Cybersecurity, corruption and policy shifts are top business risks for Kenya in 2024, according to the latest Risk Barometer by insurance firm, Allianz.
Allianz Commercial CEO Petros Papanikolaou said the top risks and major risers in this year’s barometer reflect the big issues facing companies around the world right now are – digitalisation, climate change and an uncertain geopolitical environment.
"Many of these risks are already hitting home, with extreme weather, ransomware attacks and regional conflicts expected to test the resilience of supply chains and business models further in 2024,'' Papanikolaou said when releasing the report.
Data breach is seen as the most concerning cyber threat for Allianz Risk Barometer respondents (59%) followed by attacks on critical infrastructure and physical assets (53%).
The recent increase in ransomware attacks – 2023 saw a worrying resurgence in activity, with insurance claims activity up by more than 50% compared with 2022 – ranks third (53%).
“Cyber criminals are exploring ways to use new technologies such as generative artificial intelligence (AI) to automate and accelerate attacks, creating more effective malware and phishing."
According to the report, the growing number of incidents caused by poor cyber security, in mobile devices in particular, a shortage of millions of cyber security professionals, and the threat facing smaller companies because they rely on IT outsourcing are also expected to drive cyber activity in 2024.
Kenya's economy lost at least Sh25 billion to cybercrime in 2022 and the value is expected to rise by 14 percent on an annual basis.
Experts lament about lack of adequate cyber security expertise in the country. The country has less than 2,000 experts. To fill the gap, Kenya needs between 40,000 and 50,000.
Cyber incidents (36% of overall responses) rank as the most important risk globally for the third year in a row – for the first time by a clear margin (5% points).
It is the top peril in 17 countries and regions, including Kenya, Africa and the Middle East, Nigeria, Uganda, Mauritius, Germany, India, Japan, the UK, and the USA.
The second-highest risk identified in Kenya is theft, fraud, and corruption, which climbed from the fifth position in the previous year highlighting the persistent challenges faced by businesses in combating financial crimes and maintaining integrity.
At 41 percent, corruption continues to be a thorn in the flesh of the country's social economy, draining at least Sh600 billion or 7.8 percent of the Gross Domestic Product (GDP) according to the Ethics and Anti-Corruption Commission (EACC).
Transparency International ranked the country position 123 out of 180 countries globally in the 2023 Corruption Perception Index (CPI).
It scored 32 points out of a possible 100, falling below both global and continental averages of 46 and 48 points respectively.
This was, however, a slight improvement for Kenya from a score of 30 points in 2021.
Change in legislation or policies is the third risk businesses fear this year in Kenya at 35 percent of the sampled population.
This factor took the first position in a survey conducted in 2022 inspired by the expected regime change that followed the general presidential
Despite an easing of post-pandemic supply chain disruption in 2023, Business interruption (31%) retains its position as the second biggest threat globally in the 2024 survey.
However, it moved from position six to position five in Kenya, up from position three to position two in Africa and the Middle East and ranks among the top five risks in Ghana, Senegal, South Africa, and Uganda.
This result reflects the interconnectedness in an increasingly volatile global business environment, as well as a strong reliance on supply chains for critical products or services.
"Improving business continuity management, identifying supply chain bottlenecks, and developing alternative suppliers continue to be key risk management priorities for companies in 2024."
Others are natural catastrophes (26%), which moved up three places in the survey.
Last year was the hottest in the survey history, with insured losses exceeding $100 billion for the fourth consecutive year, driven by the highest-ever damage bill of $60 billion from severe thunderstorms.
In Africa and the Middle East, Natural catastrophes have emerged as a new risk, ranking at position six.
Notably, Morocco witnessed a significant rise in this risk, climbing from seventh to first place.
Cameroon and South Africa also experienced a surge in natural catastrophe risks, ranking among the top five risks in these countries.