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 causing increasing headaches for companies, with the risk coming in second place with 48% - ahead of business interruption, which topped the rankings for many years. In contrast, both natural disasters (from 3rd to 6th place) and the risks of climate change (from 6th to 7th place) have fallen down the rankings worldwide. The same applies to the outbreak of a pandemic (from 4th to 13th place) - with the availability of vaccines, Covid-19 restrictions have largely been lifted in most countries. Political risks and violence has made it to 10th place, while the shortage of skilled labor rises to 8th place. Changes in legislation and regulation remains a relevant risk in 5th place, while fire/explosion drops two positions to 9th place.

Cyber incidents in Switzerland again in first place

With regard to Switzerland, concerns about cyber incidents lead the ranking, as in the previous year, with 57% of responses. However, the discussions surrounding the electricity shortage have not failed to have an impact either: energy risks have entered the Allianz Risk Barometer as a new category in 2nd place with 48%. Business interruption - for many years the biggest concern for companies - has fallen back to third place with 41% of responses. Political risks and violence, another 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 is in 10th place, while the outbreak of a pandemic no longer makes it into the top 10 biggest business 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, the threat of recession and the energy crisis as an immediate threat to their business. Companies - especially in Europe and the US - are concerned about the ongoing 'perma-crisis' resulting from the consequences of the pandemic and the economic and political impact of the ongoing war in Ukraine. The current situation is a stress test for every company. The positive news is that as an insurer, we are seeing continued improvements in resilience and risk management from many of our clients. Many companies have made their supply chains more robust, are better equipped to deal with business disruption 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 top risk globally for the second year in a row. In 19 countries, including Canada, France, Japan, India and the UK, this risk is ranked number one and is the risk of most concern to small businesses (<250m $ annual turnover).

"For many companies, the threat of cyber attacks remains greater than ever and cyber insurance claims remain at a high level. Large companies are now used to being targeted and those with an adequate level of cyber security are able to fend off 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," 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 top 3. 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 particularly worrying, as it is "eating up" the price structure and margins of many companies. Like the real economy, the financial markets are also facing a difficult year 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 companies. Nevertheless, there is no reason to despair," says Ludovic Subran, Chief Economist at Allianz. "For one thing, the turnaround in interest rates is helping, not least benefiting millions of savers. The medium-term outlook is also much better despite - or perhaps because of - the energy crisis. The consequences that go beyond the expected recession in 2023 are already becoming apparent: a forced restructuring of the economy towards 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

This article originally appeared on m-q.ch - https://www.m-q.ch/de/allianz-risk-barometer-2023-energiekrise-als-aufsteiger-des-jahres/