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South Africa’s businesses are facing a major risk in 2024: critical infrastructure blackouts. According to the Allianz Risk Barometer, this threat has topped the list for the second year in a row. The report, based on insights from 3,000 risk management professionals, highlights the significant impact of power outages and infrastructure failures on the country’s economy and businesses.
These blackouts not only disrupt supply chains but also have a broader impact on the overall economy. When essential infrastructure like ports, railways, and roads fail, it poses significant challenges for businesses. As a result, companies are prioritizing investments in infrastructure resilience and developing contingency plans to mitigate potential consequences.
The CEO of Allianz Commercial South Africa, Thusang Mahlangu, stressed the urgency of businesses staying vigilant in the face of critical infrastructure blackouts. Mahlangu emphasized the importance of proactively addressing these risks to enhance the ability to withstand disruptions and ensure uninterrupted operations.
Globally, cyber incidents are the primary concern for businesses in 2024. This marks the third consecutive year that cyber incidents, including ransomware attacks and data breaches, have ranked as the most critical risk. The report also highlights the use of emerging technologies like generative artificial intelligence to automate and accelerate cyber-attacks.
Business interruption holds its position as the second biggest threat in the 2024 survey, reflecting the interconnectedness and reliance on supply chains for critical products and services. Improving business continuity management and identifying supply chain bottlenecks are key priorities for risk management.
Natural catastrophes have risen to become the third biggest risk globally, as extreme weather events, such as devastating floods, caused significant damage to South African homes, businesses, and critical infrastructure last year.
The Allianz Risk Barometer also points out regional differences in risk perception. In South Africa, there has been a slight shift in risk perception regarding climate change, which dropped in ranking from fourth to seventh place in 2023. However, the physical damage from more frequent and severe weather events remains a significant threat to corporate assets.
Political risks and violence have moved up to the eighth spot globally, reflecting ongoing conflicts and tensions between countries. This trend is expected to fuel social unrest due to dissatisfaction with potential outcomes, economic uncertainty, and the spread of disinformation through social media.
Although economic growth outlooks remain subdued, there is hope that 2024 could see a stabilization of the unpredictable economic fluctuations experienced since the COVID-19 shock. Macroeconomic development has fallen to the fifth spot in the Allianz Risk Barometer, reflecting lackluster growth. However, the risk of upheavals remains due to the considerable number of elections scheduled for 2024.
Lastly, while the shortage of skilled workforce is seen as a lower risk in 2024 compared to the previous year, businesses in various regions still identify it as a top concern. The fight against cyber-crime is particularly impacted by the challenge of finding IT or data experts.
In conclusion, the Allianz Risk Barometer for 2024 emphasizes the need for businesses to address critical infrastructure blackouts, cyber incidents, and business interruption to ensure continuity of operations. Climate change, political risks, economic uncertainties, and the shortage of skilled workforces also contribute to business risks, underlining the importance of prioritizing risk management and resilience strategies.