The news that the British Library is preparing to restore its full online service after a devastating cyber attack that forced it to go offline for almost a month is a reminder that cyber security continues to be a pressing concern for many organisations.

Indeed, the 2024 Allianz Risk Barometer, an annual survey of more than 3,000 risk management experts around the world, found cyber risks remained the biggest concern for companies globally, closely followed by the interlinked peril of business interruption and natural catastrophes.

While UK respondents echoed the global consensus, with cyber risk leading the list of top business concerns, the percentage of businesses ranking cyber first fell slightly (by 4%) this year, to 36% of respondents, compared with 2023.

UK sentiment has also shifted on macroeconomic developments, with the percentage of respondents listing this as a leading concern declining from 34% to 18%, year-on-year, falling further than the global average (down from 25% to 19%). This ensured it dropped from third position in the UK rankings to seventh.

Instead, other risks have risen to the fore. The shortage of skilled workers now ranks fourth highest, with a fifth of UK respondents (21%) citing this as a major concern – compared with the global average of 12%.

UK businesses also expressed heightened concern about political risks and violence, with 19% of respondents (13% in 2023) troubled by the geopolitical environment, compared with 14% globally, ensuring this peril became a top five UK concern for the first time.

Risks posed by new technologies are also a leading preoccupation for 18% of UK respondents (as opposed to just 9% globally), again an increase on the 2023 response (11%), ranking joint seventh.

Trends to watch

UK respondents appear more bullish about the prospects for the economy in the year ahead after the wild ups and downs experienced over the past couple of years, with stubbornly high inflation finally coming down and the potential for interest rate cuts.

However, given ongoing conflicts in the Middle East and Ukraine, they are less confident about the uncertain and volatile geopolitical environment, which is becoming an increasingly relevant source of risk for supply chains and international trade, as demonstrated by the latest threat to supply chains, the recent disruption in the Red Sea – a vital trade route between Europe and Asia – due to Houthi rebel attacks on vessels.

At the same time the UK political environment contains a degree of uncertainty with an election likely to occur in the second half of the year, part of a record-breaking year around the world, which could see as much as 50% of the world’s population going to the polls.

The UK has seen simmering political unrest over the past year, with repeated strikes by public sector workers and a range of political protests with further unrest expected in 2024. At the same time, according to MI5, the UK’s current terrorism threat level is at ‘substantial’ – the midpoint of the five threat levels flagged by the security services, indicating that a terrorist attack in the country is likely.

However, a more pressing concern for businesses will be operational issues driven by a shortage of skilled employees, the challenge of getting to grips with exponential growth in the use of AI tools and regulatory changes which could increase the risk to directors and officers of legal challenges.

While businesses perceive a huge opportunity for significant time and cost savings by automating more unskilled tasks, at the same time many companies are finding it harder to hire and retain skilled employees amid fierce competition for talent.

A recent Manpower Group survey found 75% of companies globally had reported talent shortages and hiring difficulties over the past year, while a European Commission report identified labour shortages across multiple sectors, occupations and skills levels, which it said could grow further. IT or data experts are seen as the most challenging to find, making this issue a critical aspect in the fight against cyber crime.

The rapid expansion of AI means companies may have to invest heavily in the short term: on in-house or third party AI solutions; training and education for employees on their use; advice on navigating an increasingly complex legal and regulatory environment; and risk assessment of the potential for biased, inaccurate, ‘hallucinatory’ or plagiarised outputs from AI – as well as data privacy issues and increased vulnerability to cyber attacks.

Additionally, companies will need to invest in risk management and financing solutions to better assess and mitigate their changing risk profile and to protect D&Os against increased exposure to the legal and regulatory risks associated with new technologies and a changing working and business environment.

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