2020 is finally over, but the top global risks of 2021 are just as daunting

By KYW Newsradio

PHILADELPHIA (KYW Newsradio) — The unexpectedly challenging year of 2020 has finally come to a close, but its lingering effects are at the top of the Eurasia Group’s 2021 list of risks.

The Eurasia Group is a leading geopolitical risk firm that assesses how politics affect the global economy and markets. Part of that job is putting out a forecast of the top global risks each year.

Dominating this year’s list: the coronavirus pandemic, climate change, cyber conflict, and the political climate in the United States.

“The risks themselves aren’t more scary than they are in a usual year, but there are some structural factors that should really give us pause,” said David Livingston, senior analyst at the Eurasia Group.

The No. 1 risk, Livingston said, is the “inwardly conflicted United States.” He pointed to the recent riots at the U.S. Capitol building and the spread of misinformation surrounding the election.

“The U.S. is, on the one hand, still the world’s most powerful industrial democracy. And yet, it’s also the most politically divided and economically unequal,” he said, “and, one would argue, culturally polarized of all the industrial democracies. We have difficulty arriving and agreeing on the same set of facts to debate, let alone arriving at a consensus on any given set of facts.”

Livingston said Americans have to reckon with themselves over the rising risk of political violence in the United States.

On the climate front, the Biden administration has promised to rejoin the Paris Agreement and push for aggressive new policies.

But, Livingston said, introducing climate change action is a “paradox risk.” While climate policy has been a small but fast-growing movement, it will soon enter the minds of treasury departments, finance ministers and national security councils. And in the meantime, growing global competition and a lack of coordination will become the next big challenge in combating climate change.

“You might be tempted to think that that’s an environment in which you will see increased global cooperation, that it will create more harmony and coordination amongst countries. We think that’s not necessarily the case,” Livingston said.

“It’s going to be viewed through a lens in which it’s integrally entwined with statecraft, with international competition among states. There’s going to be more competition over who’s going to be leading the commanding heights of the 21st-century economy. Solar; wind; batteries; new, small nuclear reactors; carbon capture and storage technologies — you name it. There’s going to be more and more competition to make sure that that’s manufactured at home, and that countries are setting the standards along which these fast-growing sectors develop.

“And so, that’s going to create contention, that’s going to create competition, and that’s ultimately going to create a lack of coordination that businesses and companies and investors and even citizens are going to have to navigate in the years ahead.”

Some countries are more well-equipped than other emerging markets to deal with the lingering economic impact left in the wake of the coronavirus pandemic — specifically when it comes to stimulus measures.

Japan is increasing its stimulus to counteract its third wave of the coronavirus. The European Union had a “watershed moment” with its recovery fund, said Livingston, “which will deploy a significant amount of stimulus in the second half of 2021.”

In the U.S., President-elect Joe Biden has promised to increase the stimulus to $2,000, though that has yet to be determined.

Another significant risk in 2021 is all around us and largely invisible: cyber conflict.

Livington pointed to the massive cyber hack against the U.S. government and private sector resources from 2020, believed to be conducted by Russian hackers. The attack created a “fertile ground for unpredictable and asymmetric risks” to cybersecurity.

“(There’s) more threat surface area digitally than you’ve ever had before as a result of COVID-19. The fact that we’re conducting this interview not in person but over Zoom is reflective of how all of us have adapted our personal and professional (lives) to be increasingly digitized.”

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