Rewiring the Globe for Resilience | Davos 2023 | World Economic Forum

good morning everyone welcome to this very important session I think we all passed the first resilience test if we found the right chair uh we passed that one so uh as we all know this annual meeting of the world economic Forum I think is happening against the most complicated backdrop geopolitically geconomically in decades this session is really about making sure that we can avoid a future crisis like coed also unnecessary economic downturns economic fracturing of the world to invest a little bit in resilience to avoid to run into situations where the cost of inaction farce exceeds the cost of action what we have seen though is many of the risks that we are faced with they're so interconnected so it's not uh we're not able to just deal with one uh we have to deal with the whole scope of it and that's um and and they have knockoff uh effects so uh knock-on effects uh so that's also what we will discuss here today so we have a great panel to do so I think you're familiar with them but let me start with Rania al-mashat she is a minister of international cooperation of Egypt we have Bob sternfeld he is the managing partner means the boss of the bosses in vacancy I wish and then we have haldun Mubarak welcome haldon CEO and managing director of mobadala Investment Company one of the big investors of the world and then we have Maria Gabrielle commissioner for Innovation research culture education and youth at the European commission and last but not least Robin wins the president the CEO of bny Mellon one of the leading American Banks so I think you all deal with risks in your daily life and maybe I'll go to Bob sternfel first we have worked with McKinsey and the world economic Forum the last year on building like a coalition um on and for being more aware of the blind spots that the risks are but also how to build resilience so how can we deal more proactively with mitigating risk risks and also to build resilience over to you about well thank you thanks for having me here and it's great to be with all of you on this and I you know I guess I would start with a thank you to you and to the world economic Forum uh for a little over a year ago collaboratively coming up with the idea that we should create a Consortium on resilience and and McKinsey is proud to be a founding member of that I think we'd also I'd speak for you as well we'd love other leaders in the room to to join the Consortium it's a moment to work together I was also very excited to collaborate on the paper that you mentioned that we put out earlier this week on the notion that resilience can actually be a key enabler to drive sustainable inclusive growth and you may ask then why and I I guess I would start with resilience matters and and in the report we talk about the idea that if you look at this decade there's up to 20 percent of GDP growth at play up or down depending on how much we lean into resilience that's a massive number when you look at private Enterprise and you look at companies that are resilient and you look at the last couple of downturns the work shows that companies that act in a resilient way outperform their peers by up to 50 percent in terms of total shareholder returns so I'd start with this matters right you know the second point I'd make is but it doesn't come for free and and we do need to think about the Quantum of investment not cost but investment required to be truly resilient and and we talk about things like over 5 trillion in infrastructure nine trillion per year in Climate Technologies 500 billion for Education there's a massive investment required for resilience maybe one notion but why now and um you know what I'd make the case that this is a real moment where if we do take this notion of it's an investment not a cost we can not only be safer but we can actually enable growth growth that's inclusive and sustainable and you think about investment being a catalyst for new technologies everything from AI to Industry 4.0 and everything in between an investment for infrastructure that would not only make us safer but also be the foundation for growth going forward and an investment in training that would solve some of the big talent mismatches that we have going forward so is there a moment now maybe I then kind of close with well so what how do we do this and and I just have a few thoughts one um I think we do need to think about this notion of investment not cost and many say what's the cost of resilience I tend to frame it Borgia as you did which is an investment and and can we get more out of this when we think investment mindset I think the second is we need a common framework to think about resilience and the the paper talks about a framework both for public sector and private sector but can we agree on standards what do we mean by resilience and maybe the last thing I'd say is hyper collaboration you know we won't solve this ourselves private sector up and down value chains public-private Partnerships and maybe Partnerships with stakeholders many of you are stakeholders to think in the time Horizons required to get these returns on investment for resiliency thank you Bob one thing I was reflecting on um was of course building resilience is important and it could and can be a good investment we have seen on trade side now that some countries uh and also businesses are much more conscious about this the global value chains not just in time but also just in case you see near Shoring French horn but we can also go too far in that direction and then we shave off growth so how do you how would you advise businesses and countries to find the optimal way of investing in resilience because you could put all your money into a resilience that that would not be wise but I think you're saying that we're today probably under investing a bit in resilience I think so and I I you know to your point on one aspect of this which is around the ish the complicated issues of globalization and and what follows globalization um I there's actually some really interesting work that that we did that