Cyber and business interruption are top threats for companies in the new Allianz Risk Barometer. The annual survey highlights the top business risks around the world, with more than 2.700 global respondents.
The Allianz Risk Barometer 2023 is about continuity and change: for the second year in a row, cyber incidents and business interruption are ranked as the top business risks worldwide (both with 34% of the answers). From the point of view of German companies, the same risks dominate as worldwide, sometimes in a different order: Business interruption, cyber incidents and the energy crisis are in the top three places.
Risk of cyber incidents and business interruption
🔎 Top 10 business risks in Germany in 2023 (Image: 23degrees.io)
Joachim Müller, Chief Executive Officer of AGCS, comments on the results: “For the second year in a row, the Allianz Risk Barometer shows that companies are currently most at risk from cyber incidents and business interruption. At the same time, they see high inflation, an impending recession and the energy crisis as an immediate threat to their business. Businesses - particularly in Europe and the US - are concerned about the ongoing 'permacrisis' resulting from the aftermath of the pandemic and the economic and political fallout from the ongoing war in Ukraine. The current situation is a stress test for every company.”
Müller continues: “The positive news is that as an insurer, we are seeing continuous improvements in terms of resilience and risk management for many of our customers. Many companies have made their supply chains more resilient, more resilient to business disruptions, and have strengthened their cyber security. Becoming more resilient and managing risks better has been a key task for many companies in recent years.”
Risks in large, medium and small companies
In 2023, the top four risks in the Allianz Risk Barometer are broadly the same across all company sizes – large, medium and small – as well as in core Europe and the US (with the exception of the energy crisis). Risk priorities for companies in Asia-Pacific and African countries differ somewhat, reflecting differing exposure to the ongoing war in Ukraine and its economic and political fallout.
Digital and disruptive threats
🔎 Top 10 business risks worldwide in 2023 (Image: 23degrees.io)
Cyber incidents, such as IT failures, ransomware attacks or data breaches, have been ranked as the most important risk globally for the second year in a row. According to the Allianz Cyber Center of Competence, the frequency of extortion ransomware attacks will remain significantly elevated in 2023, while the average cost of a data breach is an all-time high at $4,35 million and this year the $5 million could exceed the threshold. The conflict in Ukraine and further geopolitical tensions increase the risk of a large-scale cyber attack by state-sponsored actors. Add to this a growing shortage of cybersecurity professionals, which poses additional challenges to improving security.
“For many businesses, the threat of cyber attacks remains greater than ever, and cyber insurance claims remain at high levels. Large companies are now used to being targeted, and those with an appropriate level of cybersecurity can thwart most attacks. However, small and medium-sized companies are also increasingly affected. They tend to underestimate their exposure and should continually invest in strengthening their cyber defenses,” said Shanil Williams, AGCS Board Member and Chief Underwriting Officer Corporate.
Business interruptions wipe out revenue
For businesses in many countries, 2023 is likely to be another year of heightened business interruption (BI) risks, as many business models are vulnerable to sudden changes that in turn impact revenue and profits. The range of sources of interference is large. Cyber attacks are the most feared cause of BI by businesses (45% of responses), followed by the energy crisis (35%) and natural disasters (31%).
The Allianz Risk Barometer is an annual ranking of the greatest corporate risks that is compiled by the corporate insurer Allianz Global Corporate & Specialty (AGCS) together with other Allianz companies. This year, it incorporates the views of 2.712 risk management professionals in 94 countries and territories, including CEOs, risk managers, brokers and underwriters. The survey is appearing for the 12th time. Each survey participant could select three top risks.
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