‘Business interruption leads in risks for power and utilities sector in 2024’
Ilenre Irele
According to Allianz Risk Barometer, business interruption is the major worry for the power and utilities sector in 2024. It is closely followed by the Energy crisis (35%), Cyber incidents (31%), Natural catastrophes (28%), and Fire, explosion (23%).
The report, based on insights from over 3,000 risk management professionals and business leaders, highlights the growing importance of addressing these risks to ensure business continuity and safeguard against potential disruptions.
Business interruption remains the #1 risk in the power and utilities sector due to various factors such as extreme weather events, cyberattacks, and equipment failures. Mitigation strategies should prioritize implementing robust contingency plans, diversifying energy sources and distribution networks, and investing in resilient infrastructure and smart grid technologies to enhance reliability and responsiveness.
Additionally, conducting regular risk assessments and scenario planning exercises can identify potential vulnerabilities and inform mitigation measures. Collaboration with regulatory agencies, government authorities, and industry partners to develop coordinated response plans and share best practices is crucial.
According to reports, proactive risk management and resilience-building measures are essential for power and utilities companies to mitigate business interruption risks and maintain operational continuity in a rapidly evolving energy landscape.
The Energy crisis maintains the #2 risk ranking due to factors such as supply chain disruptions, geopolitical tensions, and shifts in energy demand. Mitigation strategies should prioritize diversifying energy sources and investing in renewable energy technologies to reduce reliance on fossil fuels and enhance resilience to energy shortages.
Additionally, implementing energy efficiency measures and demand-side management programs can optimize resource utilization and mitigate the impact of energy crises on grid stability. Collaboration with policymakers, regulators, and other stakeholders to develop flexible regulatory frameworks and incentive programs for renewable energy development is crucial. According to studies, preemptive measures to enhance energy resilience and sustainability are essential for power and utilities companies to navigate energy crisis risks and ensure reliable and affordable energy supply for consumers.
Cyber incidents moves up from the fourth to the third place as digitalization and interconnected systems become integral to operations. Mitigation strategies should include implementing robust cybersecurity measures such as advanced encryption protocols, multi-factor authentication, and continuous monitoring systems to detect and respond to threats promptly.
Regular employee training on cybersecurity best practices and establishing a culture of security awareness are crucial for mitigating human error risks.
Additionally, investing in partnerships with cybersecurity experts and participation in information-sharing networks can help the industry stay updated on emerging threats and effective defense strategies.
According to research investing in preventative cybersecurity measures is imperative for power and utilities companies to protect critical infrastructure and ensure the reliability and resilience of energy supply in the face of cyber threats.
Natural catastrophes drops down to the fourth position from second in 2023 within the industry owing to risks such as hurricanes, wildfires, and earthquakes, which can cause widespread damage to infrastructure and disrupt energy supply.
Mitigation strategies should prioritize implementing resilient infrastructure designs, such as underground transmission lines and reinforced substations, to minimize the impact of natural disasters. Investing in predictive analytics and remote monitoring systems can enable early detection of potential hazards and facilitate practical response measures.
