Cyber incidents top list of business risks for 2024

Cyber incidents are the biggest worry for companies globally in 2024, according to the Allianz Risk Barometer 2024. The closely interlinked peril of business interruption ranks second. Natural catastrophes (up from #6 to #3 year-on-year), Fire, explosion (up from #9 to #6), and Political risks and violence (up from #10 to #8) are the biggest risers in the latest compilation of the top global business risks, based on the insights of more than 3,000 risk management professionals.

The same risk concerns unite large corporates, mid-size, and smaller businesses – they are all primarily worried about cyber, business interruption and natural catastrophes. However, the resilience gap between large and smaller companies is widening. The report notes that risk awareness among larger organisations has grown since the pandemic, with a notable drive to upgrade resilience. Conversely, smaller businesses often lack the time and resources to identify and effectively prepare for a wider range of risk scenarios and, as a result, take longer to get the business back up and running after an unexpected incident.

Data breaches top of mind

Cyber incidents such as ransomware attacks, data breaches, and IT disruptions (36% of overall responses) rank as the most important risk globally for the third year running – for the first time by a clear margin (5% points). It is the top peril in 17 countries, including Australia, France, Germany, India, Japan, the UK, and the US. A data breach is considered the most concerning cyber threat for Allianz Risk Barometer respondents (59%), followed by attacks on critical infrastructure and physical assets (53%). The recent increase in ransomware attacks – 2023 saw a worrying resurgence in activity, with insurance claims activity up by more than 50% compared with 2022 – ranks third (53%).

Despite an easing of post-pandemic supply chain disruption in 2023, business interruption (31%) retains its position as the second biggest threat in the 2024 survey. This result reflects the interconnectedness in an increasingly volatile global business environment, as well as a strong reliance on supply chains for critical products or services. Improving business continuity management, identifying supply chain bottlenecks, and developing alternative suppliers continue to be key risk management priorities for companies in 2024.

Natural threats increase in prominence

Natural catastrophes (26%) are one of the biggest movers at #3, up three positions. 2023 was a record-breaking year on several fronts. It was the hottest year since records began, while insured losses exceeded US$100bn for the fourth consecutive year, driven by the highest-ever damage bill of US$60bn from severe thunderstorms. Around the world, natural catastrophes are the #1 risk in Croatia, Greece, Hong Kong, Hungary, Malaysia, Mexico, Morocco, Slovenia, and Thailand, many of which sustained some of the most significant events of 2023. In Greece, a wildfire near Alexandroupolis in August was the largest ever recorded in the EU. Meanwhile, severe flooding in Slovenia resulted in one of the most significant supply chain events, causing production delays and parts shortages for European car manufacturers.

Climate change (18%) may be a non-mover year-on-year at #7 but is among the top three business risks in Brazil, Greece, Italy, Turkey, and Mexico. Physical damage to corporate assets from more frequent and severe extreme weather events is a crucial threat. The utility, energy and industrial sectors are among the most exposed. In addition, net zero transition risks and liability risks are expected to increase as companies invest in new, largely untested, low-carbon technologies to transform their business models.

Geopolitical instability draws concern

Unsurprisingly, given ongoing conflicts in the Middle East and Ukraine and tensions between China and the US, political risks and violence (14%) are up to #8 from #10. 2024 is also a super-election year, where as much as 50% of the world’s population could go to the polls, including in India, Russia, the US, and the UK. Dissatisfaction with the potential outcomes, coupled with general economic uncertainty, the high cost of living, and growing disinformation fuelled by social media, means societal polarisation is expected to increase, triggering more social unrest in many countries.

However, there is some hope among Allianz Risk Barometer respondents that 2024 could see the wild economic ups and downs experienced since the Covid-19 shock settle down, resulting in macroeconomic developments (19%), falling to #5 from #3. Yet economic growth outlooks remain subdued – just over 2% globally in 2024, according to Allianz Research.

In a global context, the shortage of skilled workforce (12%) is seen as a lower risk than in 2023, dropping from #8 to #10. However, businesses in Central and Eastern Europe, the UK and Australia identify it as a top five business risk. Given there is still record-low unemployment in many countries around the globe, companies are looking to fill more jobs than there are people available. IT or data experts are seen as the most challenging to find, making this issue a critical aspect in the fight against cybercrime.