperable and ROI-capable people, process, and technology approaches that work persuasively for our physical and logical environmental health ought to be economically more feasible with broader understanding for adoption across communities, markets and sectors; enabling institutional mission performance, commerce and cultural exchanges. Nimble risk detection, response, and accountability from manmade events alone require people, assets, information and transaction authentication, as well as exception reporting. Our capacity to share our interconnected risk mitigation opportunities must be accompanied by our willingness to reward ethical behavior and deny those who would harm us is a simple compliance expectation. We can begin with our own personal resonsibility to be engaged and duty to report or mitigate consequential risk within our sphere of influence. Self improvement for risk mitigation and our collaboration with others will enhance our ability to respond collectively to global natural disasters as capital and capacity are preserved from unnecessary losses.

I am not an expert on this, however from what I have understood in my interaction with some of the academic clients that I work with, this year looks like it’s going to be a very risky year for technology development at universities owing to the spending freeze or slow down in funding. This will have a cascading effect on innovation, research and development and all tied up industries and the factors involving their advancement and thus on the country’s economy as a whole. I agree with Jeffrey Charles’s comment that Talent will be affected to a very large extent. This is just my 2 cents on this. Any experts in this forum may know a lot more.

The greatest potential for risk lies with the USA and Eurozone. The reason is well documented: debt. I am not sure which one will blow up first—it might be Europe because the USA’s reserve ammo looks better than Europe. Excessive public and government debt and the USA run twin deficits. The weakening dollar will help US products to become competitive again (helping deficits), however this will cause commodities to strengthen. The reverse will be detrimental to developing economies. The patient has not taken the pain yet.

While most of the above identified risks are relevant to everyone, there is one risk I am missing which is not related to the financial situation: the risk of legislative overdrive related to product safety and especially chemical content/composition. We have seen tendencies towards legislation which essentially outrules the use of safe products because some (other) use of a material component in some instances may invoke a consumer risk. Making products for children from plastic—this is a real threat to our development, as any country/state may iniate a rule/regulation, whereafter we see the idea spreading. So, to the LEGO Group, this risk is top of mind as well.

The most important risk that we can forsee for the next 5 years will be mostly on corporate governance compliance. Since none of the country’s regulators have perceived the need of inculcating self-governance in the corporate world nor the corporate world have understood themselves.

Not being honest to face existing problems, not being ready to question traditional thinking, and not being prepared for consistent change.

Considering the current economic scenario, the most important risk would be non-restoration of consumer confidence and resultantly investor confidence. Unless these two are brought back into the green, the economy would need to be supported by stimulus measures which, in absence of consumer confidence, result in a lot of side effects including inflation and unemployment, among others.

Trying to predict risk is like wanting to become Nostradamus, the only difference being that a lot of things were unknown at that point in time. But now with modern technology and all the data in the world we have run out of the intellectual foresight to look at the basics of living a good life for millions of people, versus chasing larger than life goals churned out by the barons of industry and business schools.

The main risk in this year lies in Chinese Yuan not appreciating, followed by food inflation. Anticipated high crude oil price is catalyst for the second one.

The key point of focus should be the oil price in relation to the EUR-USD exchange rate. If the USD strengthens against the EUR and the oil prices follow an upward trend European companies will start to see their costs rising and their profitability shrink. In addition, there is not a viable alternative for fuel to fully replace oil in production, at least not in the short term. On the other hand, a cheaper EUR will make exports easier but with countries as China (supposing that will leave their currency linked with USD) being unable to urge for increase in private consumption for the time being and the US striken by unemployment and a more “spending averse attitude” left from the last downturn, Europe will find it hard to sell their products. And this time banks may not be around to provide liquidity.

Working through the damage done and that yet to come would be easier if we were able to put odds on whether this will be a classic “breakdown” catalyst for long term creative re-invention of economic, political, and social systems or just a breakdown with the spector of poorer lives on average. Individual companies and institutions can control their direction here but, from a macro sense, I don’t see clear signals in either direction. Do you?

