In a world fraught with risk, Trump will add to the bumps

With the return of the highly unpredictable Donald Trump as US president in January next year, how should one manage the coming risks?

Risk can be defined as the possibility of the occurrence of an event or condition that would negatively affect our well-being. One scans for risks to try to avoid or mitigate them. The first thing to remember is that risk cannot be eliminated; it can only be managed or hedged.

In a static zero-sum system, one man’s risk is another man’s opportunity. If you squeeze one side of a balloon, the other side will expand. However, the balloon itself may burst – such risk is not improbable. There are always costs to hedging risks, and if you choose the wrong hedge, you could lose even more when an unexpected event occurs.

The World Economic Forum’s Global Risk Report 2024, published in January and based on a global risk perception survey of 1,500 experts, was remarkably comprehensive in laying out the fears of a world being rapidly transformed by accelerating technological changes and beset by climate change and conflict.

Surprisingly, involuntary migration, interstate armed conflict and geoeconomic confrontation were ranked seventh, 15th, and 16th respectively over the next 10 years. Throughout 2024, migration, nuclear war risks and tariff confrontation were headline concerns affecting elections and the geopolitical environment.