Cyber is top business risk as climate change hits record high

New York, January 15, 2025 – Cyber incidents such as data breaches or ransomware attacks, and IT disruptions, like the CrowdStrike incident, are the biggest worry for companies globally in 2025, according to the Allianz Risk Barometer. Once again, business interruption is also a main concern for companies of all sizes, ranking #2. After another heavy year of natural catastrophe activity in 2024 this peril remains #3, while the impact of a super election year, rising geopolitical tensions and the potential for trade wars mean changes in legislation and regulation is a top five risk at #4. The biggest riser in this year’s Allianz Risk Barometer is climate change, from #7 to #5, achieving its highest-ever position in 14 years of the survey.

Large corporates, mid-size, and smaller businesses all perceive cyber incidents as their #1 business risk. However, there are significant differences in the rest of the ranking. Smaller companies are more concerned about more localized and immediate risks, such as regulatory compliance, macroeconomic developments and skill shortages, but there are also signs that some of the risks that have preoccupied larger companies are now starting to bite smaller firms too, with climate change and political risks and violence climbing the ranking.

In the United States, cyber incidents once again top the list of business risks followed by natural catastrophes at #2, up from the third spot in 2024. Rounding out the top three is business interruption. Changes in legislation and regulation is the biggest riser in the region, advancing to the fourth spot from #8 in 2024.

Allianz Commercial Chief Underwriting Officer Vanessa Maxwell comments: “2024 was an extraordinary year in terms of risk management and the results of our annual Allianz Risk Barometer reflect the uncertainty many companies around the globe are facing right now. What stands out this year is the interconnectivity of the top risks. Climate change, emerging technology, regulation and geopolitical risks are increasingly intertwined, resulting in a complex network of cause and effect. Businesses need to adopt a holistic approach to risk management and consistently strive to enhance their resilience in order to address these fast-evolving risks.”

Cyber risks continue to increase with rapid development of technology

Cyber incidents (38% of overall responses) rank as the most important risk globally for the fourth year in a row – and by a higher margin than ever (7% points). It is the top peril in 20 countries, including Argentina, France, Germany, India, South Africa, the UK and the US. More than 60% of respondents identified data breaches as the cyber exposure companies fear most, followed by attacks on critical infrastructure and physical assets with 57%.

“For many companies, cyber risk, exacerbated by rapid development of artificial intelligence (AI), is the big risk overriding everything else. It is likely to remain a top risk for organizations going forward, given the growing reliance on technology – the CrowdStrike incident in summer 2024 once again underlined how dependent we all are on secure and dependent IT systems,” says Rishi Baviskar, Global Head of Cyber Risk Consulting at Allianz Commercial.

Business interruption strongly interlinked with other risks

Business interruption has ranked either #1 or #2 in every Allianz Risk Barometer for the past decade and retains its position at #2 in 2025 with 31% of responses. BI is typically a consequence of events like a natural disaster or a cyber-attack, which can affect the ability of a business to operate normally. Several examples from 2024 highlight why companies still see BI as a major threat to their business model. Houthi attacks in the Red Sea led to supply chain disruptions due to rerouting of container ships, while incidents such as the collapse of the Francis Scott Key Bridge in Baltimore also directly impacted supply chains.  Supply chain disruptions with global effects occur approximately every 1.4 years, and the trend is rising, according to analysis from Circular Republic, in collaboration with Allianz and others. Those disruptions cause major economic damages, ranging up to 5% to 10% of product costs and additional downtime impacts.

“The push for technological advancement and efficiency is affecting the resilience of supply chains. Automation and digitization have significantly accelerated processes, which sometimes overwhelm individuals due to the rapid pace and complexity of modern technology. However, when implemented effectively, these technologies can also enhance resilience by providing better data analytics, predictive insights, and more agile response capabilities.  This is why building and investing in resilience is becoming critical for every company around the globe,” says Michael Bruch, Global Head of Risk Advisory Services at Allianz Commercial.

Climate change reaches new high

2024 is expected to have been the hottest year on record. It has also been a year of terrible natural catastrophes with extreme hurricanes and storms in North America, devastating floods in Europe and Asia and drought in Africa and South America. After dropping down the ranking during the pandemic years, as companies had to deal with more immediate challenges, climate change moves up two positions into the top five global risks at #5 in 2025, its highest ever position, while the closely interlinked peril of Natural Catastrophes remains at #3 with 29%, although more respondents also picked this as a top risk year-on-year. For the fifth time in a row in 2024, insured losses surpassed US$100bn.

Geopolitics and protectionism remain on the radar

Despite ongoing geopolitical and economic uncertainty in the Middle East, Ukraine and Southeast Asia, political risks and violence drop one place to #9 year-on-year, albeit with the same share of respondents as 2024 (14%). But it ranks as a more concerning risk for large companies, up to #7, while it is also a new entry into the top 10 risks for smaller companies at #10. The fear of trade wars and protectionism is increasing and analysis by Allianz and others shows that within the last decade export restrictions on critical raw materials increased by a factor of five. Tariffs and protectionism may be top of the list of the new US government, but on the other hand there is also the risk of a ‘regulatory wild west’, particularly around AI and cryptocurrencies. Meanwhile, sustainability reporting requirements will be high on the agenda in Europe in 2025.

“The effect of new tariffs will be pretty much the same as with (over)regulation: ramping up costs for all companies affected,” says Ludovic Subran, Chief Investment Officer and Chief Economist at Allianz.  “However, not every regulation is inherently ‘bad’. And more often than not it is the implementation of rules that make corporate life difficult. Not only the number of rules but also an efficient administration that makes compliance as easy as possible should be the focus. A thorough digitization of the administration is urgently needed. However, in 2025, too, we will probably still be waiting in vain for a corresponding digital strategy. Instead, trade wars are coming. The outlook is not rosy.”

View the top 10 global business risks for 2025

View the Allianz Risk Barometer methodology and full global and country risk rankings

About the Allianz Risk Barometer

The Allianz Risk Barometer is an annual business risk ranking compiled by Allianz Group’s corporate insurer Allianz Commercial, together with other Allianz entities. It incorporates the views of 3,778 risk management experts in 106 countries and territories including CEOs, risk managers, brokers and insurance experts and is being published for the 14th time.