Introduction
The contemporary world continually faces various challenges that are complex and interconnected and have to be managed effectively. Some of these problems include climate change, economic inequality, political tensions, quick industrial advancement, and poor health of the population (World Economic Forum, 2019). In addition to the fact that these issues appear at the same time, they continue to worsen and bring complications to the global environment and society. However, a collective desire to solve all these problems happens to be lacking. No specific tools or programs were developed to bring the needed change and improve the living conditions all around the globe. For this reason, individuals and professionals need to have a better understanding of the challenges and feel motivated to change the situation for the better. The following report will analyze the World Economic Forum’s Global Risk Report 2019 to assess the international risk profile in detail and suggest factors that affect it as well as specific organizations.
The Interconnectedness of Global Risks
It is primarily vital to discuss the interconnectedness of global risks since relationship mapping can help to identify all the current problems and predict future challenges. According to the WEF report (2019), a global risk is an uncertain situation or condition that may happen and cause a considerable negative influence on different countries and businesses in the next ten years. Since there is a significant number of events that can occur, the map arranges risks into different groups based on the spheres they influence. The list of factions consists of economic, environmental, geopolitical, societal, and technological risks (World Economic Forum, 2019). While strong relationships exist between the potential problems within each group, all issues are also connected outside of the identified sections. Consequently, it can be stated that the primary utility of the map is highlighting the strongest as well as the weakest correlations. This feature provides professionals with an account of the most severe problems and the extent to which they can impact various processes.
Furthermore, the mapping of global risks’ interconnectedness can help to understand current and potential challenges better. By placing the problems into different groups, specialists can identify what industry is directly influenced by a particular risk and, eventually, predict the consequences for this sphere before the issue appears. In addition, while the figure shows the correlation between each of the major and minor risks, it can be identified what conditions from the map are more likely to emerge as a result of a specific problem. In general, the interconnectedness of the global risks map is an essential figure that helps to understand the relationships between various societal, environmental, economic, geopolitical, and technological issues.
Changes in the Global Risk Profile Over the Past 10 Years
As the world goes through significant advancements, the global risk profile also changes and provides professionals with a different picture of the problems that have to be managed and prevented. The figure divides issues into two distinct sections: global risks in terms of likelihood and terms of impact (World Economic Forum, 2019). In addition, each category highlights five groups discussed in the previous paragraph by portraying them in different colors. This depiction gives individuals an opportunity to analyze the map in detail and indicate the most prominent modifications that happened over the past ten years.
By looking at the first section called Top 5 Global Risks in Terms of Likelihood, it can be stated that there have been many changes from 2009 to 2019. For instance, if ten years ago risks that were most likely to emerge were connected to economic challenges, such as “asset price collapse and slowing Chinese economy,” in the last three years, the most probable risks are environmental that consist of “extreme weather events, natural disasters, and failure of climate change mitigation and adaptation” (World Economic Forum, 2019, p. 8). Furthermore, between 2012 and 2014, the first places in terms of likelihood were occupied by severe income disparity, which is placed in the category of societal problems. In general, it should be noted that, while the popularity of environmental and technological risks is rising, the world seems to be less and less likely to be at risk of struggling from societal and economic complications.
At the same time, the second section indicates global risks in terms of impact. As it can be easily seen from the figure, from 2009 to 2014, the most significant influence was brought by economic risks. The problems that profoundly affected the world were “asset price collapse, fiscal crises, major systematic financial failure, retrenchment from globalization, oil, and gas price spike, and unemployment and underemployment” (World Economic Forum, 2019, p. 8). However, starting from 2015, the world was considerably impacted by such societal risks as “water crisis, rapid and massive spread of infectious diseases, and large-scale involuntary migration” (World Economic Forum, 2019, p. 8). Geopolitical and environmental problems also started to influence society to a great extent and occupied the top place on the list. For example, between 2017 and 2019, weapons of mass destruction were the most significant risk for the world, followed by severe weather events and climate change. Therefore, as the world developed, global risks were also changing their impact and created a distinct image of society as a whole.
In my opinion, the risk profile changes because of significant advancements in various spheres of life and shifts in people’s priorities, needs, and desires. In 2019, environmental issues were prevalent both in the section of likelihood and impact. This tendency is caused by recent technological advancements that contribute to the emergence of climate change and do not allow the world to adapt to various environmental challenges. Moreover, environmental risks are dominant because of the individual inaction and indifference towards the living conditions on Earth. While being aware of the adverse consequences of various human actions, such as excessive water and plastic product usage, people continue to practice these activities due to convenience and availability. Thus, since every person contributes to the situation, it can be stated that individuals’ beliefs and operations are the drivers of future changes in the global risk profile.
In addition, such processes as divergence and globalization result in changes in the risk rating profile. The figure presented that geopolitical tensions are considered to be on the list of the most urgent risks for modern society. The constantly reconfiguring relationships between the governments lead to misunderstandings and tensions that sometimes even result in armed conflicts. Consequently, these tendencies significantly influence the situation in the world and bring modifications to the global risk profile. It should also be mentioned that globalization will continue to impact society to a great extent; however, the main question is how governments and individuals will respond to the emerging changes in the future.