Threats are most likely to come from the weaknesses in the economic circumstances of the debt-ridden European countries. The risk of the collapse in specific economies (e.g. Iceland/Greece/Spain) or at least a long-term lag in recovery that could hold down trade, stretch unemployment, and give rise to political unrest could further exacerbate the situation. Coupled with a slower than expected recovery in the US economy, we could be set for an unpredictable ride through 2010 triggering a negative outlook for manufacturing and primary production.

The development of China-US relations, political and trade, will have repercussions on the progress of emerging economies in Asia this year. However, if Asian countries band together in strengths, the larger emerging markets in Asia can stay quite resilient. Still, terrorism is a huge risk to all. Terrorism is the big unknown.

Reduced appetite for global coordination as countries focus on internal economic adjustments; quality will suffer due to cost pressure in the main; internal and external terrorism.

Unemployment and the social consequences brought on by unemployment. I don’t know what all the consequences will be but I think unemployment is underestimated. Big business is global and can acquire the brightest and best trained minds at the cheapest price. Essentially knowledge is now a commodity. Governments that focus on the needs of its citizens will prosper more than governments trying to help business prosper thinking business will provide employment. Technology is cheaper and easier to manage than people. Business is very motivated to engage is more technology and less human resources.

(1) China’s property bubble may burst from 2010 to 2012. The current ratio of house price to family income is about 3 to 6 times higher than the global average. Other emerging economies are in a similar situation, but to a lesser extent. The over-lending during the global financial crisis period inflated this bubble further.

The burst will slow the global economy and erase the double digits growth miracle of China’s past 30 years.

If the bubble is not to burst, the social imbalance will erupt and negatively affect its growth for long run. This is a worse scenario for global economy and China itself.

(2) The newly introduced financial regulations do not tackle the core problems which caused the global financial crisis. This can form another round of crisis.

Particularly, leverage finance should be abolished. The world should embrace the saving, and non-leverage investment. This is a more healthier and balanced investment model.

The moderate saving should be encouraged to invest to some solid enterprises but not the leverage investment. This is a poison to world economy. It also makes people too greedy and abrupt the world economy order.

(3) The economic recovery (most noticeably USA, Europe, and Japan) is fragile and unsustainable. Overall demand takes time to recover.

The global consumption-driven economic model is adjusting to a moderate saving and consumption model. This is a balanced and healthier model. However, it will certainly slow down the global demand rising.

1.) Fear! Economic uncertainty causes many to fail to act—instead they hunker down, yet the explosion of new technologies continues and the opportunity to literally change the way the world works is in reach.

2.) America’s congress! Continued governance by political advantage rather than what’s good for America and the world.

3.) Lack of political will to take bold action required to solve credit issues and create jobs.

The confrontation between the US and China may damage the process of the world economic recovery. Wide spread trade protectionism due to sluggish economy may enlarge trade frictions. The emerging economic powers, such as China, India, and Brazil can’t keep sustainable growth.

The asset bubble in China may be harder to contain than what the central government thinks, especially if indeed, there is a rift with the US on a number of issues.

Potential credit downgrade of US debt and a significant slowdown in growth in China.

Small to midsize companies are running out of money. Their credit is not what it was and their businesses are overleveraged. Ownership is extremely disheartened. Private equity groups are at risk of defaulting on debt coming due on companies that are not performing. Loss of business and rise in unemployment.

It is surprisingly unimaginative to list the risks of events that are already well under way, for example, Greek and European fiscal pressures/crises, Iran’s internal problems, the unwinding of Chinese-US relations which have not been very cordial since before the last US presidential election raised rhetoric of trade protectionism and the specter of taxing China-based MNCs. Of all those risks listed above, only WEF attempts to actually identify future (not ongoing) risks. And even here, the risk to the capital stock (infrastructure) has been apparent well before the crisis, while illicit trade is accelerating in line with anyone’s rational expectations given the state of the global economy.

In my personal view, the risks we are going to face in 2010 are the following: (1) assets and investment bubble in China unwinding through a massive disruption of financial markets and regional economy, (2) the above triggering a world-wide recession, in the environment where policymakers have already expended all their stimulus and monetary ‘fire power’; (3) high volatility in financial flows with liquidity moving abruptly between bonds and stocks as risk aversion fluctuates in the markets, causing disruptive swings in the cost of deficit financing for governments and horrific losses on ordinary (non-institutional) investors.

