The great danger awaiting companies in 2024!

The risk survey conducted for the Allianz Risk Barometer was conducted with businesses, Allianz customers, brokers and industry trade organizations around the world.

Most responses to the Risk Survey came from large companies with annual revenues of more than $500 million, with 1,340 respondents and a 44 percent participation rate.

The report also surveyed risk consultants, underwriters, senior executives, claims specialists and risk management professionals in the corporate insurance segment of Allianz Commercial and other Allianz entities.

THESE ARE THE TOP 3 AMONG THE RISKS

In the report, which lists the main global commercial risks of concern for 2024, the top three are cyber attacks, interruption in commercial activities and natural disasters, respectively.

In the list, climate change is in seventh place, while the lack of qualified workforce is in tenth place.

According to the bankruptcy report of Allianz Trade, the world’s trade receivable insurance leader, within the scope of Risk Barometer; Bankruptcies will increase globally by 8 percent this year.

Thus, after a small recovery of 1 percent in 2022 and an acceleration of 7 percent in 2023, there will be a third consecutive increase in global bankruptcies.

The main reason for the increase in bankruptcies is the decrease in pricing power and the slowdown in the increase in companies’ revenues due to the weakening of global demand. According to the data included in the Allianz Trade bankruptcy report, this slowdown in revenues has spread over a wide base in 2023.

According to Allianz Trade economists, who emphasize that rising production costs negatively affect the profitability of companies, the deterioration in liquidity positions is not expected to improve before 2025.

ONLY FOR LARGE COMPANIES

According to the report; Companies still have significant cash surpluses, including 3.4 trillion euros in the Eurozone and 2.5 trillion dollars in the United States. However, it is noted that these cash buffers are concentrated in large companies and certain sectors such as technology and consumer needs.

The report generally states that most companies are unable to increase their cash positions through operations because growth will remain low for longer.

The report states that the most fragile companies and sectors are stuck in a quandary, with the accommodation, transportation and retail sectors at the forefront, and that the construction industry is following the path of these sectors.

THREE OUT OF FIVE COUNTRIES WILL REACH PRE-PANDEMIC BANKRUPTCY LEVELS

According to the Allianz Trade bankruptcy report included in the Allianz Risk Barometer, normalization in commercial bankruptcies was completed in most developed economies in 2023.

In 2023, the USA was at the forefront with a 47 percent increase in bankruptcies, France with 36 percent, the Netherlands with 59 percent, Japan with 35 percent and South Korea with 41 percent. Allianz Trade predicts that three out of every five countries globally will reach pre-pandemic business insolvency levels by the end of 2024.

This includes many European countries, such as Germany with 9 percent in 2024, the Netherlands with 28 percent, and the United Kingdom with 5 percent. Commercial bankruptcies in the United States are expected to increase by 22 percent this year.

The report states that GDP growth must double in order for bankruptcy figures to stabilize on both sides of the Atlantic, but this seems difficult to achieve before 2025.