The next US administration must reassure China, not just deter itÂ
During a recent Oxford debate organized by Asia Society Switzerland, experts sparred over how the next US administration should frame policy on China....
Strategy
Future
How to navigate our future world orderÂ
In a post-pandemic era shaped by wars, climate change, and new technologies, Maha Hosain Aziz outlines the main risks and shock events that could disrupt our world order in coming years. ...
In a post-pandemic era shaped by wars, climate change, and new technologies, Maha Hosain Aziz outlines the main risks and shock events that could disrupt our world order in coming years.
As a lead analyst at Wikistrat, the world’s first crowdsourced geostrategic analysis and business consultancy, and an academic who teaches risk and prediction at New York University, my mission is to help others make sense of the world through the lens of global risk. While some critics might say dart-throwing monkeys would prove better forecasters, I believe that attempting to determine the shock events that might disrupt our world order can be useful in helping policymakers and business leaders prepare for unexpected challenges.
Daily news headlines like to remind us that we are living in an increasingly unstable and unpredictable era. However, the seeds of this uncertainty have been sown over the past 15 years, as the world moved on from a post-Cold War era that was shaped by US dominance on the global stage. This lack of consensus about our world order has led to a crisis of global legitimacy and opened the threshold to emerging new actors such as smaller states or even global tech firms to fill the power gap.
Shifting attitudes towards democracy, growing inequality caused by globalization, and increasing economic anxiety linked to the rise of AI, as well as social class tensions, are further challenging the existing world order. This is prompting us to reconsider the nature of power and to question whether the current democratic system (and social contract) is still fit for purpose. Lastly, the evolution of hate and extremism and rising polarization over the past two decades has challenged the notion of shared global values.
“According to the World Health Organization, the COVID-19 pandemic was the biggest collective mental health crisis since World War Two.”
Where are we headed?
Based on crowdsourced research on geopolitical, political, economic, and social shock events that may upend the world order by 2025, here are four risks to consider:
A post-superpower era
With our superpowers increasingly overstretched and distracted, we might find that the nature of power is dispersed, creating an opportunity for other actors – especially smaller, so-called geopolitical swing states – to fill the leadership gap by forging new alliances. In particular, actors from the Global South may take on a bigger role, while we may have to accept that tech firms are the new superpowers and will assume more legitimacy on the global stage.
Election blues
With around half the world’s population heading to the ballot box, 2024 is the year of elections. A year on, if those newly elected governments have failed to address some of the issues facing these countries’ respective citizens, we may see a new crisis of political legitimacy and a larger debate about whether democracy is fit for purpose.
A major terrorist attack in the West
Following the weakening of Al Qaeda and ISIS, most analysts suggest that a resurgence of terrorism in Europe is unlikely. However, after ISIS claimed responsibility for an attack at a popular concert hall in Moscow, there is growing speculation that further attacks could take place.
A global mental health crisis
According to the World Health Organization, the COVID-19 pandemic was the biggest collective mental health crisis since the Second World War. With growing anxiety about climate change and the potential for AI to take our jobs, this remains a very prevalent risk.
“A rival currency could emerge to challenge the dominance of the US dollar in international trade. Last year, the BRICS nations discussed the creation of a common currency for trade and investment between each other, while countries like China, India, and the United Arab Emirates have started doing transactions in their own currencies.”