In the more distant future: potential collapse, due to long-term effects of current deficits and debt burdens, of the pensions provisions in the developed economies, leading to significant social unrest (time horizon - 10 years) and tearing of the social fabric between two generations - Western World’s young (assets-poor) and its old (assets-rich).

But, honestly, the list can go on, but why subsidize with one’s own thoughts a rather banal set of ‘predictions’ from the ‘professional’ forecasters who are paid to come up with them? The markets have already priced virtually all of the risks listed above, except for those that cannot be directly priced—deficient or obsolete infrastructure, the spread of chronic disease (not epidemic, mind you, chronic, as if this risk can even be verified or quantified within a span of 1 year).

The world acted relatively uni-laterally on the GFC which augers well for ongoing co-operation, although not reflected at Copenhagen. The shift in the balance of sovereign and corporate power occurring now will result in a number of opportunities and threats. The world’s biggest risk is at a micro level with hightened risk limiting entreprenurial capital development. This will flow on to impact on the longer term risk metrics of population’s & climates and humanity’s vision for itself!

The greatest risk is inflation resulting from uncontrolled government borrowing. This will lead to raised interest rates, supressed growth, and the return to recession. This time though the recession will be accompanied by high unemployment, a high level of property repossessions, company and personal insolvencies.

Top Risk: Policy Volatility. Leading governments have failed to outline clear trajectories for policy in areas with high potential impacts for national and international markets. For example, the United States is still stuck in a health care crossroads. Foggy policies, multiplying options, and regulatory spectres are creating so much uncertainty about medium-term costs in a wide variety of key markets (energy, exports, finance, health care, industrial policy, agriculture, etc.) that businesses are postponing investments, hiring, and restructuring decisions.

Excellent thoughts, banks should be aware of their obligations to their communities in making lending decisions and to contain risk, especially when they benefit from taxpayer support after getting into trouble. He also questioned the bank’s “paying out bonuses in large quantities. Our challenge now is to put in place a new system. When I was in government, I was fond of warning that the world economy could not fly forever on a single American engine. Frankly, it has flown further and longer than I would have anticipated.

On the “Anomalous and nonpermanent” trend of capital flow from developing nations to industrialized nations, he said he attributes the phenomenon to a lack of savings and rapid consumption in the United States, which he said is “sucking capital that would otherwise be productively invested in the developing world out of the developing world.

‘The three monkey syndrome in global banking’bankers around the world have been always comfortable ignoring client funds origins, hiding behind banking secrecy.

With better banking controls those funds will fly away some were else, and they are by no means negligible. Some small economies will find a credit crunch and lower investment in tourism and construction, to name a few typical drug money investments.

Mexico is deep into a drug-crusade without being aware of these consequences due to an historical “don’t see, don’t hear, don’t say” governmental attitude. And if we add the official corruption with drug money and political mischief, our economy will sink and will pull some other Latina Americas’ economies along, with an obvious world impact.

The world has never wanted to know the real amount of drug-money flowing through global banks. What will happen if it suddenly stops?

I would argue that a greater risk, with a higher probability lies in a cybersecurity breach of the now Smart Electrical Grid. Whether in North America or Europe, the fall out of a cascading event or blackout caused by such a breach results in billions of lost dollars/pounds/euro’s per day. (expected 2014)

(1) Regulatory risk: as leaders introduce unproven solutions to unprecedented problems, financial and trade systems will further de-stabilise, accelerating social unrest.

(2) e-Risk: the tarmac on the digital highway starts to break up from over-use, under-investment and imperfect understanding. e-solutions become e-problems.

(3) Ageing populations throw further strain on over-expectant youth, adding to

(4) Grumpiness: People everywhere become less cheerful, less tolerant, more abrasive. Laughter will become a precious commodity. Computers will be thrown from windows, leading to

(5) Risk from falling objects.

