UK firms brace for risks in a turbulent 2025
Allianz Risk Barometer​

Cyber is the top risk of concern for UK businesses, and is the cause of business interruption companies fear most, according to the latest Allianz Risk Barometer. At a time when billions are being invested in artificial intelligence worldwide, UK firms are also increasingly worried about the impact of new technologies, now ranked fifth, up two spots from last year.

Cyber threats, such as data breaches, attacks on critical infrastructure, ransomware, and disruptions to digital supply chains, pose significant challenges to business continuity. These incidents often create a domino effect, impacting customers and suppliers alike.

“Last year’s outage affecting CrowdStrike and Microsoft users was a reminder that IT and software supply chains can go down, and when they do, it can have a global impact,” says Rishi Baviskar, Global Head of Cyber Risk Consulting, Allianz Commercial.

“Our reliance on technology companies for IT infrastructure, software, and services is increasing, and we can expect more disruptive events like CrowdStrike to happen in the future. And with AI and generative AI, our dependency on a relatively small number of technology providers will intensify,” he says.

Closely tied to cyber risks, business interruption ranks as the second-biggest concern for UK firms. Regional conflicts, extreme weather events, and insolvencies continue to disrupt supply chains, with global-scale disruptions occurring roughly every 1.4 years, according to a joint study by Circular Republic, Porsche Consulting, Allianz, and Agora Strategy.

Although mentioned by both, Small and mid-sized companies feel this pressure more acutely than larger organisations. “Smaller firms typically have less adaptive capacity and ability to invest in climate transition / resilience measures” says Lena Fuldauer, Global Sustainability and Resilience Solutions Lead at Allianz Commercial. “There is often a higher reliance on a few suppliers or local sources and also less leverage to negotiate with suppliers to adapt.”

Given the current uncertain geopolitical climate, it’s little wonder that political risks and macroeconomic developments remain top-ten risks of concern for UK companies, ranking fourth and seventh respectively. In fact, political and economic-related risks are more pronounced in this year’s Barometer survey: Changes in legislation, for example, is the biggest mover in the UK, up from seventh in last year’s report to third in 2025.

Despite modest global economic growth forecasts of +2.8% in 2025-26, political shifts, including a new US administration under President Trump, are introducing fresh uncertainties around trade tariffs, fiscal policy, and inflation.

Many economies are now undergoing profound transformation, explains Ludovic Subran, Chief Investment Officer and Chief Economist at Allianz. “In 2024, the many elections generated a great deal of attention. 2025 will be the year in which the new governments set the course for the future. This will in most cases not have an immediate impact, but the long-term consequences for growth and prosperity will be significant. For companies, it is therefore worth following developments closely and identifying risks and opportunities in good time.”

After two years of dismal growth, the UK economy is forecast to pick up pace in 2025. We expect UK GDP growth of +1.3% in 2025 and +1.5% in 2026. However, risks remain. The planned increase in National Insurance contributions has hurt sentiment and will likely lead to a mix of lower corporate margins, lower wage growth and lower employment growth. Meanwhile, exporters face uncertainty as the US considers tariff hikes, expected to be announced on 1 February.

According to a British Chambers of Commerce survey in January, UK business confidence has slipped to its lowest level in more than two years, with ongoing concern around inflation, interest rates and taxes. In early January, 62% of trading businesses reported that they were experiencing at least one challenge that was having an impact on their turnover; the most cited challenge was economic uncertainty at 28%, according to the ONS Business Insights and Conditions Survey.

Geopolitical and economic uncertainty will put UK businesses under additional pressure at what is already difficult time. The percentage of fragile UK firms remains elevated at 12%, while UK business insolvencies are expected to stay 30% above pre-pandemic levels until 2026, having peaked at a 12-year high in 2024, according to our Global Insolvency Report.

As if high levels of geopolitical and economic instability aren’t challenging enough, many of the risks in the Barometer are particularly complex, unpredictable and interdependent. “A change in one – or indeed a mitigating action – might have a knock on effect on another, and another. Climate change, emerging technology, regulation and geopolitical risks are increasingly intertwined, resulting in a complex network of cause and effect,” says Michael Bruch, Global Head of Risk Advisory Services, Allianz Commercial.

At a time of heightened risk and uncertainty, trade credit insurance provides security against unpaid debts. It can also help mitigate the domino effects of business interruption and supply chain disruption, whether the result of a major insolvency, a cyber incident or an unexpected event.

In a fast changing and interconnected risk environment, we help businesses manage complexity through tailored solutions. We also give companies the confidence to grow in an uncertain economic and geopolitical environment. Whilst it reimburses losses occurred, trade credit insurance also informs credit risk decisions through powerful insight on who to extend credit to and what limits to offer. This means you can avoid offering credit terms to customers with a higher risk of non-payment.

To find out more about market-leading trade credit insurance from Allianz Trade, contact our specialist team for a free consultation, or call 0800 056 5452.