Allianz Risk Barometer reveals top 10 UK business risks for 2024

Data breaches, attacks on critical infrastructure or physical assets and increased ransomware attacks drive cyber concernsBusiness interruption remains #2 with 31%. Natural catastrophes is the biggest riser compared to 2023 with 26% in #3Macroeconomic concerns tumble in UK, as UK businesses show much greater concern with shortages of skilled workers, new technologies and political risks than their global peers

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Cyber incidents such as ransomware attacks, data breaches, and IT disruptions are the biggest worry for companies globally in 2024, according to the Allianz Risk Barometer. The closely interlinked 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 in the latest compilation of the top global business risks, based on the insights of more than 3,000 risk management professionals.

UK risk data

In the UK there are some notable differences to the global numbers, with a 10% downward swing in concerns about cyber risk (from 40% to 36%) as opposed to a global rise in concern about this risk (from 34% to 36%).  In a sign that the risk environment may be diversifying in the UK, there was also a sharp drop in macroeconomic concerns, which fell by almost half from 34% to 18% between 2023 and 2024. 

Instead, other risks rose to the fore in the UK, where shortage of skilled workers was the fourth most significant risk for all businesses (proving a challenge for 21% of firms). Also, uniquely important in the UK were political risks (a concern for 19% of respondents in the UK as against 14% globally) and the risks posed by new technologies (which were significant for 18% of UK respondents as opposed to just 9% globally).

Allianz Commercial Managing Director for the UK, Nadia Côté comments on the UK data: “The UK takes a different view on major risks to its global peers.  While cyber is still the leading risk, concern about this and also about macroeconomic conditions have fallen over the last year.  Instead, an aligned group of other issues have risen to the forefront for business leaders.  Shortage of skilled workers and the rising risk from new technologies such as AI bring together an increasing concern about a changing workplace and risks that group together in the D&O arena.  Meanwhile, while the UK economy has stabilized, the political environment, coming into a UK election year with a change of government widely expected, is unsurprisingly a worry for business leaders.”

Allianz Commercial CEO Petros Papanikolaou comments on the global findings: “The top risks and major risers in this year’s Allianz Risk Barometer reflect the big issues facing companies around the world right now – digitalization, climate change and an uncertain geopolitical environment. Many of these risks are already hitting home, with extreme weather, ransomware attacks and regional conflicts expected to test the resilience of supply chains and business models further in 2024. Brokers and customers of insurance companies should be aware and adjust their insurance covers accordingly.”

Large corporates, mid-size, 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, the report notes. 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.

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 (5% points). It is the top peril in 17 countries, including Australia, France, Germany, India, Japan, the UK, and the USA. 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%).

“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, “explains Scott Sayce, Global Head of Cyber, Allianz Commercial.

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 interconnectedness 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 US$100bn for the fourth consecutive year, driven by the highest ever damage bill of US$60bn from severe thunderstorms. While, natural catastrophes is the #1 risk many countries, the UK rates it lower significant of the global average, a result which was recorded before the floods of January 2024, and perhaps indicates that the UK still considers itself somewhat insulated from global temperature changes. By contrast in Greece, a wildfire near the city of Alexandroupolis in August was the largest ever recorded in the EU. Meanwhile, severe flooding in Slovenia resulted in one of the biggest supply chain events, causing production delays and parts shortages for European car manufacturers.

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 are 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 in future as companies invest in new, largely untested low-carbon technologies to transform their business models.

Unsurprisingly, given ongoing conflicts in the Middle East and Ukraine, and tensions between China and the US, 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 US, and UK. Dissatisfaction with the potential outcomes, coupled with general economic uncertainty, the high cost of living, and growing disinformation fuelled 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 subdued – just over 2% globally in 2024, according to Allianz Research.

“But this lacklustre growth is a necessary evil: high inflation rates will finally be a thing of the past,” says Ludovic Subran, Chief Economist at Allianz. “This will give central banks some room to manoeuvre – lower interest rates are likely in the second half of the year. Not a second too late, as stimulus cannot be expected from fiscal policy. A caveat is the considerable number of elections in 2024 and the risk of further upheavals depending on certain outcomes.”

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 UK 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.

The top 10 UK business risks for 2024