The 2023 Allianz Risk Barometer, based on input from 2,712 respondents across 94 countries, reveals a persistent state of ‘permacrisis’. As disruption continues to loom, businesses must proactively bolster their economic and physical resilience. While cyber breaches and business interruption remain primary concerns globally, unexpected geopolitical crises and macroeconomic challenges have propelled threats like inflation and the energy crisis into the top five.
The Biggest Risks And Threats For Businesses In 2023
#1 Recession
The global rise of inflation and subsequent economic downturn is the biggest and most apparent threat to companies and organizations in 2023. As we head into 2023, the word on everyone’s lips is recession. While it’s not entirely impossible to profit during a period of high inflation, it’s far from ideal as consumers have less purchasing power. The value of a currency depends on the number of goods or services that can be bought with one unit of money.
#2 Cyber Incidents
Cyber threats, like IT disruptions, ransomware attacks, and data breaches, continue to be the most critical risk globally (34% of responses) for the second consecutive year. Considering that cybercrime incidents now cost the global economy more than $1 trillion annually, equivalent to around 1% of global GDP, it’s no surprise that cyber risk remains the top concern among customers in this year’s Allianz Risk Barometer.
Alongside being voted as the foremost risk globally, cyber incidents also rank as the primary hazard in 19 different countries. Small companies are particularly concerned about this risk, as it poses the greatest threat to business continuity. Moreover, cyber security resilience is the most pressing environmental, social, and governance (ESG) risk trend.
As per Allianz respondents, companies are most worried about data breaches (53%), given the significance of data privacy and protection as one of the key cyber risks. In recent years, global legislation in this area has been strengthened. Such incidents can result in substantial notification costs, fines, penalties, litigation, and compensation claims from affected stakeholders, including customers, suppliers, and data breach victims.
#3 Interest Rates
The increase in interest rates will continue to deplete working capital for businesses across various sectors. Retailers concerned about consumer demand will exercise caution in purchasing inventory to avoid oversupply in the retail market. Consequently, this will put a strain on small and medium-sized companies, as they will effectively become warehouses for retailers, having to hold onto products for longer periods. Freight rates are expected to decrease in 2023 compared to 2022, reflecting the decline in demand for overseas goods across the industry.
#4 Labor Shortage
The labor shortage and skills gap challenges will persist until 2024. During this time, HR teams will focus on enhancing their recruitment and retention strategies to attract and retain talent across all organizational levels. To achieve this, HR teams will explore various avenues, including job boards and organizations, to find individuals with the necessary skills to support the business. Additionally, organizations will pay increased attention to attrition measurement practices and hold themselves accountable for creating a diverse workforce.
To compensate for the lack of workforce, more attention will be paid to hiring remote workers in various forms. Split and remote teams will become even more popular and they need online fax. Setting up a fax connection is as simple, you can just download on the App Store and set up the app. A simple fax app can replace a landline fax.
#5 Energy Crisis
The energy crisis has emerged as one of the top global risks, standing at #5. It stems from soaring fuel costs, supply interruptions, inflation, and the aftermath of Russia’s invasion of Ukraine. Even before the invasion, energy prices had been on the rise. The post-pandemic economic recovery in 2021 witnessed a surge in demand, while blockages in supply chains and delayed maintenance work caused widespread disruptions.
Severe winters in Europe and East Asia worsened the power shortage, in addition to a lackluster year for wind production. These are notably major affected European wind-power producers such as the UK, Germany, and Denmark.
#6 Damage To Reputations
The primary challenge for brands and businesses in 2023 would be reputational harm. She emphasized that reputation could be adversely affected by factors such as rising political extremism, social justice concerns, and environmental issues. Given the increasing fragmentation of media and social networks, consumers are often uncertain about what to believe. Once misinformation spreads, correcting or undoing it becomes exceedingly difficult. To effectively address these risks, brands must adopt a proactive approach by monitoring threats, responding promptly, and nurturing direct relationships with their audiences.
#7 Inability To Reach Target Audiences
It has become more challenging for brands to engage with their target audience due to the overwhelming amount of information and numerous channels available for viewing content. In 2023, brands will need to innovate, comprehend, and establish strong connections with their valued customers through personalized advertising leveraging creativity and new technologies.
Conclusion
Business will experience difficulties in both 2023 and 2024. In many ways, these will be similar problems and risks. Only wise analysis and preparation for difficulties will help businesses to counteract today’s challenges.
