World Economic Forum Global Risk Report

Last year when we reviewed the 2025 WEF Global Risk Report, Donald Trump had recently taken office and we were all wondering what came next.

Last year, the 10-year view was dominated by environmental risks. Extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems and natural resources shortages led the 10-year risk rankings.

This year’s report has the same top three long-term risks, but misinformation and adverse outcomes of AI have each moved up a place.

The two year picture is notably changed with Geoeconomic Confrontation leaping 8 places to come in at number one. State-based armed conflict is not far behind. Given that the survey on which this is based collected responses between 12 August and 22 September 2025, the start to 2026 is unlikely to have calmed nerves.

The general tone of the 2026 report can be read simply from the headings to chapter 1:

• 1.1 The world in 2026: on a precipice

• 1.2 The path to 2028: compounding risks

• 1.3 The path to 2036: over the edge?

• 1.4 A darkening outlook

Chapter 2 turns to looking at some issues with a more analytical approach.

Firstly, they consider an underlying context of structural change which comprises four issues first identified in the 2024 report:

• Geostrategic shifts: Longstanding geopolitical alliances are being reshaped as global rules and norms are increasingly contested.

• Technological acceleration is about emerging technologies and the expected significant, accelerated changes over the next 10 years – positive transformations but also new risks

• Climate change: a systemic shift, with 2024 confirmed as the warmest year on record at over 1.5°C above the pre-industrial level.

• Demographic bifurcation: Demographic divides are widening, and this will have material implications for related socioeconomic and political systems.

Digging into these areas further, the report considers:

Multipolarity without multilateralism

A trend of global geoeconomic fragmentation has taken hold with a divergence between West, East and South. Heightened geoeconomic confrontation is both a cause and a consequence of the growing vacuum being left by the weakening of multilateral institutions. Governments appear to be losing faith in the legal framework underpinning global trade, embodied in the WTO.

Geoeconomic confrontation is already contributing to a loss of trust affecting international relations. But the reverse is also happening: governments are more likely to take hostile actions on trade, investment and other geoeconomic issues when they feel that the rules-based international system is weakening and they have less to lose than before. This vicious cycle looks set to continue over the next two years.

Geopolitical instability is deeply intertwined with domestic state fragility and social instability. As more people are feeling excluded from political decision-making and losing hope for improved livelihoods, protests have led to recent political change. Evidence is building that, within countries, the rule of law is deteriorating.

Values at war

Across the world, there are deep divisions between those who are trying to preserve one value system and the institutions built around it, and others who hold opposing views. Social polarisation is increasing, and trust in institutions that have long governed and shaped societies is being eroded. The social contract between citizens and governments, particularly in advanced economies, is lagging economic and technological transformations, further eroding trust and exacerbating societal polarisation.

These trends are exacerbated by misinformation and disinformation, notably through online media. In parallel, trust in news is falling and news avoidance is rising.  More people in the United States now access news through social media and video platforms than through television or traditional news websites.

A rise in “streets versus elites” narratives reflects deepening disillusionment with traditional governance structures, leaving many citizens feeling excluded from political decision making processes and increasingly sceptical that their economic environments can deliver tangible improvements to their livelihoods.

The potential for multilateral cooperation on environmental concerns is being weakened, as major powers prioritise sovereignty and national gain over collective action. This could intensify into the medium term because of potentially soaring energy needs in the coming years.

An economic reckoning

Total global debt (government plus private sector) stood at $251 trillion or 235% of GDP in 2024,52 and debt levels are steadily rising in both advanced economies and in emerging market and developing economies. With debt servicing costs having become significantly higher, governments are having to make increasingly painful concessions on key areas of expenditure, or consider new approaches to taxation.

Meanwhile, about one-third of global corporate debt, a rising proportion of which is used for making interest payments on existing debt rather than being used for productive investment will need refinancing over 2025–2027. Added to these needs, the volume of debt likely to be issued by companies building out AI infrastructure could be huge; according to one estimate, it could reach $1.5 trillion in investment grade bonds alone over the next five years.

Some governments may be forced by bond-market volatility to retrench towards more fiscal austerity, which would lead to severe short to-medium-term negative impacts on household wealth.

