World Economic Forum: International community more at risk to geoeconomic issues than climate change in 2026
Rising geopolitical tensions, debt pressures, and AI governance challenges are reshaping the risk landscape for businesses and governments worldwide
As geoeconomic confrontation tops near-term risk rankings for the first time, surpassing climate change and armed conflict, business leaders face unprecedented uncertainty.
Mark Elsner, Head of the Global Risks Initiative at the World Economic Forum, discusses with Economy Middle East how weakening multilateral institutions, mounting debt burdens, and fragmented AI regulation are creating a more turbulent global environment and what organizations must do to adapt.
What specific policy failures or institutional weaknesses allowed geoeconomic confrontation to surpass climate change as the top near-term risk, and what does this tell us about the current state of international cooperation?
“Geoeconomic confrontation” tops the risk rankings this year in both the immediate-term (2026) and the short-term (to 2028) risk rankings. Last year, these rankings were respectively led by “State-based armed conflict” and “Misinformation and disinformation”. Global geoeconomic fragmentation is now entrenched.
Looking ahead over the next two years, a wider range of economic levers may be used by governments worldwide within the broader objectives of building national security and advancing geopolitical interests. Heightened geoeconomic confrontation is both a cause and a consequence of weakening multilateral institutions.
As a unipolar world shifts towards a more multipolar one, a new competitive order is emerging. With fewer multilateral constraints on unilateral action, rising national barriers and clashing interests could have negative economic and social repercussions worldwide.
With half of the surveyed leaders expecting turbulence and only one percent anticipating calm, how should multinational corporations and financial institutions fundamentally restructure their risk management frameworks for this environment?
Risk management is no longer a compliance function. It’s a strategic imperative. Robust risk management is essential for navigating the global risks landscape, supported by early investment in understanding interconnected risks, continuous monitoring, and advanced modelling.
Robust risk management can include an emphasis on scenario-based decision-making. Companies can use forward-looking, event-based scenarios populated with the best available data to stress-test strategies, investments, and operating models. Many companies use scenario planning already, but it should be institutionalized and rigorous.
Economic risks showed the largest collective increase in your two-year outlook — beyond the obvious fiscal pressures, what are the second-order effects of simultaneous debt concerns and asset bubbles that markets are most likely under-pricing?
Amid high capital expenditure on artificial intelligence, the returns on ambitious projects are unclear and investor sentiment can reverse quickly. Should concerns about an asset bubble burst materialize, the potential economic impacts could be significant given how concentrated investor exposure is to certain markets and even to specific stocks.
At the same time, growing debt in both advanced and developing economies poses a risk in an environment with higher spending pressures and, in some countries, relatively high interest rates.
While it is possible that markets digest the upcoming high volumes of public and corporate debt issuance smoothly, there are risks of heightened bond market volatility in some countries.
Combining these two concerns, it is likely that fiscal responses to any asset bubble burst and subsequent economic downturn would face constraints, making economic stabilization and recovery more difficult than in a more benign fiscal environment.
If governments turn to increased debt monetization, inflation concerns could re-emerge, placing downward pressure on real wages and endangering social mobility. The combination of concentrated exposure, constrained fiscal space, and political pressure risks a harder landing than markets are pricing in.
You note that environmental risks remain dominant over a decade despite falling in near-term rankings. Does this temporal disconnect suggest a dangerous complacency among business and political leaders, and what evidence do you have of this affecting investment decisions?
The survey captures perception, not capital flows. What we can say is that environmental risks fell in both ranking and severity score in the short term. Extreme weather events dropped from second to fourth in the two-year ranking, and pollution dropped from sixth to ninth.
Immediate crises appear to be crowding out long-term priorities, with environmental risks still dominating the ten-year risk outlook.
The mismatch between long-term environmental risks and the need for immediate action to mitigate them is concerning. Environmental risks are global and increasingly interconnected with other categories of risks.
Yet governance capacity at the multilateral level is increasingly facing challenges. Cooperation is becoming harder to achieve precisely when we need it most. We need to rebuild trust and find new models of cooperation that work in a more competitive world.
Given that misinformation ranks among the most severe near-term risks while AI concerns escalate long-term, what regulatory or market mechanisms could address both simultaneously without stifling innovation or entrenching current information gatekeepers?
Public digital infrastructure matters. Without it, we risk creating a globally marginalized AI underclass — excluded by language, geography, or income. Public awareness and education are the foundations. You can’t rebuild trust in systems people don’t understand.
The long-term risks stemming from AI depend on choices made or avoided within the short to medium term. However, fragmentation of regulatory regimes is increasing the risk of a race to the bottom. Coordination on minimum safety, transparency and ethical deployment standards is urgently needed, yet this will require deep and broad cooperation across a range of areas.