shows one we're more interconnected than we ever thought we all know the benefits of the last 30 years in globalization we also know some of the stress points but if we do default to some of the terms that you used you know friend Shoring or even more aggressively decoupling the value of global GDP that's at risk is anywhere between 10 and 40 percent of global GDP it's a massive number now one of the interesting things though that shows a weakness and lack of resilience is we are less Diversified in global trade now than we were in 1990 right trade has gotten more concentrated massive trunk routes think of Europe China U.S China and one of the arguments perhaps in thinking about an investment in resilience is not the de-globalization of trade but the diversification of trade and you start to think about other countries you think about the UAE you think about Egypt do you think about India Indonesia Vietnam and there I wonder we could be not only more resilient from a risk point of view but we could actually drive inclusive growth because more countries could participate there may be a way to think about that I I think that that makes sense and that will also mean more manufacturing and countries today that are not leading in manufacturing but as you said if you get 80 percent of semiconductors from one or two countries or minerals and Etc Minister from Egypt you were a critical at heading and sharing the cup 27 in um Sheikh and I guess you made reflected on the meeting also afterwards we got lost in damage for the first time into the agreement but I think we're all seeing that we are very very vulnerable when it comes to climate change it's not any more about why but how and how and how much do we need to invest in the years to come on mitigation but also adaptation because it's really happening there and I think in Egypt you also feel climate change every day with water challenges but also the impact it has on agriculture production well thank you very much and thank you for inviting me to be part of the the group and the Consortium a few points to make and I love the way it's phrased it's not a cost it's an investment because if you don't invest into resilience you move into loss and damage so that's the way if I'm putting it in a cop context if we're not investing enough in adaptation projects if we're not investing enough in private sector if the government is not doing enough policy to to increase resilience then we're going to be in a situation where we're trying to find money as quickly as possible increasing the debt to be able to avoid a loss and damage situation um a few important points reflecting on on cop and this concept of resilience if countries are not very aware that today if you are trying to invite investors if you're trying to finance your own Sovereign projects financing is very difficult if it doesn't have climate action embedded somewhere and therefore the argument that we were making to increase resilience in general is that climate action and development should not be seen as mutually exclusive they come hand in hand and it comes hand in hand because we've seen over the years that if we don't do that the implications not just on a national level but on a global level are quite big so if we take a look at the report and I invite everyone to take a look at it it split maybe into into increasing resilience on the social level because there are people that are affected if we're looking at uh Health if we're looking at education if the cost is going up so much then you're eating from a pool of resources and those that are affected most are the sectors which are supposed to increase the resilience so that's an important Point there's a social aspect the other aspect is related to inclusivity and sdgs and therefore this point about growth and then finally the financing so again if if these are the three points that the report come out and and explicitly identify very very important and the other point is it's not just a government being resilient without the private sector being resilient it's really a collective because at the end of the day we've seen that crisis when they happen if it's a financial crisis it affects everyone if it's a crisis where the private sector and banks are involved and again it affects growth and it affects governments and so forth so our message from from cop was climate and development should be seen hand in hand when governments today are putting out development projects which include private Public Partnerships or try to catalyze private sector and so forth we need to be very very clear on um uh you know the the the on the national level what the ndcs are but also make sure uh that uh the private sector is is aware of the goals and the plans and that all of us are working together and of course hyper collaboration uh again crisis in and crisis outage it's shown that without International cooperation and and you know weft is a fantastic forum for that it would be very difficult to meet the common problems that we are all facing and increase our resilience well thank you uh Mr Rania I go to haldun um Al Mubarak you heard Mr Rania was saying that it's not only a cost but there's an investment in resilience so who do you think you're one of the large investors in the world but also UAE in general I know you play a critical role there how do you think about resilience because it's also about optimalizing the Investments because we know from government that you could invest that so much there is no money left but there but but I think we're more conscious about this resilience because now than we were in the past yeah I mean listen the UAE You Know It uh very well is a country that is all about resilience our history our 50-plus year history for many of you who have been there and uh for someone that I've lived through most of it you would have seen a country that I think was completely underdeveloped uh in every way uh 50 odd years ago and now is a is considered one of the most developed countries in the world and it's by investing investing in the long-term investing in the infrastructure