A mix bag of global risks to businesses and insurance

Female-run SMEs and youth at the heart of AfCFTA
Amos Safo is a Development and Communications Management Specialist, and a Social Justice Advocate.

The 2023 Risk Barometer published by Allianz Insurance has identified cyber-security risks, high energy prices, inflation, global economic uncertainty, and climate change as some of the major threats to the global economy, with ramifications for poor economies. The report captures the most significant corporate concerns for 2023 and 2024, as ranked by 2,712 risk management experts from 94 countries and territories.

According to the report, despite positive moves to diversify business models and supply chains since COVID-19, businesses continue to experience significant disruptions around the world. The pandemic came as a massive shock to business models, creating global shortages, and higher prices while the war in Ukraine triggered an energy crisis and inflation in both developed and developing countries.

Quite expectedly, business interruption and supply chain disruption ranks as the second top risk in the Allianz Risk Barometer (34 percent), only second to cyber incidents (by just a few votes, also on 34 percent). The concern over cyber-security reflects the growing importance of the digital economy, the evolving threat from cyber-attacks and extortion, as well as geopolitical rivalries and cyber-space conflicts. Undoubtedly these cyber-attacks have the potential to create business interruption (BI) across the world.

As was expected, business interruption (BI)-related risks have climbed this year’s rankings as the new economic and political consequences of the world triggered by COVID-19 and the ongoing Ukraine war. These include the impact of the energy crisis and macroeconomic developments, such as inflation.

Global risks

The Allianz Barometer report highlighted the top global risks to both developed and developing economies as well as large and small businesses. Following is a summary of selected case studies. In Australia, climate change and natural catastrophes have emerged as the new top risks, driven by flooding, which resulted in the country’s most devastating and expensive national catastrophe in 2022. These catastrophes have the potential to cause business interruptions. In Japan, natural catastrophes are perennial life-threatening events, and equally disrupt business. Also Cyber emerged as the top risk for the third year in succession in both Australia and Japan.

In France, natural catastrophe has emerged as a big issue, with the impact of the energy crisis rising to the top 10 issues for the first time. As in Australia and Japan, cyber-security also emerged among the new top risks, with the potential of business interruption. In South Africa, cyber-security is an equal concern. South Africa is also faced with critical infrastructure and energy blackouts, which have the high potential for business interruption. In Brazil, there are concerns of macroeconomic developments. This has resulted in corporate concerns over the increasing number of disruptive business operations.

In both Germany and Spain, energy crisis and business interruption remain the top risks, while firms are also worried about the energy crisis. Switzerland is also confronted with the impact of the energy crisis on sound businesses operations. Climate change remains a big concern in Canada, while cyber-security has emerged as a new risk. Canada is also faced with shortage of skilled workforce. Currently, Cannada has become the preferred destination for economic migrants from Africa, as it tries to reduce the shortage of skilled workforce.

In Nigeria, macroeconomic fundamentals are growing concern, with the impact of inflation emerging as the biggest concern for businesses. Associated with this is political risk and ethnic violence following the recent elections that has divided the country. Though the Allianz Risk Barometer report did not mention Ghana, our economy has been hit by high inflation and exchange rates depreciation, with the cedi performing abysmally against major foreign currencies. This has raised the cost of doing business in Ghana. Ghana is, however, politically stable compared to Nigeria. Furthermore, in the United Kingdom, the impact of inflation is weighing heavily on firms after it rose to 10%+ in 2022. In a nutshell, the impact of climate change, energy crisis, macroeconomic disruption, high inflation and cyber-security have become top risks across the world and are the major causes of business interruptions, with dire implications for the insurance business.

Digital danger

Specifically, the attention given to cyber incidents – such as IT outages, ransomware attacks or data breaches – signals the risk it poses globally for the second year in succession. A data breach is a business interruption which threatens the operations of many businesses across the world. Reports show that even the average cost of managing data breach was as high as US$4.35million in 2022 and is expected to surpass US$5million in 2023. Globally, cyber-crime incidents are estimated to cost the world economy about US$1trillion a year (about 1 percent) of global GDP. This explains why cyber risk became the top customer concern in the 2023 Allianz Risk Barometer. Cyber incidents also rank as the top risk in 19 countries. It is the risk many small companies are worried about since, as it is the major cause of business interruption.

Moreover, the Allianz analysis indicates that severe business interruption can result from a wide range of cyber-related threats, including malicious attacks by criminals or state-backed hackers, human error or technical glitches.  The Allianz analysis shows business interruption is the single biggest loss driver for cyber insurance claims. Hackers are increasingly targeting both digital and physical supply chains, which provide opportunities to simultaneously attack multiple companies and gain additional leverage for extortion. Small wonder that several companies are investing in security training, cyber incident response plans and cyber-security governance. Unfortunately, the capacity of large corporations to invest in cyber-security makes small- and mid-size businesses soft targets of cyber-hackers.

