Few industries are moving faster than the technology, media and telecommunications (TMT) sector, as it drives technological, societal and economic progress.

According to Allianz, the long-term future outlook is positive – yet, with such a rapid pace of change comes new risks, complexity, heightened regulatory scrutiny and increasingly global exposures. And, of course, the TMT sector is not immune to the macroeconomic challenges facing other sectors.

Geopolitical tensions including the war in Ukraine, the Middle East, and Sudan, supply chain disruption, inflation, and the continued the tightening monetary policies. As with other sectors, sustainability challenges are ongoing – whether it is TMT companies minimising their environmental impacts or supporting others on their net zero journeys.

Every year, Allianz asks risk management experts in the TMT sector to rank their top risks for the year ahead as part of its annual Allianz Risk Barometer 2024. This year the top ranked challenges are cyber incidents (55% of respondents), followed by business interruption (33%), with macroeconomic developments (21%) in third.

Given TMT companies hold large amounts of personal information which can be a prime target for criminals and can be either sold on the dark web or used for fraud or to extort the victim for ransom, it is unsurprising that cyber incidents is a top concern.

In addition, there is a large risk of service interruption and data loss following a disruptive cyber-attack, such as in a ransomware or wiperware incident.

The latter, also known as “pseudo ransomware”, has risen in parallel with the Ukraine war – it is often used as part of an advanced persistent threat (APT) attack against critical infrastructure with its primary purpose being to destroy or cause havoc rather than financial extortion.

Business interruption is the main cost driver for more than 50% of cyber claims globally, Allianz Commercial analysis shows, and is a significant driver for the rising severity of claims in recent years.

Given the large number of devices connected to a company’s network, ensuring adequate protection can prove to be an extremely challenging task, particularly for smaller-sized companies, and requires deep expertise and an individualised approach.

Cyber incidents and natural catastrophes are the top two causes of business interruption feared most by companies, followed by fire, and machinery/equipment breakdown or failure.

However, almost any peril can cause disruption, according to Allianz. Business interruption is closely related to many of the other top global risks in this year’s Allianz Risk Barometer, such as climate change (7), political risks and violence (8), skills shortages (10), energy crisis (11) and the impact of new technologies (12).

The TMT industry is subject to various macroeconomic developments risks[1], including economic downturns, geopolitical tensions, and regulatory changes. These risks can impact consumer spending, advertising budgets, and investment in technology infrastructure.

However, they also present opportunities for innovation and growth, particularly in areas such as digital transformation, cloud computing, and streaming services.

Mitigation strategies for TMT companies include diversifying revenue streams, maintaining agility in response to market shifts, and investing in scalable technologies.

TMT companies can mitigate macroeconomic risks by focusing on digital transformation initiatives and adapting business models to meet evolving consumer demands. For example, during economic downturns, TMT companies can offer affordable subscription-based services to attract and retain customers, thereby offsetting declines in advertising revenues.

What the top risks for the TMT sector reveal is the extent to which risks are interrelated and aggregated in the networked world. Businesses can never be fully prepared for everything, but continuous monitoring of geopolitical issues, proper risk analysis and consulting with experts, both locally and globally when possible, is a good start. Faced with loss scenarios that can fall like dominoes, businesses need robust, resilient operational processes to safeguard operations, supply chains and ensure business continuity.

Business continuity planning (BCP) reviews are essential and must be regularly updated. Cyber protection should include regular backups, segmentation of data, the right end-point detection and multi-factor authentication. Insurers such as Allianz Commercial can leverage company data to facilitate a tailored risk assessment and help draw up a personalised mitigation strategy.

Organizations are also urged to operationalise their response to regulation and privacy rights in relevant jurisdictions. Should the risk landscape change, businesses need to be aware of how this will impact their activities and take steps to protect their assets.