both human and physical and that creates that resilience yes I think we're blessed with natural resources but it was also about diversification you know consistently over the last 40 years a consistent investment into diversification of the economy and the development of the country I think that's worked very well for us the last couple of years I think have been um pretty remarkable in many ways not necessarily all good for the world for all of us here on this room in terms of the Black Swan events that we dealt with over the last three years a couple of them which you know each one of them I think we all know in its own self is is uh is you know incredibly challenging and I think put that resilience uh reality to the core of every business every country every economy uh you know everybody in this room would have been impacted in some way or another by these Black Swan events over the last three years now what that took us into is a shift from what was predominantly a cost driven approach in the past that cost-driven approach led to energy policy in some places where you had dependence over 80 percent on one supplier where you had uh uh production of one particular commodity or yeah one that's called commodity semiconductors in one country and these things were not looked at within the resilience lens because it was completely cost driven so what the three years and the last three years have taught us all is it cannot be that way there has to be in addition to the cost a resilience aspect a diversification aspect which is critical now the challenge is we can also go too far down that road where it also cost is important and we all know that and it cannot be to Bob's point then uh resilience at the cost of cost where then it becomes an impediment for growth uh in whatever sector or whatever economy it is I think the challenge we we all deal with today is particularly with the last three years particularly with this divide the push towards decoupling the globalization these are very very challenging headwinds and I think from our perspective here I would say a UE perspective a mobile perspective as an investor my personal view on this that's also a problem uh because yes we have to have a resilience aspect of it we have to have diversification we have to have sensible uh views when it comes to Global Supply chains uh but also decoupling is not necessarily the answer because the problem that creates is also quite substantial for over moving forward not having um this gathering weft for the last three years was a problem I mean yes we had virtual meetings yes we but look at us see a rollback here now you're seeing people from all over the world east west north south this sort of uh grouping brings us back together bringing us back towards uh communicating and I think that's fundamental and I see in a very cautiously optimistic way the future as we come back together as we communicate back again uh how we how we have to now create the new way and it's not the global uh de-globalization it's not necessarily globalization and the way we knew it in the past there is a new way a re-globalization or a different kind of globalization as you mentioned also I think there is a big difference of diversification and decoupling we heard the vice premier of China yesterday also underlining the importance of trade-in Investments and reforms and if we look at the decoupling I think that will then apply for maybe 10 percent of the trade maybe there are areas of National Security and Etc but still there will be a possibility to trade with 90 of the goods I guess absolutely I think there's no question that as long as we you know that there's a fence that defines what is justifiably um positioned as a decoupled space whatever it is whatever sector let's say semiconductor as an example fine I think that gets put in and there's you know guard rails within that but then the remaining pie the remaining 90 85 95 maybe I don't know what the number is that has to be in my view released in a appropriate way the challenge is when you have a cloud it affects the whole so let's look at the last quarter the last two quarters I think it was you know in the last two days I've been speaking to a lot of people we had a wave of negativity in the last third and fourth quarter this year was going to be uh is going to be a disaster and that you heard it in the media you heard it from politicians you heard it from government if you heard from everyone yet I think all of us I mean I won't be presumptuous about to speak on myself you look at the data and it's telling you a different story but you can't help but be influenced by by this you know wave you're hearing from you know on the screen in meetings uh government and then you pause that pause I think is what hit us in that last quarter last year now I think you see it today I think at weft uh you don't hear that people are starting to now wait go back to data go back to the fundamentals and you know I'm not saying it's going to be great or it's going to be a bad year but it's certainly not as bad as we thought it would be because of that and I think that's the same argument goes to the decoupling because I think that wave that is or that cloud is very much there until we have that Clarity and I think you're right that when we meet it's also easier to address those things also between nations and and what we are seeing now is a little bit more of a picture of Silver Linings I think growth will be back uh in China in a major way uh late uh 2023 and the one region that was almost written off was was Europe it Europe was gonna be in a total energy crisis people work concerned if they could come to Davos but it's because there was no heating here and Industry production was gonna Deep dive and last quarter industry production increased in Germany and we're also seeing that Europe is diversifying very fast so commissioner I guess there are still a commissioner Gabrielle some challenges ahead for Europe and where would you say that Europe no with learning from building a Russian gas U.S security and Chinese export I guess there's a