LONDON (Reuters) - Two years of economic and market turmoil mean that investors cannot ignore the chances of even the most extreme events like global depression or a killer pandemic, a leading investment consultancy said on Monday.

Watson Wyatt said in its study, "Extreme Risks," that investors should prepare for everything from currency and banking crises to trade protectionism and even the end of capitalism.

The firm said it had drawn up the list to underline that risk management in investing cannot afford to ignore threats even in the bottom 5 percent of possible events and recommended ways of hedging -- a form of insurance -- against them.

...

Its 15 extreme risks were ranked in order as of mid-year.

They were economic depression, hyperinflation, excessive leverage, a currency crisis, a banking crisis, sovereign default, climate change, political crisis, insurance crisis, protectionism, disunity in Europe, the end of capitalism, the end of fiat money, war and a killer pandemic.

Of its top risk, economic depression, the firm said that while the immediate threat appeared to have been reduced by government action, there was now little governments could do if demand dropped again.