Collaboration is the key to innovation, so that’s why we’re asking you to help us find the best business opportunities that turn global risks on their head.
The Global Opportunity Network which brings together the world’s sustainability experts, innovators and business leaders to unpack the world’s most pressing and systemic challenges and identify the sustainable new market opportunities that they create. And this year, we’re opening it up to you!
Help us find the opportunities that businesses can act on that will deliver social, environmental and financial returns. And in return, you’ll be in with the chance of winning one of five Little Sun solar lamps, designed by award-winning artist Olafur Eliasson.
We want to know:
1. What business opportunities lie in solving the five risks that we are focusing on in the next report?
2. What new business models, technologies, products and services can meet society’s needs while at the same time generate business value?
You’ve got the month of June to get thinking!
Click risk titles to expand text.THE CYBERCRIME EPIDEMIC
|Though silent and often invisible, cybercrime is an exploding threat to businesses globally. The internet economy generates USD 2-3 trillion annually, and estimates show that cybercrime extracts 15-20 percent, costing businesses USD 400-500 billion a year. According to leading experts in the field, every business connected to the internet can expect to fall victim to cybercrime and the projected cost to the global economy is expected to reach USD 2 trillion each year by 2019 (Morgan, 2016).
While the Internet of Things is making our cities, products, and services increasingly smart, this ease of communication and high level of connectivity also increases the threat of outside entities breaching secured and private systems. In 2014, the U.S. Director of National Intelligence ranked cybercrime as the top national security threat in the U.S. – higher than that of terror (PWC, 2014). And in 2015, IBM’s CEO Ginni Romett described Cybercrime as “the greatest threat to every company in the world” (Morgan, 2016).According to PwC’s 2016 Global Economic Crime Survey, cybercrime jumped from 4th to 2nd place among the most-reported types of economic crime compared to the year before. Nonetheless, the survey also showed a general lack of preparedness. Only 37 percent of respondents – most of them in the heavily regulated financial services industry – have a fully operational incident response plan. Three in ten have no plan at all, and of these, nearly half don’t think they need one (PWC, 2016).
The severity of the threat has made cyber security professionals some of the most sought after forms of talent on the current market. Locating the right cyber security talent is challenging for business and the public sector, and this hunt for qualified candidates is only becoming more difficult. Government estimates put the total number of available and unfilled cyber security jobs at 210,000 in the U.S. alone. It is estimated to be 10 to 12 times more difficult to find specialized cyber security professionals than it is to find general IT professionals (Cisco, 2015). The demand is so high that cyber security jobs pay an average of USD 15,000 more per year than similar non security IT jobs.
Besides the costs to businesses, cybercrime also poses a great threat to essential infrastructural systems. On a global scale, for example, the cost of cyber crime in the energy sector is USD 12.8 million annually, making it second only to the financial services sector (Hogan Lovells, 2016). In a study by the U.S. Department of Homeland Security, it was found that of the approximately 200 breach incidents handled by the DHS cyber security team, more than 40 percent were aimed at the energy sector (The Hill, 2014).
Though existing in the digital rather than the physical world, cybercrime has proven to be a very real danger, threatening innovation in businesses and the safety of societal infrastructure. Cybercrime is thriving as companies and governments are struggling to cope the situation as the breaches are getting bigger.
|Our soil is losing its ability to perform the services that are essential for humans to survive. Overexploitation has diminished soil’s capacity to retain water, produce food, and absorb CO2, just to mention a few essential services. Approximately 40 percent of soil used for agriculture around the world is either degraded or seriously degraded – meaning, among other things, that 70 percent of the topsoil – the layer allowing plants to grow – is gone (WEF, 2012).
The UN Food and Agriculture Organisation (FAO) estimates that food production must increase by 70% between now and 2050 if we are to feed the growing world population (FAO, 2016). However, each year we lose about 100,000 km2 of cropland (approximately the size of Iceland) due to soil erosion – leaving us with less and less arable land. If we continue on the same trajectory we are on, we will produce 30 percent less food over the next 20-50 years. Soil degradation is primarily happening due to different human activities such as overgrazing of farm animals (35 percent), agricultural activities (28 percent), deforestation (30 percent), overexploitation of land to produce fuel wood (7 percent), and industrialization (4 percent) (University of Michigan, 2010).The utilization of a narrow selection of crops is another serious factor threatening the nutrient quality of soil. Modern agriculture focuses on the cultivation of a few major staple crops, such as rice, maize and wheat, which provide half of the global human requirement for carbohydrates, proteins and calories, and 95 percent of human dietary energy originates from just 20 of the 100–120 crop plant species grown today (Jacobsen et al., 2015). Intensive cultivation of these few select crops will make it more difficult for conserving the soil and will decrease natural soil fertility.