little bit discussions now on how to build stronger resilience moving forward well first I think that what was clear the last few months is there is strategic sectors from Supply chains technology Health agriculture transport and there is strategic challenges Investments again when we talk about talents what I would like to raise is the importance of innovation and education because I think that the first strong message that Europe sent it really to stay United and that's actually for me a real challenge to stay United not only between member states within Europe but with our International partners and allies and to build these strong Partnerships Partnerships between different governments and countries Partnerships between public and private sector and many other Partnerships we have to innovate in these ecosystem approach that we have to adopt because we would like to have this resilience there is a lot of key elements to take into consideration the second thing that's what we are doing and maybe that explains a little bit these good numbers is that we are looking very much now on the new wave of innovation actually we are witnessing a new wave of innovation the so-called deep Innovation and for us deep that means deepest societal challenges that means that the World of Science and Industry together with education and talents is working with The Regulators since the very beginning in order to offer solutions that are adequate to the needs of our citizens it was good thanks to the digitalization we increased the productivity but it's not sufficient anymore we need new products that will tackle these challenges and what is good is that the companies that are in the Deep Tech 94 of them are answering to sustainable development goals it's really impressive and we have another good example take the MRNA vaccine a startup working with a big industry company with the regulator really to accelerate the procedures and to continue to invest in building an ecosystem connect the local Innovation ecosystems and have talented and skills so for me that's the main challenge now really to see the investment in education not as a cost but as a real investment because behind all these good companies good Innovation brilliant examples we have brilliant people with the necessary skills and competencies and so on the other side yes to innovate and to see The Innovation itself not just to produce Technologies or prototypes but to see how they can build this resilience how they contribute really not to exclude someone but to not to left anyone behind and that's for me the main message but Investing For example in a education and r d That's you're saying a part of future success we heard that president from The Lion yesterday was pretty tough when it came to the IRA this inflationary reduction Act um I think there are huge Investments I'm not sure if the ACT is going to reduce inflation but it's huge uh investments in semiconductors decarbonization and uh Innovation what is Europe's answer to this is it like saying that this state subsidies or are you just pulling the same kind of money together and say we will do as well as the U.S for those that want to be in these sectors well definitely definitely diversification will be the key word because there is no Miracle Solution yes of course if we have stated rules in our hands we have to see how we can adapt them but there was another big announcement that was the Net Zero industry act and that's the Clinton Tech it's an example of these deep Tech wave of innovation where we have facts it's a evidence-based policy and where we have to build on this on this trend what is different again for me is to build different Partnerships well but I think that it's if you'd like to succeed not just to be opposed to any other decision that's the right of everyone to take decisions what we should stop to do is to lose time only by to opposed to each other let's see what are our respective strengths and what we can do in order to bring solutions to to the problems of people and that's why we need to change the approach that's why I'm always saying from co-creation to complementation we need for these new solutions to co-create the solutions together with the stakeholders not only public institutions not only governments but together with universities with innovators with startups with public and private investors and after to co-implement those Solutions together in order to see very rapidly if there is a need to adapt to what to be flexible and to identify Tendencies much more rapidly not to discover Five Ten Years Later that there is concentration and there is logging behind so that's that's for me a strength of course there is a momentum to seize and I think that with the announcement of the president Europe will be there to seize the momentum thank you very much it was very interesting to listen to minister habeck the minister for economy and also energy from Germany yesterday saying that it was a cardinal mistake of course of Germany he said it to decide that 40 percent of the natural gas was coming from one country and that's so much also was based on Expert to China has to diversify and then he said I can't put all the eggs in the basket of Washington DC when it comes to security either but anyway coming to you Robin wins uh there is no one better than Banks to identify at least that's what we hope identify risks mitigate them and also build resilience and I I think we've seen through this economic downturn too that the banks are much more robust than they were in 2007-2008 so what are your Reflections on risk and resilience and the optimalizing of this okay look it's a very important topic and I actually want to come back to something that they're both Rania and Bob said earlier on when we were talking about the concept of resilience and is it a cost or is an investment we keep it kind of simple in our company and I think this applies across the financial sector more broadly resilience is commercial being resilient is a commercial Endeavor and and and and you alluded to it with the question which is economies around the