Business interruption (29% at #1) remains the top concern alongside Fire & explosion (29% at #1), and Changes in legislation and regulation (29% at #1), which climbs the ranks by three positions to tie for first position.
Globally and in Asia, the top risks are Business interruption, Cyber incidents, and Natural catastrophes in this year’s Allianz Risk Barometer, which is based on the insights of more than 3,700 risk management professionals from 100+ countries.
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.”
Christian Sandric, Regional Managing Director of Allianz Commercial Asia, says, “Business interruption is the most significant risk for companies in the region and this is no surprise as Asian economies are increasingly participating in trade globally and regionally. This is also often due to events like cyber incidents or natural catastrophes, which are part of the top risks in the region. Against this backdrop of an increasingly volatile risk landscape, businesses should ensure they are sufficiently protected and their response measures robust. This includes adopting measures such as loss prevention, developing multiple suppliers, alternative risk transfer, and multinational insurance policies.”
Rafliz Ridzuan, Chief Underwriting Officer, Allianz General Insurance Company (Malaysia) Berhad, said: “Business interruption is closely linked to many of this year’s highly ranked risks, such as fire, cyber, natural catastrophes, and remains a key concern in a rapidly changing world. Disruption from fire can be very high, as it can take longer to recover than many other perils, and the impact on suppliers can often be great. Given the growing reliance on technology, cyber remains a top risk for organizations and the CrowdStrike incident once again underlined how dependent we all are on secure and dependent IT systems. It is crucial that companies have robust risk management plans and supply chains in place to enhance resilience and withstand business interruption.”
Business interruption strongly interlinked with other risks
Business interruption (BI) ranks joint #1 in Malaysia alongside Fire & explosion, and Changes in legislation and regulation, and is strongly interlinked with these risks, as well as other risks including Cyber incidents and Natural catastrophes.
BI retains its top spot in Malaysia and its persistence at the top reflects severe supply chain disruption during and after the pandemic. For example, last year, Malaysia Airlines reduced its scheduled flight capacity by 20% to mitigate the post-pandemic challenges of returning normalcy in air travel due to new aircraft delivery delays and a global spare parts shortage that impacted their current fleet maintenance.
The destructive nature of Fire & explosion means there is often a high degree of disruption. Damaged plants can sometimes take years to rebuild and get production back up and running to full capacity. Malaysia witnessed several fires and explosions, including an explosion and fire that broke out at four factories in Iskandar Puteri which left three foreign workers with burn injures covering 30 per cent of their bodies. In November 2024, a fire broke out at the former Employees Provident Fund (EPF) building in Jalan Gasing, Petaling Jaya.
Changes in legislation and regulation can result in a more challenging business operating environment. There were several changes in the country last year such as economic sanctions, a new regulatory license for social media platforms and tech firms, the Cyber Security Act and amendments to the Personal Data Protection Act.
Cyber risks continue to increase with rapid development of technology
Cyber incidents (26% at #4) remain one of the top risks in Malaysia. Five government agencies and nine companies operating in aviation, banking and healthcare were among companies that were affected by the global CrowdStrike outage last year. The global outage resulted in company losses and disruption to airlines. The country was also hit with an alleged data breach of 17 million Malaysian’s MyKad, or Malaysian identity card, that was claimed to be sold on the Dark Web.
Cyber incidents rank #2 in Asia, with 31% of responses. The Asia Pacific region saw a 23% increase in weekly cyberattacks per organization in Q2 2024, compared to the same period in 2023.
Globally, 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). 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%.
Market developments (23% at #5) emerge as a new concern for companies in Malaysia in 2025 and ties for fifth position with Natural catastrophes (23% at #5). The country saw a wave of technology investments in the region as new players including AirTrunk, Equinix, EdgeConneX, Princeton Digital Group, NEXTDC and ST Telemedia Global Data Centres entered the market. Google also announced their investment in Malaysia, while other tech giants like Microsoft, Amazon, Nvidia and Apple intensified their focus on the region.
Due to Malaysia’s topography, the country has been susceptible to coastal flooding and flash floods. Floods last year due to monsoon rains displaced 90,000 people and left 3 people dead, with Kelantan and neighboring Terengganu being the worst hit. The flood overflowed rivers, submerged cars and left houses inundated, and forced 94,778 people to be evacuated to 527 temporary shelters in nine states.
Resources:
Allianz Risk Barometer methodology and full global and country risk rankings
Media releases for Asia, China, Hong Kong, India, Japan, Singapore, South Korea, and Thailand
This content is provided by Allianz Malaysia Berhad
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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