The effects of soil erosion go beyond the loss of fertile land. Soil erosion has led to increased pollution and sedimentation in streams and rivers, clogging these waterways and causing declines in fish and other species. Degraded lands are also often less able to retain water, which can worsen flooding.
Since humans worldwide obtain more than 99.7 percent of their food (calories) from the land and less than 0.3 percent from the oceans and aquatic ecosystems, implementing new approaches to combat the risk of soil degradation is of the outmost importance (Pimental & Burgess, 2013).
Furthermore, soil destruction creates a vicious cycle, in which less carbon is stored, accelerating the effects of global warming, and in turn further degrading land (WWF). Perhaps surprisingly, more carbon is stored in soil than in the atmosphere (760 billion tonnes) and in vegetation (560 billion tonnes) combined (DG Environment, 2013). The ability of soil to act as a retainer for carbon has been weakened in recent decades and projections show that the amount of carbon released from poor soil management threatens to undermine reductions made in other sectors.
Further loss of productive soils would severely damage food production and food security, amplifying food-price volatility, and potentially plunging millions of people into hunger and poverty (FAO, 2016). Although natural soil can be regenerated, the rate at which this happens is very slow. For this reason, soil should be considered a non-renewable resource to be conserved with care for generations to come (Parikh & James, 2012).
|Conflicts can rip apart regions, countries, communities and families. The impacts of conflict are seen more clearly than ever today, as millions of people are fleeing violence and conflict areas are left in economic and social turmoil. Conflicts and instability put increasing pressure on the world economy, as it has been estimated that conflicts cause a 13 percent loss in the global GDP, an increase of 15 percent compared to 2008 (IEP, 2015).
The World Bank estimates that 1.5 billion people live in countries trapped in repeated cycles of violent conflict. Conflicts have huge impacts on people, societies and economies. After a seven-year civil war, which is the average length of a civil conflict, incomes are around 15 percent lower compared to expected levels. Furthermore, because of the effects of inflation and lost investment opportunities, the incidence of absolute poverty will have increased by 30 percent compared to before the war began (Lopez).Conflicts often leave the affected areas drained for people and resources, witnessed by the fact that global refugee flows have reached a level that is unprecedented in recent history. Nearly 60 million people, half of them children, have been forced from their homes due to conflict and violence, compared to 40 million at the time of World War II (World Humanitarian Summit, 2015). More than half of these recent refugees come from three conflict-ridden countries: Syria, Afghanistan and Somalia. It’s an upward trend: during 2014, the number of people displaced – 42,500 per day – was four times greater than in 2010. As the average length of displacement due to conflict or protracted crises is 17 years, it is a long-term status for many (Ferris, 2014).
Companies operating in conflict areas can rarely remain neutral, as their actions and policies will typically either exacerbate problems or work to mitigate them. On one hand, businesses can act as drivers of conflicts, with special interest in maximising profits at the expense of the region’s socioeconomic health and well-being.
Beyond loss of life, conflicts and the resulting large displacement of populations have broader implications for the global social, economic, and political landscape, as it is estimated that 13 percent of the global GDP is lost due to conflicts (IEP, 2015).
|High economic inequality has a harmful impact on a number of societal outcomes, such as life expectancy, level of educational attainment, and economic growth (KPMG, 2015). While overall global income inequality is declining, the gap between the haves and have-nots is widening within countries, threatening to pull the rug out from under entire societies.
Due in part to the rise of emerging economies, global inequality overall is declining and the number of people living in extreme poverty has declined from 1.9 billion in 1990 to 836 million in 2015 (Humanosphere, 2015). In line with this development, projections show that we will witness a massive influx of people into the global middle class, which will grow from 1.8 billion people in 2009 to 4.9 billion in 2030 (OECD, 2012).However, while these figures tell a story of positive developments on a global scale, inequality still poses a risk to societies. Global trends have led to an increasing concentration of wealth in an increasingly small number of hands. The gap between the rich and the poor reached a new peak in 2015, where the richest 1% had accumulated more wealth than the rest of the world put together (Oxfam, 2016). Looking at the OECD countries, income inequality is at the highest level for the past half century (OECD). The average income of the richest 10 percent of the population is about nine times that of the poorest 10 percent across the OECD.