world rely on the financial sector to be resilient to be able to weather downturns uh in the general state of the economy you alluded to all of the work that's been done since the financial crisis and that's right just the U.S g-sibs alone that's the eight biggest banking institutions just in the U us added half a trillion dollars worth of capital to their balance sheets since the financial crisis as an investment in resilience and ensuring that in whatever it is that happens next and one can't predict whatever it is that's going to happen next they will be able to weather those storms and and I think collectively the financial services industry around the world feels very proud of having managed through what was an incredibly disruptive event through the global pandemic when all of the business as usual that we all depend on the fact that the cash machines continue to work the fact that our debit cards and credit cards can still tap on consoles the fact that we can transition to being more online purchases in our case being why melon we settle every day between 10 and 15 trillion dollars worth of U.S treasuries uh as part of our role and helping the US government to be able to conduct its own uh operations We Touch about 20 of all investable assets in the world with the world's largest custodian 44 trillion dollars worth of assets that we have on our custody platform if resilience isn't commercial for us then we're obviously missing a trick and so then the question becomes okay how do you become resilient and it's all the things that everybody's been talking about we need diversification we can't have all of our eggs in one basket we can't service our business out of one place we have to be globally distributed we have to be regionally just attributed we have to have a variety of different technology infrastructure so that we're not dependent on a place that we can render our business out and distribute it to wherever our customers may be so there's a lot of work that goes into it there's a lot of investment that goes into it but at the end of the day it is commercial and it's wrapped up in Brands and trust that we can actually rely on sectors to perform through thick and thin well thank you and even if the banks know are showing a little bit not as good results as in the past we're saying that they're much better prepared for also taking his I think we're all also wondering about um how is economic outlook for 2023 are we going to see like um also a recession in the U.S uh will that be a very shallow one what could you we do today to avoid this possible recession and this is where I would like to also hear you uh telling us a bit more of what tools do we have enable our toolkit we see that inflation is going down in the U.S now but I think we still can expect the FED to continue increasing interest rates because you have an inflationary Target of two percent that was maybe possible when China was exporting deflation every year but things have changed so maybe I separate the comments into two things and sort of where are we now and what might we expect potentially but then let me just talk about the other part of your question which is the investment and the preparedness I think it's a large financial institution but this applies to any Walk of Life you just don't know exactly what the future has in store uh you know anybody who is arrogant enough to think that they know the answer about how the world's going to unfold in the next 12 months we have to worry a little bit about them and so the consequence of that is to say well we don't know but we have to be prepared for different eventualities and that to me is the is the heart of what risk management is um you know I worked for somebody once who had an expression they used to use which was we have a great Crystal Ball but it only works for the present and it's a great insight into where we are at this moment in time and I I think that's instructive and so as a financial institution what we do and I know other financial institutions do the same thing we're preparing for all all of these things maybe we'll have a terrible recession maybe we won't have recession at all maybe the FED will be hiking rates all year maybe they'll start cutting rates at the end of the year but it doesn't really matter which path it's on in terms of our ability to be prepared we have to be prepared for all reasonable and plausible consequences I think that's the heart of a good risk management mindset which is don't try to predict but prepare for all of those different possibilities now having said all of that what do we actually see which was the other part of your question well you know we touch 20 of the world's investable assets and through that we get insight again not about what's going to happen but what has been happening now and when we look at our own data we certainly see that that some of the forces that were driving the dollar to the strength that we saw in 22 some of those have abated again it's not a prediction for the future but it's a comment about where things stand today we've also seen some of the very aggressive short of the U.S Equity Market Abate again not a prediction but an observation and we've also seen less investment in sort of buying in the long end of some of the debt markets particularly in the US our own economists suggest that while everything is going to be data dependent in the US there's certainly a possibility that we could maybe see a little bit more from the FED than is currently priced into the market that possibility of getting all the way to five percent maybe it's even possible we could go beyond in fed funds rates and also the possibility that we're up we'll stay there for a little bit longer the market currently prices that the FED will be cutting rates Again by the end of 2023 certainly possible there are sets of data that that could lead that to be the outcome but we think that that's that's less likely as a base case scenario given given the importance of combating inflation given the importance of making sure that we really do deal with that once and for all and