Conflict, Extreme Weather, and Disinformation: Top Global Risks in 2025

The World Economic Forum's Global Risks Report 2025 has highlighted a grim outlook for the coming years, with conflict, extreme weather, and disinformation topping the list of immediate and short-term concerns. As the world grapples with the aftermath of the COVID-19 pandemic and the ongoing impacts of climate change, these risks threaten to derail the global recovery and exacerbate existing inequalities.

Conflict: A Looming Threat

Geopolitical tensions have been on the rise in recent years, with state-based armed conflict ranking as the number one current risk, according to the Global Risks Perception Survey 2024-2025. The report notes that respondents are increasingly concerned about the potential for conflicts to worsen or spread, particularly in regions such as Ukraine, the Middle East, and Sudan. This heightened perception of geopolitical risk is likely to impact investment decisions, as investors may become more risk-averse or shift their focus towards more stable regions.



Extreme Weather: A Growing Concern

Extreme weather events have become increasingly frequent and intense in recent years, posing significant risks to the global energy market and exacerbating market volatility. The United Nations Office for Disaster Risk Reduction reports that climate-related disasters have increased from 3656 events in the period 1980-1999 to 6681 events in the period 2000-2019. These events can lead to sharp fluctuations in global energy prices and rapid cross-market risk contagion, as seen in the 2021 energy crisis in Europe.

Investors can employ several strategies to hedge against extreme weather risks, such as investing in companies well-positioned to benefit from the transition to a low-carbon economy, catastrophe bonds, strong risk management practices, and green technologies and infrastructure.

Disinformation: A Double-Edged Sword

Disinformation has emerged as a significant threat to market sentiment and investment outcomes, as demonstrated by the 2016 U.S. Presidential election. While heavy doses of disinformation related to the candidates did not affect broad index stock returns, disinformation that was strongly pro-Hillary Clinton was associated with a substantial lowering of conditional volatility of stocks. This suggests that disinformation can influence investor sentiment and risk perception, leading to changes in stock market volatility.



As the world grapples with these interconnected risks, it is crucial for investors to remain vigilant and adapt their strategies accordingly. By staying informed about geopolitical developments, monitoring extreme weather events, and understanding the impact of disinformation on market sentiment, investors can better navigate the complex and uncertain global landscape.

In conclusion, the World Economic Forum's Global Risks Report 2025 underscores the importance of conflict, extreme weather, and disinformation as top global risks in 2025. As investors seek to capitalize on the global recovery, they must remain cognizant of these risks and adapt their strategies to mitigate their impacts. By doing so, investors can better position themselves to weather the storm and capitalize on the opportunities that lie ahead.