Allianz Risk Barometer 2023: Energy crisis as "up-and-comer of the year

The Allianz Risk Barometer 2023 is all about continuity and change: cyber incidents and business interruptions are considered to be in the second year in a row as the biggest business risks worldwide (both with 34% of all responses). They are followed in third place by macroeconomic developments such as inflation, financial market volatility and the threat of recession. In Switzerland, the energy crisis in particular is increasingly causing headaches for companies, and the risk has moved straight into second place with 48% - ahead of business interruption, which topped the rankings for many years. In contrast, both natural disasters (from 3rd to 6th) and climate change risks (from 6th to 7th) have dropped in the rankings worldwide. The same is true for the outbreak of a pandemic (from 4th to 13th) - with the availability of vaccines, Covid 19 restrictions have largely been lifted in most countries. Political risk and violence has made it to 10th place, while shortage of skilled labor rises to 8th. Changes in legislation and regulation remains a relevant risk in 5th place, while fire/explosion drops two positions to 9th.

Cyber incidents in Switzerland again in first place

With regard to Switzerland, concerns about cyber incidents top the ranking, as in the previous year, with 57% of responses. But the discussions about the electricity shortage have not failed to have an impact either: energy risks, for example, have entered the Allianz Risk Barometer as a new category right away in second place with 48%. Business interruption - for many years the biggest concern for companies - has dropped to 3rd place with 41% of responses. Political risks and violence, also a new category, are already in 4th place (20%), followed by changes in legislation and regulation (18%) and natural disasters (18%). At the other end of the scale, fear of the consequences of climate change ranks 10th, while the outbreak of a pandemic no longer makes it into the top 10 of the biggest corporate risks in Switzerland.

Allianz Risk Barometer 2023 shows companies in permacrisis

Joachim Müller, CEO of AGCS, comments on the results: "For the second year in a row, the Allianz Risk Barometer shows that companies currently see themselves most at risk from cyber incidents and business interruptions. At the same time, they see inflation, an impending recession and the energy crisis as immediate threats to their business. Businesses - especially in Europe and the U.S. - are concerned about the ongoing 'perma-crisis' resulting from the aftermath of the pandemic and the economic and political impact of the ongoing war in Ukraine. The current situation is a stress test for any company. The positive news is that as an insurer, we are seeing continued improvements in resilience and risk management among many of our clients. Many companies have made their supply chains more resilient, are better equipped to withstand disruptions to their business operations, and have strengthened their cyber controls. Becoming more resilient and managing risk better has been a key task for many companies in recent years."

Digital and disruptive threats

Cyber incidents, such as IT outages, ransomware attacks or data breaches, are ranked as the most important risk - globally - for the second year in a row. Ranked #1 in 19 countries, including Canada, France, Japan, India, and the United Kingdom, this is the risk of greatest concern to small businesses (<250 million $ annual revenue).

"For many companies, the threat of cyberattacks remains greater than ever, and cyber insurance claims remain at a high level. Large companies are now used to being targeted, and those with adequate levels of cybersecurity are able to fend off most attacks. Increasingly, however, small and medium-sized businesses are also being affected. These tend to underestimate their exposure and should continually invest in strengthening their cyber defenses," emphasizes Shanil Williams, AGCS Board Member and Chief Underwriting Officer Corporate.

Macroeconomic malaise

Macroeconomic developments such as inflation or economic and financial market volatility rank as the third most important risk for companies worldwide in the Allianz Risk Barometer 2023 (25 % of responses), up from 10th place in 2022. It is the first time in a decade that this risk has "made it" into the top3. All three major economies - the United States (US), China and Europe - are in economic crisis at the same time, albeit for different reasons, according to the Allianz Research team, which forecasts a recession in Europe and the US in 2023. Inflation is of particular concern as it "eats away" at the price structure and margins of many companies. Like the real economy, financial markets face a difficult year ahead as central banks withdraw excess liquidity from the entire system and trading volumes decline even in historically liquid markets.

"2023 will be a challenging year; in purely economic terms, it is likely to be literally a year to forget for many households and businesses. Nevertheless, there is no reason to despair," says Ludovic Subran, Chief Economist at Allianz. "For one thing, the interest rate turnaround is helping, with millions of savers benefiting not least. The medium-term outlook is also much better, despite - or perhaps because of - the energy crisis. The consequences beyond the expected recession in 2023 are already emerging: a forced transformation of the economy toward decarbonization, as well as increased risk awareness in all parts of society, which strengthens social and economic resilience."

Source and further information: http://www.agcs.allianz.com