Cyber incidents such as data breaches, ransomware attacks, and IT disruptions are the biggest business risks for companies globally in 2025, according to the Allianz Risk Barometer. Business interruption ranks as the second top concern for companies of all sizes followed by natural catastrophes. Now in its 14th year, the Risk Barometer is an annual business risk ranking incorporating the views of 3,778 risk management experts in 106 countries and territories including CEOs, risk managers, brokers and insurance experts.
The Risk Barometer also surveyed Construction and Engineering risk experts to identify the threats keeping them up at night. Here is a look at their top industry risks for 2025:
Natural Catastrophes
Natural Catastrophes topped the list this year with 52% of Construction and Engineering respondents ranking this their number one concern, up from 38% in 2024. Natural catastrophes include storms, floods, wildfires, and other extreme weather events.
An above-average hurricane season that featured events like Helene and Milton in the US, Storm Boris in Europe, widespread flooding in several countries and the Noto Peninsula Earthquake in Japan serve as reminders that natural catastrophes are a major threat for companies around the world and the insurance industry.
Total economic losses from natural catastrophes alone reached $310bn in 2024, according to Swiss Re. Severe convective storms (SCS), tropical cyclones and flooding events accounted for almost 90% of all global insured losses related to natural perils and 85% of the total economic losses associated with natural hazards. SCS was the costliest peril, with $57bn, $51bn of which occurred in the US alone. This is the second consecutive year that SCS losses in the US have surpassed the $50bn threshold.
2024 was the warmest year on record, marking the first-time global temperatures exceed 1.5°C above pre-industrial levels (1850-1900). Weather and climate events accounted for at least 95% of the insured losses in the first three quarters of 2024, with $103bn. Moreover, every major continent experienced at least one historically anomalous extreme weather or climate event during this year.
Business Interruption
Business interruption (BI), including supply chain disruption, ranked second on the risk list for Construction and Engineering respondents at 33%, up from the third spot in 2024. Closely aligned with many of the other top risks in the Allianz Risk Barometer, BI is typically a consequence of events like a natural disaster, a cyber attack or outage, insolvency or political risks like conflict or civil unrest.
Concern for BI is also being driven by supply chain disruption and geopolitical risks. Supply chain disruptions with global effects occur approximately every 1.4 years, and the trend is rising Those disruptions cause major economic damages, ranging up to 5% to 10% of product costs and additional downtime impacts. Nowadays, a failure or disruption in any segment of a supply chain tends to be more severe, leaving minimal time to respond.
Fire and Explosion
Few things can be more destructive than a fire. Not only can fire cause costly damage, but it can also interrupt a firm’s operations indefinitely, ensuring it is a perennial top 10 global risk for businesses. For Construction and Engineering companies, Fire is the third most important risk in 2025 at 27%, but down from the second spot last year.
Allianz Commercial analysis of more than 1,000 BI insurance industry claims over a five-year period ending in 2023 (with a value in excess of $1.3bn), shows fire is the most frequent driver of these claims and accounts for over a third of the entire value (36%).
The degree of disruption can be very high, as it can take longer to recover from than many other perils, and the impact on suppliers can often be great. Regularly assessing and updating prudent fire mitigation practices, including preventative measures, fire extinguishing methods and contingency planning remain essential for all businesses to lower the risk of loss from any incident.
Climate Change
A new risk on the Risk Barometer rankings for Construction and Engineering businesses this year at number four with 20% of responses is Climate Change, including physical, operational and financial risks as a result of global warming. 2024 was another year of extreme weather and new climate records. It was also the fifth year in a row in which insured losses from natural disasters worldwide exceeded the US$100bn mark. It is little surprise then that climate change delivers a standout result in 2025.
The challenges are many for businesses. As climate- and nature-related risks continue to rise, and awareness of them among companies grow, the financial implications are also becoming increasingly pronounced, whether it concerns managing transition risk, mounting costs from regulatory compliance on disclosing physical climate risks or dealing with operational disruptions caused by more extreme weather events or ecosystem degradation.
Extreme temperatures can drive up energy demand, which is especially critical for industries reliant on cooling systems, potentially leading to operational cost increases. Water scarcity can threaten businesses reliant on water for operations, while biodiversity loss undermines ecosystem services which many industries depend on, for example, agriculture or maintaining crop yields.
The top three actions companies are taking to mitigate the direct impact of climate change according to the Risk Barometer’s global respondents are:
· Adapting or increasing insurance protection (including alternative risk transfer)
· Adopting carbon-reducing business models (e.g., recycling and reducing waste, encouraging sustainable travel, developing more sustainable supply chains)
· Creating contingency plans for climate-related eventualities (e.g., response and recovery, assessing critical systems and resources)
More companies also say they are investing in clean technologies to reduce emissions. Awareness among businesses of the need to deploy climate resilience measures, which can help to safeguard business operations and contribute to a more sustainable future is growing. The impact of chronic perils on operations, such as drought, can often be underestimated because their impact is more gradual, as can the impact of climate change on aging and interdependent infrastructure, and on the workforce, for example, extreme heat disrupting labor.
Physical measures are direct actions to protect infrastructure and assets from climate risks. Examples include flood barriers, sea walls, and flood-proof building materials. Nature-based solutions involve restoring or protecting natural ecosystems to reduce climate risks. For example, green open spaces can help to cool air while unpaved areas can reduce the velocity of stormwater. Behavioral changes are vital for driving effective resilience strategies. These include developing and practicing emergency plans, training employees on what to do during extreme weather, and educating communities on best practices.
To read the full 2025 Allianz Risk Barometer, please visit: https://commercial.allianz.com/news-and-insights/reports/allianz-risk-barometer.html
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