It might be my imagination, but it sure seemed that the “Good riddance to you” declarations at the end of 2023 were even stronger than the relief people bidding adieu to the year 2020 and all of its pandemic woes.
Will things get better in 2024 or are we just jumping from the frying pan into the fire?
So far, I fear that it’s the latter, at least judging by the sentiments of those around me. Given that it’s the Year of the Dragon, well…
As Eurasia Group puts it in its 2024 Top Risks Report released Monday: “Politically it’s the Voldemort of years. The annus horribilis. The year that must not be named.” (I couldn’t help but follow the Harry Potter theme by choosing a Hungarian Horntail to illustrate this article…)
Happily, the thing about foresight, outlooks, predictions –whatever you want to call them– is that outcomes are not set in stone. What key stakeholders do about them makes all the difference. Calling out fears and worries gives us a sense of control and a road map for thinking about how we will confront them.
Some of the perennial annual-prediction-producers judge their success by how many of the previous year’s calls they got right. But no matter how gloomy or sunny a forecast or top-risks list may be, I’d say that the best measure of success may lie in some of the predictions we get wrong.
Why? Because drawing attention to economic and political risks gives us the ability to change their course.
That’s what I hoped to do when I created the gray rhino concept and accompanying analytical framework: to prompt decision makers to take a fresh look at obvious, probable, dangers and opportunities heading our way, because few of us are anywhere near as good as we’d like to think at keeping our eye on these gray rhinos and responding effectively.
A Better Question to Ask
As you might expect, journalists, clients, and audiences at my talks and readers of my articles ask me often “Tell us, what are the top gray rhino risks right now?”
Everyone has their own perspective. It is, of course, helpful to hear what risks worry others in your orbit. The risks they see might have second-order effects on your organization. Or they might have slightly different ideas about the likelihood and impacts of the same risks, and about what can be done about them.
I always remind people that the best person to identify gray rhinos is the one you see when you look in the mirror. You know what the biggest risks in front of you are. The challenge is to make sure that you are paying attention and being brutally honest with yourself about how you –and your organization and key stakeholders—are responding and how you could do better.
As we sort through the annual deluge of top risks lists, here are the questions I’d like to see more often: “What are the gray rhino responses? How can we do better? What do we need to keep the worst from happening?”
Not everyone has the same power to affect big, global trends, which often lie in the hands of local, national, or global policy makers, corporations, and civic movements. But many individuals have the power to align themselves with problem solvers, to reduce the negative impact of many gray rhinos and even to find opportunities in adversity.
So after issuing my usual caveats, I typically relent and share what’s on my own mind.
Coming from a background in finance, policy, and governance, over the past few years my attention has been focused on a trio of high-level, interconnected gray rhinos: climate change, financial fragilities, and geopolitical tensions. I continue to be deeply concerned about all three.
However, a risk analysis for 2024 would be remiss without a mention of generative AI and large language models. Unless you’ve been living under a rock, it’s hard to avoid conversations about the impact of these technological breakthroughs and the possible risks they pose.
Technology and AI
On my travels in 2023, from Beijing to Milan, I got a lot of questions about AI as a gray rhino risk. Like any risk, AI is not a single risk but a series of related issues. In my view, the biggest Ai-related risk is not the one that got the most media attention: that it might become sentient and destroy humanity, as many tech leaders famously posited in an open letter last March. Though that might become a future issue, right now, is a dangerous distraction from immediate issues.
I told multiple audiences in 2023 that in my view, the biggest risk was the infodemic of misinformation that AI could unleash, making the waves of misinformation we saw in early days of Covid-19 look like child’s play.
Indeed, the World Economic Forum Global Risks Report 2024 released this morning called out misinformation as the top two-year risk of 2024 based on responses of roughly 1500 survey participants around the world.
Next week I’ll go into more detail about the myriad other AI and tech related risks to which companies and policy makers should be (and to which many ARE) paying attention.
These risks include high carbon emissions and water use, an “accelerate or die” attitude, labor market impact, unproductive over-investments, privacy, algorithms’ amplification of human biases, and shocks to the educational system.
The biggest financial fragility worry on people’s minds is the slowdown of the global economy: how much, how fast, what will the knock-on effects be – or will we achieve the mythical “soft landing” of which everyone dreams?
I fear that now that the inevitable downturn did not happen in 2023, too many people assume that it will not occur at all. To anyone who watches monetary cycles, that’s simply magical thinking.
In two weeks, I’ll go into more detail on the obvious and not-just-probable-but-already-happening challenges for commercial real estate, banking in the wake of the bank failures nearly a year ago, the US budget and debt dynamics, regulation, crypto, and global commerce.
I’ll also look at the political implications of various economic scenarios in coming months. Which brings us to…
Geopolitics and the US, US, US
Despite the high-stake conflicts in Ukraine, Gaza, and elsewhere, the United States itself is on the top of mind for many of the smartest people I know. Of course, given the dominant US role in geopolitics, domestic US politics are highly relevant and will bear upon the outcomes of other global, er, situations.
In a presidential election year in which the two most likely contenders are elderly even as voters and other interested groups would prefer not to see a rematch of 2020, there is huge potential for lots of disruption and surprises.
Some potential “surprises” -such as medical events or a third-party candidate—are anything but unforeseeable, though of course nobody has the power of precise prediction.
Eurasia Group put “The US versus itself” on top of on its list of the top risks.
The Council on Foreign Relations’ latest Preventive Priorities survey found high concerns about domestic terrorism in the US -the first year that it has included domestic conflicts.
And recent threats against political officials in the United States, particularly women –of both parties— give great reason for concern.
More on all this in three weeks.
Finally, the climate crisis remains high on many observers’ minds. Climate policy is, of course, a major difference between Trump and Biden supporters. The US election outcome thus will have a significant impact on future US climate response.
Extreme weather and its consequences are at the top of the Global Risk Report’s 10 year risks and second in its two year risks.
Four weeks from now, we’ll go into more detail on economic and policy implications of climate crisis, from stranded assets in the net-zero transition, to record insurance payouts and insurers withdrawing from the most climate-vulnerable areas (and in turn the real estate implications), water scarcity, crop failures and their impact on food price volatility and supply chains, and more.
From Risk to Response
I’ll be addressing each of these gray rhino risks over the next four weeks, so stay tuned. Then we’ll move on to evaluating the policy, business, and individual responses –both what’s happening and what could be improved.
In the meantime, have a Happy New Year, if you can!
P.S. Stay tuned for a big announcement next week…
Want to learn more about current economic gray rhinos and evaluate your organization’s response to them? For a limited time, I’ll be offering free fireside chats, workshops, and book club opportunities along with bulk purchases of my recent book, You Are What You Risk, now available in paperback.
- Gray Rhino Risks and Responses to Watch in 2024 - January 10, 2024
- Chapter Zero Italy: Assessing Long-term Climate Impact Scenarios - August 8, 2023
- Banking Crisis Part II: Some Obvious Lessons that Bear Repeating - March 24, 2023