once the FED starts cutting it's hard to turn around you know thank you for that very thoughtful answer and also about this uh it's hard to predict but uh you can prepare and so I think that's a lesson um learned uh turning back to you about uh you listened I think this uh discussion has brought up uh a lot of very important points uh I think it was no Robin also um saying that resilience has to be commercial uh uh I think that's a good point but also this is about predicting you know I remember when I started my economic studies at the professor ASA linback saying that you know economics is not an exact science so if you bring five economists in the same room there's probably eight different opinions so I think uh this also proves that we have to be prepared but looking at this resilience is being commercial and that you have to be prepared if you as Mackenzie that do deal with a lot of the global companies if you would you be able to share any areas where you see blind spots where we are weaker then we should be commercially when it comes to being resilient you know I think it's a great question and I might link and you give that advice for free heart yeah exactly as an appetizer exactly uh you get what you pay for it you know I'd maybe link Robin where you were going uh how doing some of the things that you said and you know part of this is I I think any organization is stepping back and saying look I I need to stress test a much wider array of scenarios going forward than I ever did before and and am I missing something right this notion of rather am I going to be certain but let me actually widen the aperture let me widen the aperture around geopolitics around where Global growth will come from around how fast we hit our climate goals Around Talent shortages and and so I think one of the muscles that I see Enterprise starting to build is a wider capability to look at a a set of scenarios that were inconceivable a couple years ago and I think that's prude um and I think that goes to your notion of of plan versus predict and and are we ready to um to adapt but I would link it with um if we stop at planning nothing's going to happen and and I I go to haldun one of the observations you made you know one of the things that I'm picking up is I think 2023 is a year of getting stuff done despite all these disruptions I need to make decisions as a leader and I need to make some decisions that some can be reversed some are irreversible but based on the data that I'm seeing am I actually starting to act and and one thought for me is is if we start to do that we may change some of the answers to how the world could actually play out um I think interest rates are are a key component to the equation but we also know that a large chunk of this inflation was driven by Supply disruptions right Supply disruptions will be driven largely through capital investment made by the private sector and if we then come together to say look let's start making some decisions and move even under uncertainty against a wider range of scenarios we may end up having some positive outcomes that could actually come through this year well then um looking at the risks and where we are prepared and not so prepared any thoughts on that um so there's one maybe I'll completely take us out of the box here so what we're seeing no no no no no but you know I'm going to throw something that maybe maybe controversial so what's happening in open AI right now is incredible now you can look at it from a risk lens or you can look at it from an opportunity lens since you're asking about risk let's look at it from a risk class uh this is a revolution that's now just about to I think kickstart I don't know what impact that's going to have on Industries businesses sectors I mean you can certainly see the the possibilities and the potential of disruption as as uh quite significant and that is a risk when I you know I'll answer the question in the risk lens that I don't think from my perspective I have a clear view on and when I look at our investments when I look at our portfolios when I look at our industries that we're in the impact of this uh AI Revolution that it's going to have now at a pace that in my view is going to be coming now Fast and Furious are we ready for it what businesses are ready for it how are they going to adapt how are they going to Pivot how are they going to take advantage of it and and of course what are the ones that are not going to be able to deal with it and what does that mean what does that mean and what does that mean for us from a from a portfolio allocation from a deployed Capital perspective how do we exit these these industries these sectors that we're going to have to take a view on right now if you had asked if we had had this discussion in years a year ago I would have told you now we're still away away from that conversation or that discussion I think now no I think it's here it's now and then I think we have to really look at that from from both a risk and an opportunity lens I agree and I think we're what we're seeing between the G2 is China and us is a race for those new technologies they do understand that those are that are on top of it will also be most influential I'll come back to you Rania on this but I also commissioner I know you care a lot about this and Ai and how is the European Union prepared for this because it's a risk but it's also a huge opportunity for those that succeed but for developing countries in the platform economy where the winner takes it all it raises also some some problems so we we have four minutes so one minute one minute and uh then we'll we'll close uh at the end here well very briefly baby for this question how to be better prepared of course we can't predict everything maybe a little bit provocative so but we need to continue to invest much more in fundamental research because we talk about companies citizens sectors investors but without the fundamental research it will be impossible to be better prepared in the future but will the EU do that because we have the European Resource Council I think that it's our