Cyber incidents at the top of the Allianz 2024 Risk Barometer

Cyber incidents, such as ransomware attacks, data breaches and IT disruptions are the most concerning risks for businesses globally in 2024, according to the Allianz Risk Barometer.

Business interruption, which is closely associated with it, comes in second place. Natural disasters (moving from 6th to 3rd place in one year), fires and explosions (from 9th to 6th place) and political risks and violence (from 10th to 8th place) recorded the highest increases since the last global business risk ranking, based on responses from more than 3.000 risk management professionals.

In France

Cyber incidents and business interruptions remain major concerns for businesses in France. Furthermore, political risks (political instability, war, terrorism, coup d'état, social conflicts, strikes, riots, looting) enter the 2024 ranking, directly in 6th position, while the risks of fire and explosion gained four places and climbed to 3rd position. French companies are also more concerned about the risks of breakdowns or failures of critical infrastructures, placing them for the first time in the risk ranking (10th).

10 main risks in France

For Petros Papanikolaou, Managing Director of Allianz Commercial: “The rankings and progressions in the Allianz Risk Barometer reflect the big issues facing businesses around the world today: digital transformation, climate change and geopolitical uncertainty. Many of these risks are already present. As such, extreme weather events, ransomware attacks and regional conflicts will continue to test the resilience of supply chains and business models in 2024. Brokers and insurance company clients must be aware of this and adapt insurance coverage accordingly. »

Large, medium and small businesses share the same concerns: all are primarily concerned with cyberattacks, business interruptions and natural disasters. However, the resilience gap by size is widening. In large companies, risk awareness has improved since the pandemic, with a strong desire to increase resilience capabilities. Conversely, in small businesses, there is often a lack of time and resources to identify an increasing number of risk scenarios and prepare effectively for them; the time required to resume activity after an unforeseen incident is therefore longer.

Cyber risk trends for 2024

For the third year in a row, cyber incidents (36%) top the global ranking, and for the first time with a comfortable lead (5 percentage points). They are the No. 1 risk in 17 countries, including Australia, France, Germany, India, Japan, the United Kingdom and the United States. Data breach is considered the main cyber threat by respondents to the Allianz Risk Barometer (59%). This is followed by attacks against critical infrastructure and physical assets (53%). Ransomware attacks, which are experiencing a worrying increase, with an increase in claims of more than 50% compared to 2022, rank in third position (53%).

For Scott Sayce, global director of cyber insurance at Allianz Commercial: “Cybercriminals are leveraging new technologies, such as generative artificial intelligence (AI), to automate and accelerate their attacks, creating ever more powerful malware and phishing tools. In 2024, cyber risks are expected to increase further, with the rise in attacks using vulnerabilities, particularly on mobile devices, the shortage of millions of cybersecurity professionals and the dependence of small businesses on IT outsourcing. »

Business interruption and natural disasters

Despite easing disruptions to supply chains post-pandemic, business interruption (31%) is still second in the rankings. This result reflects the interconnection of factors in an increasingly volatile economic context and the strong dependence on supply chains for essential products and services. For 2024, companies' risk management priorities will remain improving business continuity, identifying bottlenecks in supply chains and finding complementary suppliers.

Natural disasters (26%) are the risks that have increased the most, moving from 6th to 3rd place. 2023 set records in several areas. It was the hottest year since meteorological records began. Additionally, insured losses exceeded $100 billion for the fourth year in a row, driven by the highest-ever claims ($60 billion) from severe storms.

Regional differences, increases and decreases

Climate change (18%) remains in 7th place, but is among the top three risks in Brazil, Greece, Italy, Mexico and Turkey; and in 4th place in France.

Physical damage to business assets caused by more frequent and severe extreme weather events poses a major threat. The utilities, energy and industrial sectors are among the most exposed. Furthermore, risks related to the transition to carbon neutrality and civil liability risks are expected to increase in the future. Indeed, to transform their business models, companies must invest in new low-carbon technologies, which are generally poorly proven.

Unsurprisingly, given conflicts in the Middle East and Ukraine, as well as tensions between China and the United States, political risks and violence (14%) move down from 10th to 8th place. In France, they enter directly in 6th place (with 21% of responses). Many elections will also take place in 2024, where almost half of the world's population could go to the polls, including people in India, Russia, the United States and the United Kingdom. Dissatisfaction with the results, combined with economic uncertainty, the purchasing power crisis and misinformation fueled by social media, could deepen the polarization of society, causing even more social unrest in many countries.

However, some respondents to the Allianz Risk Risk Barometer hope that in 2024, the economic instability caused by the shock of the pandemic will ease. Risks linked to macroeconomic developments (19%) thus fall from 3rd to 5th place. Growth prospects nevertheless remain weak (well below 1% in the main economies in 2024), according to Allianz Research.

For Ludovic Subran, chief economist at Allianz: “This gloom, however, is a necessary evil: high inflation rates would finally be a thing of the past. Central banks would thus have room to maneuver, with a probable drop in interest rates in the second half of the year. It is about time, because we should not expect a recovery through fiscal policy. A word of caution is in order, however, given the sheer number of elections in 2024 and the risk of further upheaval following the results. »

Globally, the risk of a shortage of qualified labor (12%) seems lower than in 2023, and falls from 10th to 8th place. However, it is ranked in the top 5 by companies established in Central and Eastern Europe, the United Kingdom and Australia. In many countries, unemployment remains at an all-time low and there are more vacancies than available professionals. IT and data experts appear to be the hardest to find. Resolving this issue is essential in the fight against cybercrime.