There is currently widespread concern around elevated equity prices for the largest technology companies, and 2025 saw periods of frenzied investor interest not only in artificial intelligence (AI) related stocks, but also in sectors such as nuclear, quantum or rare earths. Global institutional and retail investors are heavily invested in US stock markets by historical standards, so the resulting potential impacts of a crash could be severe for the global economy. The value of wealth destruction could be far greater than the dotcom bubble given how high exposure is today. Longer term, quantum technologies could potentially upend entire data centre-based business models.

In the immediate term, inflation is expected to remain largely under control, although the figure masks an acute cost-of-living crisis in many countries following the significant global inflation spike in 2021–2022. However, rising prices of natural resources if geoeconomic confrontation intensifies are of concern and tariffs could also add inflationary pressures.

Infrastructure endangered

Disruptions to critical infrastructure are being seen as an increasing risk. Much of the critical infrastructure in OECD countries, such as transport networks, power grids and water systems, was built in the initial post-World War II decades and will require costly maintenance and upgrading or will experience greater failures.

More frequent and more intense extreme weather events are likely over the coming decade, generating a wide range of risks to critical infrastructure.

Geoeconomic confrontation is likely to amplify existing challenges to critical infrastructure in the physical, cyber and cyber-physical realms.

Quantum leaps

All three key areas of quantum technology – computing, communications and security, and sensing – could see rapid change. Promising areas include optimization (e.g. for financial portfolios, supply chains and energy grids); cryptography and number theory; simulation (e.g. in chemistry and materials science); and for improving AI/ML, subject to future hardware capabilities.

Cryptographic risks are looming from expected quantum computing attacks on classical mathematics-based cryptography. This threat is immediate, due to so-called “harvest now, decrypt later” campaigns, whereby encrypted data is stolen and stored until quantum technology becomes sufficiently advanced to decrypt it. Quantum experts believe that within a decade there will be at least a 50% likelihood of a quantum computer being able to break public-key classical mathematics-based cryptography within 24 hours.

Trading algorithms, including high-frequency trading algorithms, will also become more powerful, complex and faster. This might lead to more frequent flash crashes or market melt-ups, with a heightened need for circuit breakers to prevent downside market moves that are too sudden and sharp.

AI at large

Within a decade, AI and automation could displace human labour in many roles, disrupting labour markets on a historic scale, though estimates of labour market impacts vary widely. Impacts will be felt very differently in different countries, regions and even within countries.

If entry-level jobs for graduates vanish, then educated unemployed could be a driver of social disruption. Rising middle-class unemployment would negatively affect the tax base and housing markets. Advanced economies may face the kind of permanently K-shaped economies prevalent in many highly unequal developing economies.

Energy and water requirements of AI data centres are substantial and could have major environmental impacts.

The ultimate threat to societies is a loss of control to AI systems and could lead to a creeping, structural shift of power from humans to AI over the next decade. Incremental AI advances could steadily erode human influence over the economy, culture, governance and societal systems.

Similarly, in a military context loss of control could have major consequences. As the war in Ukraine shows, AI will increasingly influence how militaries perceive threats, make decisions, and take actions. AI system failures could propagate through entire chains of command and deterrence systems. Adversaries might use data poisoning – introducing corrupted data during model training – as a covert weapon to undermine military AI systems.

The speed at which AI systems operate, when applied without checks and balances, can itself be a source of risk. An automated early-warning system misinterpreting a missile test, for instance, could trigger defensive responses from an adversary's AI system, leading to a conflict started by technical error rather than strategic intent.

Beyond state actors, the democratisation of AI capabilities raises the spectre of asymmetric security threats. Even small groups may eventually wield destructive capacities once reserved for superpowers, leveraging AI to design bioweapons, conduct infrastructure attacks or manufacture disinformation at scale.

The Report is a very thorough examination of many major risks. Climate change is only briefly considered, presumably because this has been done often before. But as environmental issues were the top three in the 10-year risk  perceptions, it seems remiss not to have at least some in-depth considerations – especially the second- and third-order effects.

Written by Huw Williams, SAMI Principal

The views expressed are those of the author(s) and not necessarily of SAMI Consulting.

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