SINGAPORE – A new report from Allianz, the global insurance giant, reveals that businesses worldwide are facing an increasingly complex and volatile risk landscape.
The Allianz Risk Barometer 2025, based on insights from over 3,700 risk management experts across 106 countries and territories, identifies cyber incidents, business interruption, and natural catastrophes as the top three concerns for the year ahead.
“Business interruption is the most significant risk for companies in the region and this is no surprise as Asian economies are increasingly participating in trade globally and regionally,” said Christian Sandric, Regional Managing Director of Allianz Commercial Asia. “This is also often due to events like cyber incidents or natural catastrophes, which are part of the top risks in the region.”
Cyber Incidents Remain Top Threat
For the fourth consecutive year, cyber incidents hold the top spot, garnering 38% of responses.
The report attributes this persistent concern to the rapid evolution of technology and the increasing sophistication of cyberattacks, particularly ransomware attacks that target sensitive data for financial leverage.
Data breaches are identified as the most feared cyber exposure, driven by a rise in ransomware attacks coupled with data exfiltration, evolving regulatory environments leading to increased litigation, and the growing interdependencies between organizations sharing personal records. This trend points to the need for robust cybersecurity measures and data protection strategies.
Cyber incidents remain the top risk for the fourth consecutive year, driven by concerns over ransomware attacks, data breaches, and IT outages. The increasing sophistication of cyberattacks, particularly those targeting sensitive data for financial gain, has heightened these concerns.
Rishi Baviskar, Global Head of Cyber Risk Consulting at Allianz Commercial, observes, “For many companies, cyber risk, exacerbated by rapid development of AI, is the big risk overriding everything else.”
He further notes that “Concern is widening worldwide” as cyberattacks become more frequent and severe.
Business Interruption Looms Large
Business interruption remains a close second, with 31% of respondents citing it as a top concern. This persistent threat is largely attributed to supply chain disruptions, which are becoming more frequent and severe in a globalized and interconnected economy.
Notably, the report highlights that supply chain disruptions with global effects occur approximately every 1.4 years, with the trend on the rise.
Allianz identifies cyber incidents and natural catastrophes as the leading causes of business interruption that companies fear most, followed by fire, machinery breakdown, and supplier failure.
The report emphasizes the need for businesses to develop alternative suppliers, diversify their supplier networks geographically, and implement robust business continuity management plans to mitigate these risks.
Business interruption, ranking second, stems from anxieties about supply chain disruptions. These disruptions are occurring more frequently, averaging every 1.4 years, and are becoming more impactful.
Companies fear business interruptions arising from cyber incidents, natural catastrophes, fires, machinery breakdowns, and supplier failures.
Michael Bruch, Global Head of Risk Advisory Services at Allianz Commercial, highlights the role of technological advancement in impacting supply chain resilience: “Automation and digitization have significantly accelerated processes, which can sometimes overwhelm individuals due to the rapid pace and complexity of modern technology.” Bruch emphasizes the need for robust contingency plans that are not overly reliant on technology.
Natural Catastrophes and Climate Change
Natural catastrophes retain their position at #3, with 29% of responses, underscoring the growing impact of climate change on businesses.
The report notes that 2024 was marked by extreme weather events and record-breaking temperatures, leading to significant insured losses from natural disasters for the fifth consecutive year.
Climate change itself has climbed to its highest-ever position in the Allianz Risk Barometer, reaching #5 with 19% of responses. This reflects the growing awareness among businesses of the need to implement climate resilience measures, including adapting insurance protection, adopting carbon-reducing business models, and creating contingency plans.
Physical damage and business interruption from extreme weather events are the two most significant impacts of climate change that companies fear, while managing climate change transition risks, such as decarbonization and net-zero strategies, is a key area of focus for businesses going forward.
The report emphasizes the importance of proactive measures, including physical infrastructure improvements, nature-based solutions, and behavioral changes, to mitigate climate-related risks.
“What stands out this year is the interconnectivity of the top risks,” noted Vanessa Maxwell, Allianz Commercial Chief Underwriting Officer. “Climate change, emerging technology, regulation and geopolitical risks are increasingly intertwined, resulting in a complex network of cause and effect.”
Natural catastrophes remain a significant concern due to the increasing frequency and severity of extreme weather events linked to climate change. This is reflected in the fact that insured losses from natural catastrophes have exceeded US$100 billion for five consecutive years.
Mabé Villar Vega, Senior Catastrophe Risk Research Analyst at Allianz Commercial, underscores the changing nature of these events: “What we are seeing is a complex picture of climate change linked to natural disasters and physical hazards.” She notes that while climate change might not be solely responsible, it significantly contributes to the unpredictability of these events.
The report raised the interconnectivity of these top risks. Climate change can exacerbate the impact of natural catastrophes, leading to more frequent and severe business interruptions.
Daniel Muller, Emerging Risks and Trends Manager at Allianz Commercial, states: “Combating climate change is the biggest challenge for society. Every action we take has an impact.” Muller emphasizes the need for collective action and behavioral change to reduce greenhouse gas emissions and build climate resilience.
Political Risks and New Technologies
Despite a slight drop in ranking, political risks and violence remain a significant concern at #9 (14%), particularly for large companies.
The report highlights the impact of civil unrest, war, and terrorism on businesses, emphasizing the need for robust security measures, business continuity plans, and insurance coverage to protect against these threats.
The impact of new technologies, specifically artificial intelligence (AI), enters the top 10 global risks for the first time, landing at #10 with 10% of responses.
While AI promises numerous benefits, its rapid development and adoption have outpaced regulations and risk controls, raising concerns about potential unintended consequences.
The report notes that while 50% of respondents believe AI brings more benefits than risks, 15% believe the opposite, highlighting the need for a balanced approach to AI implementation.
Businesses must carefully assess the risks and rewards associated with AI, addressing potential cybersecurity vulnerabilities, ethical considerations, and environmental impacts related to its energy consumption.
Smaller Businesses Facing Growing Concerns
While the top risks for large and mid-sized companies largely mirror the global picture, the report highlights a growing concern among smaller companies about changes in legislation and regulation, which jumped to #2 from #5 in their ranking.
The area places the spotlight on the challenges smaller businesses face in navigating complex regulatory environments and adapting to new sustainability and ESG requirements.
Additionally, the report notes that smaller companies are increasingly worried about climate change and political risks and violence, indicating that these concerns are no longer exclusive to larger corporations.
This trend underscores the need for tailored support and resources to help smaller businesses assess and mitigate these evolving risks.
Risk Management and Enhanced Resilience
The Allianz Risk Barometer 2025 underscores the interconnected nature of today’s risks, with events in one area potentially triggering a cascade of consequences across multiple sectors and geographies.
The report emphasizes the need for a holistic approach to risk management that recognizes these interdependencies and develops strategies to address them effectively.
Resilience is identified as a key theme for businesses going forward. As the global risk landscape becomes increasingly unpredictable and volatile, businesses must prioritize investments in loss prevention, risk mitigation, and business continuity planning.
This includes adopting measures to enhance supply chain resilience, bolster cybersecurity defenses, and address the multifaceted impacts of climate change.
The report also highlights the growing importance of collaboration between businesses and insurers in developing and implementing comprehensive risk management strategies. This partnership will be crucial in navigating the complex challenges ahead and ensuring business sustainability in the face of an ever-evolving risk landscape.
“Against this backdrop of an increasingly volatile risk landscape, businesses should ensure they are sufficiently protected and their response measures robust,” Sandric added. “This includes adopting measures such as loss prevention, developing multiple suppliers, alternative risk transfer, and multinational insurance policies.”
