What's your biggest business concern?
According to Allianz's 2024 Risk Barometer, cyber incidents are the top business risk concern, followed by business interruption, natural catastrophes, macroeconomic developments, fire and explosion, climate change, political risks and violence, market developments, and the shortage of a skilled workforce.
Some risks are unique to a particular business size or industry, but the top three business risk losses are a threat and concern for all businesses, particularly small business. Keep reading to learn more about the top business risk losses of 2024.
Cyber Risk Loss Biggest Concern for Businesses of Every Size
Cyber threats are constantly evolving as hackers and criminals gain access to new technologies or find new ways to exploit old vulnerabilities. Cyber incident risk is the top concern across all company sizes: large ($500M annual revenue), mid-size ($100-$500M), and small. Cyber is the cause of business interruption that companies fear most. It is also the top company concern across a wide range of industries, including:
- consumer goods
- financial services
- government
- public services
- healthcare
- leisure and tourism
- media
- professional services
- technology
- telecommunications
Artificial intelligence is being leveraged by hackers to increase the speed and scope of ransomware attacks, create new malware, produce highly convincing phishing emails, and deep fakes. These cyber attacks are only expected to increase in the future.
"It's no surprise that cyber is the top concern for businesses globally. Businesses and the wider economy are now reliant on digital services and infrastructure for both critical and everyday activities. Almost everything is now linked to technology. But once you are connected it opens the door to hackers to steal data or threaten disruption for extortion," says Michael Bruch, Global Head of Risk Advisory Services at Allianz Commercial.
Business Interruption and Supply Chain Disruption
With almost all companies reliant on supply chains for critical products and services, business interruption and supply chain disruption remain top concerns for businesses.
Business interruption remains one of the leading causes of concern for businesses across all sizes and industries. Business interruption is linked to many of the top loss risks facing business owners; it can be tied to cyber risks, extreme weather, political risks, and others.
Extreme Weather & Natural Catastrophes Bring Worry
Last year was the hottest year ever on record. Wildfires are increasing around the globe -- multiple studies have shown a steady increase in wildfire season length, wildfire frequency, and burned area. Heat and wildfires aren't the only weather-related risks for business owners -- losses from severe thunderstorms reached a new all-time high of $60B in 2023. Physical damage and business interruption are the two direct impacts of extreme that weather and natural catastrophes businesses fear most.
Regulatory and Political Risks Rising
The pandemic may be over, but the memory of government-inforced business closures, lockdowns, and supply chain interruption is still fresh in the minds of business owners. Despite vows to reduce bureaucracy, companies will still face new rules and regulations in 2024 that will not only require a high administrative burden but could also impose restrictions on their business activities. Increasing intervention by policymakers, a trend that first began out of economic necessity during the COVID-19 pandemic, continues, driven by factors such as the energy crisis, green transformation, or in the interests of national security or economic self-sufficiency. Emerging regulations and legal developments in areas like artificial intelligence (AI) are also on companies' risk radars.
Adding to business owners' unease is an election year, risk of election-related civil unrest, and the risk of terrorism related to the Israel and Gaza war.
Economic Uncertainty Impacts Businesses
The ripple effect of interest rises, increasing material costs, inflation, and economic uncertainty is causing small businesses to focus more on short-term challenges rather than on long-term planning. Small businesses are making tough choices, such as rising prices, cutting non-essential spending, and accepting lower profitability as they navigate rising costs, inflation, and economic uncertainty.
Workforce Challenges
Alongside economic challenges, businesses are concerned about their ability to attract and maintain talent. Businesses are competing with larger companies who are offering increasing wages, remote work options, additional paid time off, and attractive benefits packages to maintain staff or attract new hires. For businesses that are cutting costs in the face of economic uncertainty, it's becoming increasingly difficult to maintain their existing workforce.
Attracting and maintaining a skilled workforce is a challenge across every industry: 75% of companies globally had reported talent shortages and difficulty hiring over the past year. However, some are hit harder than others, such as:
- Food service and hospitality
- Durable goods and manufacturing
- Financial activities
- Professional and business services
Is it Time to Update Your Risk Management Plan?
Businesses of every size can help mitigate business risks with a risk management plan that includes transferring risk with appropriate commercial insurance coverage. Simply renewing your existing policies year after year won't help you adapt to the ever-changing risk landscape or the biggest risks impacting businesses of every size.
Schedule a call with your trusted insurance professional to be sure you're carrying the right amount of commercial insurance coverage to ensure your business can survive in the face of cyber attack, business interruption, extreme weather catastrophes, and these other top business loss concerns.