Navigating business risks in 2023
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Navigating business risks in 2023

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The 2023 Allianz Risk Barometer gives insight into the risks organizations are facing in the year ahead and what action companies are taking as they face increased levels of disruption as a result of various factors including digitalization, the war in Ukraine and inflation.

The survey gathered views of brokers and industry trade organizations, risk consultants, underwriters, senior managers, claims experts, as well as other risk management professionals in the corporate insurance segment of both AGCS and other Allianz entities.

According to the Allianz Risk Barometer, in the US the top risk in 2023 is business interruption followed by cyber and macroeconomic developments, the latter being a new entry and referring to risks such as inflation.

“Elevated levels of disruption look set to continue in 2023 with companies most concerned about the impact of mounting cyber risks and business interruption, which can be a consequence of many of the top risks identified by our customers in this year’s Allianz Risk Barometer,” explains Chris Townsend, member of the board of management at Allianz SE.

“At the same time, the unexpected geopolitical crises and globally felt macroeconomic challenges of the last year have pushed threats such as inflation and the energy crisis into the top five risks worldwide and companies will need to take systematic precautions to strengthen their economic and physical resilience. At Allianz, even in such turbulent times, our goal remains unchanged: as a trusted partner, we want to work with our business clients and support them.”

According to Georgi Pachov, head of portfolio steering and pricing at AGCS, businesses are are adapting their business models, making them more flexible, adaptable and dynamic going forward.

“Organizations need to be more agile in the current environment and be able to adapt their business models depending on the risks of the macroeconomic, political and competitive landscape,” he says.

Supply chain risks

The recent supply chain disruptions have come as a surprise to businesses, according to Marianna Grammatika, a regional head of risk consulting at AGCS. “Many businesses did not realize until their supply was interrupted that they had single critical suppliers, and that the impact of disruption to those suppliers was so significant,” she says.

The results from the survey show that the most common ways companies have taken action have been by de-risking supply chains and making them more resilient by developing alternative/multiple suppliers (64%), initiating/improving business continuity management (48%), broadening geographical diversification of supplier networks in response to geopolitical trends (40%) and intensifying supplier selection, monitoring, auditing and risk assessment (39%).

“Finding alternative suppliers is just a first step, not the final solution,” says Pachov. “If alternative suppliers are not secured with proper engagement and contractual terms, in times of crisis or peak demand, suppliers can pick and choose which clients to serve, or increase price and lead times, creating uncertainty.”

While progress has been made in ensuring a resilient supply chains, many companies are yet to improve supply chain transparency or are unable to provide good quality data or engage with the relevant stakeholders to acquire it.

Pachov stresses it’s important for insurers and brokers to ensure they advise companies and clients of the as it can lead to “catastrophic consequences.”

“When disruption happens it can have catastrophic consequences, which is why insurers and brokers must continue to bring knowledge and raise awareness for companies and clients, given the growing connectivity between many organizations,” says Pachov.