2030 shock events
But what about later this decade? In my upcoming book Our Future World Order, I outline shock events that could materialize by 2030. Here are a few to consider:
A new global power is declaredÂ
It is highly conceivable that a new global power will emerge that has the legitimacy to dictate how events unfold. Given the climate crisis, this new power could be a country that prioritizes climate action, or that has the best tools to tackle climate change. Equally, it could be a state that takes the lead on climate mitigation. Â
A new currency replaces the US dollarÂ
A rival currency could emerge to challenge the dominance of the US dollar in international trade. Last year, the BRICS nations discussed the creation of a common currency for trade and investment between each other, while countries like China, India, and the United Arab Emirates have started doing transactions in their respective currencies. There is also renewed focus on the potential of Central Bank Digital Currencies to reduce the vulnerability to dollar trade fluctuations.Â
A post-democracy worldÂ
If by 2030, we are still dealing with a recurrent crisis of political legitimacy and a concern about whether governments are capable of tackling risk, this could lead to a post-democracy world. While it’s hard to predict what this might look like, it could involve technology playing a more dominant role.Â
The four factors that could derail world order in coming yearsÂ
If we are to understand the world through global risks, I believe there are four factors that decision-makers should have on their radar:Â
The Trump effect
First, it goes without saying that the re-election of Donald Trump as US President would be a destabilizing factor for world order, raising concerns about the impact on democracy and a resurgence in domestic and global instability. His re-election could hinder progress in tackling climate change, however, it might herald clarity about the world order, since he has been clear that he would stop aid to Ukraine and unwind trade deals.Â
The AI effect
Artificial intelligence also has the potential to emerge as a new superpower, bringing with it a host of risks and benefits. Already, tech billionaires like Elon Musk have shown they can change the face of war by providing Starlink satellites to Ukraine. AI could potentially beat the stock market, becoming a strategy to help reduce poverty by using funds to help climate refugees. But it could also eliminate jobs, exacerbating inequality and, in a worst-case scenario, even lead to a third World War.Â
The climate effect
Climate change will have major ramifications for world order. If governments fail to make progress to mitigate the impact, a private actor – such as a billionaire or even a trillionaire – could intervene and fund solar geoengineering to cool the planet. While this might bring short-term gains, it could have spillover effects and potential long-term negative consequences. There are concerns about the accessibility of rare earth minerals needed for renewable energy projects, as well as potential climate-driven food shortages leading to mass starvation. Moreover, climate refugees could get exploited by militant groups, while in the West there could be a new wave of environmental terrorism.Â
War effect
2023 saw the highest number of regional and local conflicts in three decades. A possible silver lining is that this could strengthen the resilience of globalization as it is forced to adapt to ever more frequent shocks. We could also see other actors uniting to protect democracy and human rights, as we have seen with Europe coming together to help Ukraine following Russia’s invasion. Â
Takeaways for business leaders
With the breakdown in global leadership and a crisis of political legitimacy in many parts of the world, it will require private actors, such as business leaders, to step up to tackle the risks and shocks we might face.
So how can we go about this?
Be informed: Some firms, such as German life sciences group Merck have already hired an in-house chief political officer or political risk analysts to help identify risks and shocks
Be engaged: Companies can’t stay quiet anymore. They need to do their research and take a position.
Be policy entrepreneurs: Business has a key role to play in tackling key challenges, and companies that focus on purpose tend to be more successful in the long run.
It’s clear that our world is being increasingly shaped by climate change, wars, new technologies, and a pushback against political systems. Rather than wait for governments to fix these issues, we as business leaders and individuals can do more than we think to shape the outcomes of the future.
This article is inspired by a keynote session at IMD’s Orchestrating Winning Performance, which brings together executives from diverse sectors and geographies for a week of intense learning and sharing with IMD faculty and business experts.
Authors
Related
Why multinationals are betting on IndiaÂ
As the world’s largest democracy prepares to overtake China in terms of economic growth, it offers a huge investment opportunity, explains IMD’s Richard Baldwin....
Why supply chain reorganization now tops the CEO’s agenda
Amid mounting geopolitical tensions, CEOs must take direct control of supply chain resilience, says IMD’s Carlos Cordon...
Where business and policy meet: Managing geopolitical tensionsÂ
Business leaders need to respond more proactively to geopolitical tensions, while policymakers need to rethink their approach, argues IMD’s Simon Evenett....
Learn Brain Circuits
Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
Â
Explore Leadership
What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
Â
Join Membership
Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
Â