There is a major mismatch between perception (hype?) and reality. The attempts by governments around the world at applying ‘Keynesian’ solutions to their economies assumes that these actions actually have a positive effect. What is often misunderstood is that a free market economy is far too complex, as it is driven by both rational and irrational forces, to manage in any way without long-term, negative consequences. Hence, we have continued to underscore the following:

1. De-leveraging persists as a central concern. It is a necessary process in the reduction of overall risk after years of over-borrowing and over-spending. This permeates all economic agents (consumer, corporations, government). De-leveraging has a major systemic downside impact on growth and asset prices as it generally leads to deflation. The recent significant growth in government debt levels and deficits only postpones the end of the process as this has simply shifted the debt burden among the agents, if not outrightly increased leverage on the national economic level. Government borrowing and stimulus measures only end up ‘front-loading’ consumption. That such measures actually lead to long-term economic growth is highly debatable. This situation is true for almost all worldwide major economies, new and old.

2. General systemic and specific risks are still difficult to assess outside of the US and the UK, the two countries that have been most transparent in exposing and intervening in the current crisis. The transparency of financial institutions and governments in a number of Continental European, Asian, and South American countries has remained very low, making it diffucult to assess the general systemic and specific risks that remain. The next ‘shocks’ may come from these countries currently touted as having managed well through the crisis.

One of the main Russian risks (as in all development countries) is the rising government role: new administrative rules, administrative, fiscal pressure and as a result, market system decreasing.

I think the risks mentioned summarise the overall picture quite well. My personal pick will be sovereign risk realignment—looking at Greece, Ireland and UK/ EU debt levels; and on the question of US—China currency realignment will be pretty much at the top.

My unexpected risk category pick is stemming from more nationalistic approaches by various governments and regulators paving the way for inefficient products and trade barriers, or opportunities for “self-sufficient” products, ostensibly the cost of such inefficiency outweighing the cost of market collapse.

Internet/electronic industrial espionage, Iran, accelerating loss of confidence in business and political leadership as leaders focus on how the pie is divided instead of innovation and investment in people and technology to grow the pie.

From my perspective, business continuity or continuity of supply may be at risk in certain industries with no back up plans or in need of critical spares with long lead times.

For sure the financial sector will remain an area of concern, as well as an imbalanced global economy. On the other hand, a higher level of tension between China and the US, and between the US and the EU with Iran will increase for sure the geopolitical risk in 2010. Finally, higher public deficit budgets coupled to high inflation could put part of the developed world on the brink of a stangflation period or growth but with high inflation rates, neither of them good.

Firms ability to hire will be a problem this year. There are still mass layoffs and companies scaling back even though things like consumer spending have picked up.

The society is being challenged mostly by drug lords, insecurity is rising to unprecedented levels, police and governments are losing the war against drug cartels, youth without jobs are being attracted to crime, and these cartels are moving to other crime areas, like asking for protection tax to business owners (family business of different sizes), and kidnapping.

Hyperinflation, deep new recession, government bankruptcy, EU destabilisation, USA bankruptcy, country destabilisation from socialist versus depth of countries or even war, natural catastrophes, terrorism increase, social institution collapse, pension fund collapse, insurance collapse.

If the unemployment numbers in the US keep going up and the government could not generate new jobs for the unemployed, there is a risk that more people will not be able to pay their creidt card monthly payments. Therefore, Banks might be faced with a credit card crisis as official figures showed that the amount of card debt banks have written off has unexpectedly doubled.

The obvious risk will always be identified by all. However, understanding what risk is, the ability to understand where it may appear, and the willingness to address the potential for risk at the C-level is truly the greatest potential for risk. To quote Pogo: “We have met the enemy and he is us”. It will be our own folly and hubris that presents the greatest amount of risk.

Talent. Ensuring that teams are not just filling gaps in their talent to face today’s challenges and objectives, but are thinking strategically about where their business is going and adding talent that will address long-term objectives and goals.

1) Sovereign default risk

2) Populist policy risk

3) Regulatory risks, particularly in banks

4) Credit ratings and outlook downgrades in G7 countries

5) US unemployment remaining double digit and no housing sector recovery in US

6) Chinese government slowing the economy and falling property prices

7) Reduced demand for US treasuries

8) European banks taking further writedowns

9) Currency and bond market volatility

10) Terrorism