SEOUL Emerging economies are facing significant uncertainty and serious downside risks.

But they remained underinsured against domestic credit risks the leading threat to emerging economies today.

Now, both dynamics are being reversed, generating new risks for the global economy particularly for emerging countries.

In particular, expansionary monetary policies in the US (indeed, in all advanced countries) are generating high risks for emerging economies.

Emerging markets are leading the recovery, but a number of them must contend with the risks of overheating and growing financial imbalances.

Thus, for the emerging economies, advanced countries downside risks and the spillover effects of their recovery policies are the key areas of concern.

Asian countries must be able to conduct well coordinated candid reviews of one another to reduce the likelihood of risks and detect emerging vulnerabilities.

In that sense, although China, with its 3.5 trillion stock of foreign exchange reserves, may seem to exemplify emerging economies tendency to be over insured against external risks, it actually faces the same credit risks as its counterparts.

Furthermore, emerging international banking capital adequacy regulations (Basel II), make the credit risks rating of potential borrowers a condition for their access to bank loans.

In emerging markets and low income economies, the challenge is to avoid overheating, contain financial risks, and address pressing social spending needs, while not compromising sustainability.

None of this is to say that the risks of foreign capital flows have evaporated, and that emerging markets should throw open their capital accounts all at once.

Many infectious diseases that ravage developing countries today, notably HIV AIDS and tuberculosis, pose severe risks for the entire world, particularly in the light of emerging drug resistance.

Following the Asian financial crisis of the late 1990 s, emerging economies began to accumulate massive foreign exchange reserves to protect themselves against the risks of external over indebtedness.

Today, we can recognize the outlines of a post American international (dis)order not only its emerging structures, but also its risks, threats, and conflicts, all of which are intensifying.

The European Food Safety Authority (EFSA) is the agency of the European Union (EU) that provides independent scientific advice and communicates on existing and emerging risks associated with the food chain.

And, to Europe s immediate south, across the Mediterranean, new risks are emerging in the vastness of North Africa and the Sahara, including the threat of an Al Qaeda state in northern Mali.

But offsetting fiscal austerity with ultra easy monetary policies risks fueling a resurgence of private leverage in advanced economies and already has produced the dangerous spillover of rising leverage in emerging economies.

But, today, emerging countries are growing very concerned with what they rightly perceive as the serious risks to their own economies implied by excessive weakness in Europe, which remains the world s trade leader.

Occupational risks

And, given the seriousness of the downside risks to growth in advanced and emerging economies alike, the correction could be a bellwether of worse to come for the global economy and financial markets in 2013.

These risks explain why the Fed s mere suggestion of a potential move toward reducing its purchases of long term asset (so called quantitative easing) caused emerging market currencies and asset prices to plummet this summer.

But the demand for emerging market assets is neither infinite nor perfectly substitutable for the assets of advanced economies even for given interest rate differentials because these assets have very different liquidity and credit risks.

Emerging markets know this, and are upset Brazil has vehemently expressed its concerns not only about the increased value of their currency, but that the influx of money risks fueling asset bubbles or triggering inflation.

Risks As with any surgical procedure, there are risks of bleeding and infection.

But risks remain.

Risks and challenges

The public perceives Fukushima type risks and derivatives risks differently. Many fear nuclear risks, which are vivid, slowing the industry s development amid safety concerns.

Postponing fiscal consolidation risks aborting it, but consolidating too aggressively risks temporarily hindering growth.

Emerging issues

Can Russian President Vladimir Putin s regime withstand a prolonged period of low energy prices and Western sanctions? What risks do you see emerging should Russia s economy continue to decline, with Putin increasingly unable to reward his political base?

In short, the medium term benefits that emerging economies could receive from faster growth in the US are now being swamped by short term risks generated by the capital tsunami, as Brazilian President Dilma Rousseff has called it.

Since 2005, following recommendations by the United Nations Board of Auditors, all audits rated at below average or deficient are brought to the attention of the Oversight Committee where the main control failures and emerging risks are highlighted.

As a result, market risks can be equated with the risks confronting individual market participants.

Tom understands the risks.

These risks are real.

There are serious risks.

The risks are considerable.

Some recognize the risks.

The risks are high.

The Risks of Withdrawal

The attenuation of downside risks and pleasant surprises in developed and emerging economies could lead to a further increase in demand for risky assets (equities and credit), which would reinforce economic recovery via wealth effects and lower borrowing costs.

All this could greatly complicate managing the G 20, and risks obscuring the question that all should be addressing how to manage a global economy in which the balance between advanced and emerging countries is shifting at great speed.

We recognize that HIV AIDS, malaria, tuberculosis and other infectious diseases pose severe risks for the entire world and serious challenges to the achievement of development goals. These diseases and other emerging health challenges require a concerted international response.

Emerging Infectious Diseases

Emerging World Rising