Top 15 extreme risks cited by the Thinking Ahead Institute
Global temperature change, global trade collapse and cyber warfare are the three biggest risks for global economic growth and asset returns, according to the Thinking Ahead Institute’s (TAI) ‘Extreme risks 2019 report and ranking’ report.
Global temperature change took the top spot from third place in the 2013 ranking, while collapse of global trade jumped up two spots due to fears of protectionism.
Cyber warfare’s third position was due to the ever-interconnected world being at risk, as well as the increased risk of the internet to be weaponised.
Along with cyber warfare, abandonment of fiat currency and biodiversity collapse were new additions into the ranking, which replaced deflation, insurance crisis and terrorism.
The full 15 expanded to resource scarcity, currency crisis, depression, infrastructure failure, banking crisis, sovereign default, stagnation, biodiversity collapse, health progress backfire, nuclear contamination, abandonment of fiat money and extreme longevity.
The report suggested three hedging strategies: hold cash, derivatives and hold a negatively-correlated asset.
Tim Hodgson, head of the Thinking Ahead Group, said the trend saw non-financial extreme risks emerging ahead of traditional financial risks.
“Global temperature change becomes the highest ranked risk due to our assessment of higher likelihood coupled with significant impact – in the extreme this would mean mass extinction,” Hodgson said.
To navigate through this complex world, we suggest investors need to be open-minded, avoid concentrated risks, be sensitive to early warning signs, constantly adapt and always prepare for the worst.”
AUTHOR
Chris Dastoor
Recommended for you
The merger with L1 Capital will “inject new life” into Platinum, Morningstar believes, but is unlikely to boost Platinum’s declining funds under management.
More than half of the top 20 most popular shares bought by advised investors during the first half of 2025 were ETFs, according to AUSIEX data.
At least two-thirds of ETF flows are understood to be driven by intermediaries, according to Global X, as net flows into Australian ETFs spike 97 per cent in the first half of 2025.
Inflows for the first half of 2025 for GQG Partners stand at US$8 billion, but the firm has flagged fund underperformance could be a headwind for future flows.