Significant Global Conditions Driving Risk for Australia and Rx Management
Various environmental and technological issues drive significant risk for Australia. Like many countries all around the globe, Australia suffers from unpredictable changes in climate and temperature, different natural disasters, and the indifference of the population towards the living conditions on Earth. At the beginning of 2020, multiple fires happened across several Australian states and caused damage to wildlife and nature (Moorcraft, 2020). In addition, extremely dry weather and smoke from the fires made it impossible for many businesses to operate and provide services to the population (Moorcraft, 2020). Nevertheless, environmental problems are not the only risks that receive considerable attention in Australia. According to Moorcraft (2020), technological issues are on the list of the most serious ones and should be managed as soon as possible. In recent years, different Australian businesses suffered from cyber-attacks and incidents that brought complications to their professional activities (Moorcraft, 2020). Therefore, Australia should primarily focus on managing environmental and technological issues because, at this moment, they are the most evident and drive risks for the country.
Talking about Rx Management, it can be noted that the most significant global conditions that cause risks for the company are COVID-19 and political tensions. As discussed in Assessment 1, Rx Management is a franchise network that controls Priceline Pharmacy stores’ operations in numerous Australian states. As well as millions of businesses worldwide, the organization is profoundly affected by the pandemic. Hence, Rx Management had to adapt to the condition quickly and completely reconfigure the structure of operations. Moreover, the pharmaceutical industry is funded mainly by the government and is impacted by various challenges in geopolitics. In case the countries have strong partnerships, they are more likely to exchange medications and decide on reasonable prices for consumers. Thus, any complications in the geopolitical sphere can bring the crisis to Rx Management. Negative processes in the geopolitical condition can also cause financial problems for the company, driving various economic risks both for the business and the customers.
After understanding a few global circumstances that cause risk for Rx Management, it is possible to project the impact of the three most significant risks identified in the World Economic Forum’s Global Risk Report 2019. COVID-19 put pharmaceutical businesses under severe operational and financial stress. While the world currently possesses more knowledge about the virus, this societal risk will continue to have a strong influence on the industry and Rx Management in particular. Coronavirus occupies the category called “rapid and massive spread of infectious diseases” and will have a substantial economic impact on the company because of competitiveness and pressure on the market (World Economic Forum, 2019, p. 8). In addition, the second global risk that can have a significant influence on the organization concerns geopolitical relationships. As mentioned in the previous paragraph, conflicts between countries can make it harder for people to receive proper treatment at an affordable price. Finally, economic risks brought by COVID-19 can result in many individuals being fired from Rx Management due to severe financial difficulties.
Impact of Global Risks and Methods of Monitoring Their Development
After consulting a couple of other sources, the predictions about the impact of three specific global risks were supported, but different perspectives were also highlighted. For instance, it was indicated that coronavirus, which is a societal risk, and various economic issues brought by it would result in competition on the pharmaceutical market, financial complications, and unemployment (The impact of big pharma on COVID-19, 2020). However, it was also suggested that the impact of COVID-19 could be positive. The reputations of pharmaceutical companies and specifically Rx Management will rise since the organizations are currently providing support to vulnerable populations and do their best to respond to the unpredictable changes (The impact of big pharma on COVID-19, 2020). In addition, geopolitical tensions can result in various difficulties for Rx Management. Besides making it impossible for individuals to purchase medications at a minimum price, geopolitical misunderstandings may prevent the company from receiving different life-saving drugs (Impacts of politics on the pharmaceutical industry, 2017). Therefore, it can be concluded that global risks do impact not only the business itself but also its workers and customers.
To monitor the development of the risks and the changes in their likelihood and severity, the organization needs to implement specific controlling methods. One of the strategies that can be undertaken by Rx Management is continuously researching and analyzing the situation on the market, which includes identifying the leading competitors and highlighting the prevalent needs and preferences of individuals. Furthermore, the organization has to control the economic impact of coronavirus on their operations to ensure that all employees have work and constant income. This can be done by creating weekly reports concerning the spending and profit of the company while providing transparency and clarity. Finally, Rx Management needs to monitor the geopolitical situation to be prepared for any misunderstanding and complicated circumstances. Overall, by implementing these measures, the organization will be able to control the development of global risks and predict which ones are more likely to happen and which ones will bring adverse consequences.
Strategic Insights
By analyzing the WEF report and discussing a specific company, the following analysis helps identify the most significant global risks for the organization and how these issues impact it. It can be concluded that various processes happening in the world have the power to impact the pharmaceutical industry and provide both advantages and disadvantages. For instance, the COVID-19 pandemic is a societal risk that also contributes to the appearance of economic complications for Rx Management. On the other hand, the virus can benefit the company by making it essential for the population and encouraging it to support vulnerable citizens. Moreover, the analysis helps the business not only to locate the problems in their daily operations but also provides possible ways of controlling the situation. If Rx Management undertakes the identified suggestions, it will be more likely to go through any complications successfully and without any financial losses.
Conclusion
To summarize, the World Economic Forum’s Global Risks Report 2019 provides its readers with a detailed account of various problems that exist in contemporary society. It highlights the risks in terms of their likelihood and impact and shows the strong relationships between different spheres of life. Therefore, governments and individuals need to analyze the report carefully to gain more knowledge about the prevalent conditions and issues worldwide. The presented paper discussed the WEF report and attributed various risks to Australia and the Rx Management company.
Reference List
Impacts of politics on the pharmaceutical industry (2017) Web.
Moorcraft, B. ‘These are the top 10 global business risks for 2020’, Insurance Business. Web.
The impact of big pharma on COVID-19 (2020) Web.
World Economic Forum. The global risks report 2019. Web.