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10 cover story
Thinking Ahead Institute’s extreme risks rankings over time
Rank 2019 2013 2011 2009
1 Global temperature change Resource scarcity* Depression Depression
2 Global trade collapse Stagnation Sovereign default Hyperinflation
3 Cyber warfare Global temperature change Hyperinflation Excessive leverage
4 Resource scarcity* Depression Banking crisis Currency crisis
5 Currency crisis Global trade collapse< Currency crisis Banking crisis
6 Depression Banking crisis Climate change Sovereign default
7 Infrastructure failure Sovereign default Political crisis Climate change
8 Banking crisis Currency crisis Insurance crisis Political crisis
9 Sovereign default Deflation Protectionism Insurance crisis
10 Stagnation Health progress backfire Euro break-up Protectionism
11 Biodiversity collapse Nuclear contamination Resource scarcity Disunity in Europe
12 Health progress backfire Extreme longevity Major war End of capitalism
13 Nuclear contamination Insurance crisis End of fiat money End of fiat money
14 Abandonment of fiat money Terrorism Infrastructure failure War
15 Extreme longevity Infrastructure failure Killer pandemic Killer pandemic
*Food/Water/Energy crisis
Tim Hodgson, Head of the Thinking Ahead Group, said: “Our bution. That means extreme events are much more likely than
extreme risks ranking has seen the emergence of a general trend previously thought. To navigate through this complex world, we
with financial risks falling down the rankings and non-finan- suggest investors need to be open-minded, avoid concentrated
cial extreme risks growing in significance. Global temperature risks, be sensitive to early warning signs, constantly adapt and
change becomes the highest ranked risk due to our assessment always prepare for the worst.”
of higher likelihood coupled with significant impact – in the ex- The research suggests, broadly, there are three hedging strate-
treme this would mean mass extinction. gies available to institutions:
“We believe that the world is subject to fundamental changes, • Hold cash. Over long historical periods cash has held its real
whether environmental or political which will alter power bal- value through both episodes of deflation and inflation but there is
ances. A complex world can and will deliver extreme outcomes no guarantee that this will be the case in the future.
that are hard to imagine when working with a normal distri-