Inequality has obvious implications for the groups negatively affected by it; however, it also has a negative spill over effect on other areas of society such as economic productivity, resilience and crime rates. E.g. inequality tends to fuel crime, and societies marked by inequality experience higher rates of violence than more equal societies do (Equality Trust). Also life expectancy is influenced by inequality, as researchers have found that people in unequal communities in the US were more likely to die before the age of 75 than people in more equal communities, even if the average incomes were the same. It’s not just the level of income in a community that matters — it’s also how income is distributed (NY Times, 2015).
OECD found that income inequality has a statistically significant impact on economic growth, costing the UK nine percentage points of GDP growth between 1990 and 2010 and the U.S. almost seven points (OECD, 2014).
The 2015 Change Readiness Index, which measures the ability of governments, businesses and civil societies in 127 countries to handle economic change and take advantage of investment opportunities, found that economic inequality makes it harder for countries to weather crises such as natural disasters and social unrest (KPMG, 2015).
The gaps between rich and poor are not only growing in wealthy countries, but are also happening in developing countries, which in recent years have been celebrated for successfully reducing poverty (OECD, 2015). The causes of these growing income gaps are complex and reflect both economic and social shifts. The OECD points to globalization – in particular the impact of technology on the workforce – as an important factor.
|Climate disruption is exacerbating urban challenges such as heat islands, air pollution and extreme weather events, to mention a few. The effects of a changing climate will impact all aspects of urban society, including infrastructure systems, public services, the built environment, and ecosystem services (IIED). While these challenges disproportionately affect low income groups, they also bring serious political, social, and economic repercussions for entire cities.
Cities are growing at an unpresented rate today, particularly in the developing world, where 1.4 million people are added to urban areas each week (The New Climate Economy, 2015). By 2030, around 60 percent of the global population will live in cities and a vast majority of them in coastal regions. For cities, it is vital that they can operate and function resiliently, even as climate change subjects them to an increasing number of extreme and disruptive weather events. Resilient cities are important for everyday life as well as for the global economy, as more than 80 percent of the global GDP is produced in urban areas (World Bank, 2016).Climate change will impose a range of different potential risks to cities (Rosenzweig et al. 2015). One risk is the increasing prevalence of urban heat islands – a phenomenon in which urban centers and cities are several degrees warmer than surrounding areas due to presence of heat absorbing material, reduced evaporative cooling caused by lack of vegetation, and production of waste heat. The warming climate combined with urban heat islands increases the need for cooling and air conditioning systems, which in turn exacerbate air pollution in cities. In addition to heat islands, other climate related risks to cities include heavy downpours and coastal flooding.
Cities don’t just experience the effects of climate change, they also contribute to their creation, as today, cities generate 70-75 percent of energy related greenhouse gasses. Spurred by the need to act, and invigorated by the COP21 climate agreement, a range of cities have developed climate action plans. However, for many local governments, this task can be seen as overwhelming when faced with such myriad challenges.
Finally, climate disruption does not hit people equally. Poorer people and ethnic and racial minorities tend to live in more hazard-prone, vulnerable and crowded parts of cities (Rosenzweig et al. 2015). These circumstances increase their susceptibility to the impacts of climate disruption and reduce their capacity to adapt to and withstand extreme events. As of now, one billion urban dwellers live in informal settlements which lack provision for risk-reducing infrastructure and basic services. Their homes and livelihoods are also often those most at risk from the impacts of climate disruption (Bartlett & Satterthwaite, 2016).
Climate disruption is already costly for cities globally. Climate change-induced urban flooding alone is estimated to cost approximately USD 1 trillion a year, globally, and the annual cost of adaptation measures is estimated to range between USD 80-100 billion, of which about 80 percent will be borne in urbanized areas (Rosenzweig et al. 2015). These figures will only rise as cities are increasingly disrupted by climate change and must work faster and quicker to mitigate and adapt to its effects.
Opportunity is defined as a chance for progress in relation to a business generating social, environmental and financial returns. A good opportunity will see the value that can be created by responding to the world’s most pressing challenges and being part of the solution.
Click on the links below to read examples of opportunities from the previous two Global Opportunity Reports:
Our call for suggestions forms one part of a year-long collaborative innovation process which includes an Opportunity Lab in New York. Our experts will assess all the suggestions and help define which can go forward in the process. The Global Opportunity Report, published in 2017, will showcase 15 final opportunities.
For a chance to discuss turning risks into opportunities in person, check out the UN Global Compact Leaders Summit (22-23 June, New York). The event features six Opportunity Sessions focused on transforming new mindsets into new concrete opportunities and solutions. Learn how to register here.