Data privacy

Similarly, data privacy and protection constitute the key cyber risks across the world, a trend which is attracting tougher legislation. Such incidents can result in significant notification costs, fines and penalties, and also lead to litigation or demands for compensation from affected customers, suppliers and data breach victims, notwithstanding any reputational damage to the impacted company.

Allianz Risk Barometer estimates that in 2022, the average cost of a data breach reached an all-time high of US$4.35million. According to IBM’s annual cost of a data breach report, the cost of data breach is expected to surpass US$5million in 2023, although these numbers constitute small change compared to the costs that can be involved in major breach events. The Allianz Risk Barometer forecasts that an increase in data breaches is expected by the end of 2023, as criminals are finding ways to breach standard multi-factor authentication technologies.

The report further notes that an increase in ransomware attacks ranks as the second most important concern (50 percent). Around the world, cyber-attacks and related claims costs remain high. The cost of ransomware attacks has increased as criminals have targeted larger companies, supply chains and critical infrastructure. Besides, double and triple extortion attacks are now the norm, as even encryption systems and sensitive data are increasingly stolen and used as a leverage for extortion demands to business partners, suppliers or customers.


While the global economy was on the road to recovery from COVID-19, Russia’s invasion of Ukraine rubbed salt into an already bleeding world economy. Aside from the human tragedy, the economic and financial market volatility looks set to continue in 2023 and beyond. High inflation across the world, including Ghana, and efforts by central banks to control it have resulted in the high cost-of living and the threat of economic recession.

For the first time in decades all three major economic areas – the US, China and Europe – plunged into economic crisis with dire consequences for developing economies. Not surprisingly, these threatening macroeconomic developments rank as the third top risk for companies in 2023 (25 percent), up from number 0 in 2022, according to the Alliance Risk Barometer.

Inflation remains a particular concern as higher costs of goods and services are threatening the profitability and sustainability of business models across the world. With the current, trend global business insolvencies are likely to rise by 10 percent in 2022 and 19 percent in 2023 as the cost of energy, rising interest rates and wages weigh heavily on profitability and cash flows, says the report.

Energy crisis

Furthermore, the energy crisis (22 percent) has become topical, moving to the fourth position after appearing in the Allianz Risk Barometer for the first time. The skyrocketing cost of energy in some countries, including developed economies, has forced some energy-intensive industries to use energy more efficiently. The alternative is the shift toward renewable energy and environmentally friendly operations. In Europe, the resulting shortages threaten to cause supply disruption across critical industries, including food, agriculture, chemicals, pharmaceuticals, construction and manufacturing.

Climate change

The drop of natural catastrophes (19 percent) and climate change (17 percent) to the sixth and seventh position in Allianz Barometer report is partly due to perception that economic and geopolitical uncertainties constitute serious risks. However, the catastrophes – such as flooding, bush fires and the change in weather patterns across the world – indicate that businesses, policy-makers and key stakeholders continue to downplay climate change at their peril.

For instance, the devastation of Hurricane Ian in the US, widespread flooding in South East Asia and Australia, winter storms in Europe and the US, severe heatwaves and droughts around the world, and even record-breaking hailstorms in France in 2022 indicate that climate change is emerging as the world’s biggest threat. In 2022, these changes in weather conditions contributed to an additional US$100billion of insured losses, says the Allianz Risk Barometer.

On a positive note, some companies are committed to reducing carbon emission and have outlined action to reduce their net-zero transition journeys despite these challenges. The top three actions firms are taking are: adopting carbon-reducing business models; developing a dedicated risk management strategy for climate risks; and creating contingency plans for climate change-related eventualities, says the report. These actions are captured in the sustainability reports of major companies, especially those operating in high impact industries.

ESG exposures and disclosures

Related to climate change is the issue of Environmental, Social and Governance (ESG), which has become a best practice as companies are endeavouring to become good cooperate citizens.   Unsurprisingly, the Allianz Risk Barometer notes that changes in legislation and regulation (19 percent) is gaining attention, as it appears three times at number five in the past five years. Consequently, the growing demand for corporate reporting and compliance around sustainability and other environmental, social and governance (ESG) issues are high on the risk register for companies in 2023. Cyber-security resilience; company working conditions; and increasing regulatory and disclosure requirements rank as the top three ESG risk trends for the year ahead. However, a lack of consistent standards and reporting frameworks is hindering ESG knowledge gathering, strategies and implementation. As a global player in the insurance industry, Allianz is championing best practices on corporate social responsibility (CSR) and ESG in both developed and developing countries. This is because sustainable business provides the platform for growth in the insurance businesses. In Ghana, Allianz Insurance is represented by Thomas William Jefferson Cook Dankwah, Executive Director – Hanssen Global UK &Ghana Ltd.


Allianz. 2013. Allianz Risk Barometer: Identifying the major business risks for 2023.

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