As ransomware attacks, flood, fire, and floods ravage companies across Europe, new research highlights the steps that risk professionals can take to manage the threats.
Cyber risk is the biggest risk faced by businesses of all sizes and across a wide range of sectors in Europe, according to the Allianz Risk Barometer 2024.
This tallies with the global findings of the 13th annual barometer survey which found that cyber risks, including cybercrime, IT network and service disruptions, malware/ransomware, data breaches and fines and penalties, top the list of concerns for risk experts across the world.
Following a period of frequent but stable cyber-related losses, 2023 saw an uptick in the volume of ransomware and extortion losses, with hackers increasingly targeting IT and physical supply chains.
The adoption of Artificial Intelligence (AI) and poor cyber security around the use of mobile devices are contributing to the vulnerability of many organisations to cyber-attack.
How to tackle cyber crime risks
Preventing cyber-attacks is becoming harder and early detection and response capabilities are therefore key to a business’ ability to remain resilient.
Currently, the largest proportion of IT security budgets is spent on prevention measures, with only about 35% going to detection and response.
Early detection is key to stopping losses from escalating, and a greater proportion of budgets should be devoted to detection and response capabilities, according to Allianz Commercial’s global head of cyber claims, Michael Daum.
Detection backed by AI should be able to catch incidents earlier. Reducing downtime and its impact on revenue and reputation.
Nat cat concerns on the rise
One of the risks to rise in importance in Europe in 2024 compared with 2023 was natural catastrophes, which leaped to 3rd in the ranking from 6th last year.
Indeed, in several European countries, natural catastrophe risk topped the list of concerns. It ranked number one in Greece, for example, which was ravaged by natural disasters last year.
Greece suffered severe drought and widespread wildfires, including the largest single wildfire ever recorded in the European Union, necessitating large-scale evacuations and causing tragic loss of life, followed by the worst flooding ever recorded in the country after Tropical Storm Daniel hit.
Natural catastrophe risks also topped the list of concerns in Hungary, where flooding caused the Danube to burst its banks last year, and Slovenia, which saw a month’s rainfall in 24 hours causing widespread flooding and economic losses of more than €500 million.
Climate change ranked as the number one concern of risk professionals in Turkey, and remained steady at number seven in the ranking for Europe overall, while creeping up the list of concerns in France, Germany, Italy, Spain and the UK.
More numerous and more severe natural catastrophe events, the increased frequency and severity of which is fuelled in part by climate change, has clear implications for businesses of all sizes and in all sectors.
As well as concerns over loss of life and property damage, business interruption is often a direct result of climate change and the severe weather events and natural catastrophes it can exacerbate.
How European businesses can tackle nat cat threats
There are actions that companies can take to try to mitigate the risks posed by climate change and severe weather events. Those include transitioning to low-carbon business models, and improving planning and response to climate events in ways such as adopting measures to improve the ability of sites to cope with weather extremes.
Businesses also noted that they are seeking protection and finance mechanisms to address the growing climate insurance protection gap.
And many indicated that boosting supply chain resilience would be a key focus for 2024.
The Allianz Risk Barometer is based on insights from more than 3,069 risk management experts from 92 countries and territories across 24 industry sectors.
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