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A Stakeholder Approach to Managing Global Risk

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At last week's Summit on the Global Agenda, convened in Dubai by the World Economic Forum (WEF), risk was high on the agenda. In fact, risk has been center stage from the very first Summit, held in the late fall of 2008.

This year's Summit was the WEF's third, and the emphasis on managing risk called to mind the surreal environment of the first Summit. At that event, the world's economy was in freefall, and nowhere was that more pronounced than in Dubai, where real estate speculation as hot as summertime in the Persian Gulf was crashing to earth. When Dubai's ruler told the plenary audience--over and over--that everything was fine, it succeeded only in stoking fears that the opposite was true.

The last couple of years have made clear just how much work needs to be done to manage systemic risks more effectively. The WEF made a significant contribution to that important goal at this year's Summit by announcing its new "Risk Response Network," a network of corporate risk officers and other thought leaders who will aim to identify systemic geopolitical and economic risks--and offer potential solutions. The Network will be inaugurated formally at Davos in late January, and convened formally for the first time in New York in early April.

Many of us at the Summit expressed concern that undue focus on avoiding risk will undercut the creativity so crucial to rebuilding global economic vitality. Indeed, in a meeting at the Summit of the Consumer Industry Council, which I chaired, we focused our attention on innovation as the key to building sustainable growth and prosperity.

The mandate of the Council, which includes companies like Pepsico, Best Buy, and Procter & Gamble, and thought leaders from design firm IDEO, the University of Manchester (UK), and Brazil's Akatu Institute, is to sketch a vision for the consumer products industry over the coming decades, with a report due in June, 2011. Over three days, we debated whether economic models that measure and reward growth are appropriate in an era of growing populations and natural resource constraints.

In charting the industry's future, we fixed on health and environment as two crucial features that merit increased investment and focus. In just the past several weeks, many high profile consumer products companies have announced sustainability focused initiatives: Nestle's creation of a new business unit focused on "nutraceuticals," the combination of food and medicine; Best Buy's investment in pioneering home energy management systems; and Nike's making public its environmental apparel design tool, so that peers--and competitors--can use it. These efforts are part of an emerging movement in this and other industries toward sustainable consumption, an issue that BSR considers the next frontier in sustainability.

It is said that generals too often fight the last war, instead of preparing for the next one. The WEF's Risk Response Network is making a crucial investment by strengthening the world's collective ability to avoid the mistakes that nearly brought down the global economy. But it is the creative impulse found throughout the Summit on the Global Agenda that will generate the sustainable, inclusive growth that makes the world's economy worth protecting in the first place.