Davos 2014: Widening wealth gap 'biggest risk' in 2014

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The increasing gap between rich and poor is seen as the biggest risk to global stability, according to a survey by the World Economic Forum (WEF).

In its annual report it warned that income disparity is seen as the risk "most likely to to cause serious damage globally in the coming decade".

The increased risk of a cyber attack was also highlighted.

Firms were told they needed to do more to deal with that risk as well as regain public trust in the internet.

'Lost generation'

The report warned that worsening levels of income disparity could lead to more social unrest - such as that seen in the Arab Spring.

"Disgruntlement can lead to the dissolution of the fabric of society, especially if young people feel they don't have a future," said Jennifer Blanke, WEF chief economist.

"This is something that affects everybody."

David Cole, group chief risk officer at Swiss Re and contributor to the report, said: "I'm a big supporter of capitalism but there are moments in time when capitalism can go into overdrive and it is important to have measures in place - whether regulatory, government or tax measures - that ensure we avoid excesses in terms of income and wealth distribution."

The WEF also warned about the "lost generation" - young people coming of age in the 2010s who face either unemployment or underemployment.

"The younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an ageing population", said Mr Cole.

"While in the emerging markets there are more jobs to be had, the workforce does not yet possess the broad based skill-sets necessary to satisfy demand," he added.

As a result, he said it was important to think in the long term, and that countries should not simply support jobs at home but that they also facilitated migration and invested in skills.

Internet trust

As far as the internet is concerned, companies were advised to do more to protect themselves against a potential cyber attack as well as working to regain trust amongst the public.

"Trust in the internet is declining as a result of data misuse, hacking and privacy intrusion", said Axel Lehmann, chief risk officer at Zurich Financial Group and who also worked on the report.

"A fragmentation of the internet itself is the wrong way to solve this issue as it would destroy the benefits the web provides to all of us. Rather than building walled gardens, it is time to act by setting up security standards and regaining trust."

"This is not just a technical problem. It needs to be discussed at board and chief executive level. It needs to be dealt with at the top," he added.

Other risks to global stability highlighted were extreme weather events and climate change.

The risk of a fiscal crisis was seen as being the most potentially damaging, but the chances of it actually happening was perceived to have lessened.

The report was based on a survey of 700 experts from industry, government and civil society. It comes ahead of the World Economic Forum's annual conference in Davos next week, where many of the themes will be discussed.

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