Nobel Prize Factory and we are very very proud so now there is a lot a lot of other challenges uh but it's it's really important to continue to to invest in in research the second it's really to bring closer these worlds of research Innovation and education to industry it's something that it's not obvious we don't think spontaneously to each other but suddenly we discovered that we can provide concrete benefits and concrete situations in order to be more resilient and finally let's tackle much more the fragmentation of the regional Innovation values everywhere in all our continents not only within the European Union we have a vibrant local Innovation ecosystems they are not connected to each other if you'd like to be better prepared and to anticipate and not only to talk about Supply chains and dependency short or long we need to tackle this issue Rania I guess the new technologies and I know you worked a lot on this could be a way of leapfrogging for developing countries but I still we know that 3.6 billion people are not really connected to state of the world internet so so what are your Reflections how can Egypt uh Leap Frog in such a situation is it possible um I want to say that that you had for bringing this as a big opportunity slash risk because I think the AI is going to redefine how we think about countries correct I mean it's not just going to be about growth it's not just going to be about natural resources it's going to be about how fast the population those who's going to be running all of this so I think there's going to be a reshaping of the economic landscape based on exactly this is it going to be a knowledge economy is it going to be it's we used to talk about just Services now it's taking it to a to a different level and I just want to conclude with one thought also reflecting on the discussion and um predicting preparing but also control not controlling anchoring perceptions because I think that we used to talk in the past as economists about sunspots and creating the sunspots and actually uh uh you know the the you see the design you you met the disaster materializes because everybody's expecting it so how can we reduce information gaps anchor expectations more and perception so that we don't fall into more risks and I think that happens by making sure that everything is more resilient take food security for instance if people believed that countries and private sector in their Investments were more resilient against food trucks maybe the extra premium on prices would not have been materialized because of the perceptions so I think that's you know importance of anchoring expectations through uh investing in resilience thank you irania um Robin um of course for your industry uh the artificial intelligence can change a lot of things maybe comment on that and the second thing is that a lot of the risks are we cannot really predict as you said who would have thought that thousands of people were storming the capital uh the 6th of January who would have thought that Russia would try to invade a country where they have never disputed the border so there's a lot of uncertainties also in the future that we we will have to be resilient but we can't exactly know what is happening so your last Reflections on those two things so first just on the artificial intelligence so look this is not it's a very very powerful capability and I think it's very exciting it certainly has risks it's not native intelligence of course ultimately it's models complex models very very um impactful models but one of the things that that many Industries have done over time with models is understand you really have to measure and control models we in our industry in fact have people who are independent from the creation of models whose sole job it is to really test and validate and make sure that we understand how things will behave so that we don't get uh unpredictable outcomes certainly not where those unpredictable outcomes and models are plugged into ordinary course important activities so that that's an important science that's going to have to build up around these types of capabilities which is the the process of understanding them and making sure that we we understand and Define the boundaries for them uh so so that that's going to be that um in terms of in terms of the preparedness so just go back to to Bob what Bob said earlier on we have to prepare for all the eventualities we'll hope for the best we'll prepare for a whole bunch of things we won't prepare for exactly the thing that's going to happen we all know that that to be the case but across the scenarios of what it is that we prepare for we probably will have developed some as as it's called in the US some muscle memory associated with that that's useful and also it's conditions us all to have that mindset and I think actually that makes us more adaptable and so part of resilience is also about about the ability to adapt to things that are slightly outside of what we exactly prepared for but but we we've we've practiced enough at adaptation that we can then adapt to that new thing that to me that's also the heart of resilience thank you thank you so much Robin thank you to what I feel is uh was a great panel I I learned a lot about resilience during this panel probably things I should have known before but that is what also Davos is about um intelligent conversations where we all learn and I think the best test of a good Davos panel is if you come out and have learned something new or you start to reflect and to the panelists you delivered on that thank you [Applause]

Channel: World Economic Forum

Views: 6,399

Keywords: sustainable global goals, climate change, sustainability, davos agenda, World Economic Forum, Davos, politics, finance, economy, news, leadership, democracy, education, 4IR, technology, tech, AI, automation, work, future, world news, economist, world, forum, economic, world news today, worldeconomicforum, recommended for you, globalization, robotics, bloomberg, documentary, klaus schwab

Id: _tv4iYq7JE4

Length: 47min 43sec (2863 seconds)

Published: Sun Feb 26 2023