The biggest business risks in 2021 – the ‘pandemic trio’ worries company leaders

We live in an increasingly unstable world where change is the only constant. As a result, many companies are facing rapidly changing environments and associated risks that they need to adapt to in the shortest possible time or risk falling behind their competitors.

Allianz’s risk barometer revealed the 10 business risks that company and corporation leaders must pay attention to this year and next.

Business interruption is consistently at the top of the list as the biggest business risk. This risk has been at the top of the research for the last decade seven times, indicating that it was on the minds of business leaders even before the pandemic began. However, the pandemic has placed one business risk at the forefront, namely the fear of supply chain disruptions related to the pandemic. As many as 94 percent of companies surveyed in Allianz’s research cited this risk as the most current.

The second most important business risk relates to the pandemic itself. The outbreak of the pandemic as a risk has jumped 15 places, and despite vaccines, the spread of the virus and its potential mutations continue to worry company leaders.

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The third most prominent business risk is cyber incidents, which are also on the rise, as evidenced by recent hacking cases of the largest oil pipeline in the U.S., Colonial Pipeline, or the company CNA Financial Corp.

Other socio-economic business risks

The three aforementioned risks are considered the “pandemic trio”, due to their inseparable and intertwined effects on the business world. However, the next few significant business risks are not far behind. Globally, GDP is expected to recover by +4.4 percent in 2021, compared to a decline of -4.5 percent in 2020. However, in the long term, the world will have to grapple with a record $277 trillion in debt, which could potentially impact those economic growth projections. The rising insolvency rate also remains a key concern post-COVID. Additionally, there are traditional risks such as fire or explosion, which are particularly harmful to manufacturing and industry.

For example, the explosion in Beirut in August 2020 caused damage amounting to $15 billion. Political risks and violence have also made it onto Allianz’s list, escalating in number, scale, and duration worldwide in the form of civil unrest and protests. Such disruptions are often underestimated, but business losses from these risks can also add up to billions.

There is no life without risk, and the risks companies face depend on a multitude of factors, from political (in)stability and rising regulations to climate change and macroeconomic shifts.

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