Cyber incidents such as ransomware attacks, data breaches and IT disruptions are the biggest worry for companies globally in 2024, according to the 13th annual Allianz Risk Barometer, an annual business risk ranking incorporating the views of 3,069 risk management experts in 92 countries and territories, including CEOs, risk managers, brokers and insurance experts.
The closely linked 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.
Results for the U.S. mirror the global results, with cyber topping the risks, followed by business interruption and nat cats.
Large corporates and mid-sized and smaller businesses are united by the same risk concerns – they are all mostly worried about cyber, business interruption and natural catastrophes. However, the resilience gap between large and smaller companies is widening, as risk awareness among larger organizations 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.
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Trends driving cyber activity in 2024
Cyber incidents (36%) rank as the most important risk globally for the third year in a row – for the first time by a clear margin (give percentage points). It is the top peril in 17 countries, including Australia, France, Germany, India, Japan, the U.K. and the U.S. A data breach is seen as 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%).
According to Scott Sayce, global head of cyber at Allianz Commercial, “Cyber criminals are exploring ways to use new technologies such as generative artificial intelligence (AI) to automate and accelerate attacks, creating more effective malware and phishing. The growing number of incidents caused by poor cyber security, in mobile devices in particular, a shortage of millions of cyber security professionals and the threat facing smaller companies because of their reliance on IT outsourcing are also expected to drive cyber activity in 2024."
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Business interruption and natural catastrophes
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 connectedness 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 catastrophes (26%) is 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 $100 billion for the fourth consecutive year, driven by the highest-ever damage bill of $60 billion from severe thunderstorms.
Regional differences and risk risers and fallers
Climate change (18%) may be a non-mover year-on-year at #7 but is among the top three business risks in countries such as Brazil, Greece, Italy, Turkey and Mexico. Physical damage to corporate assets from more frequent and severe extreme weather events is a key 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.
Unsurprisingly, given conflicts in the Middle East and Ukraine, and tensions between China and the U.S., political risks and violence (14%) is 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 U.S. and the U.K. Dissatisfaction with the potential outcomes, coupled with general economic uncertainty, the high cost of living and growing disinformation fueled by social media, means societal polarization 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 down experienced since the COVID-19 shock settle down, resulting in macroeconomic developments (19%) falling to #5 from #3. Yet economic growth outlooks remain weak – well below 1% in the major economies 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 U.K. 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 to fill them. IT or data experts are seen as the most challenging to find, making this issue a critical aspect in the fight against cyber-crime.
To view the 2024 Allianz Risk Barometer, please visit: Allianz Risk Barometer.
