Climate change and increasing weather volatility is now ranked ahead of market developments and business interruption in Allianz Global Corporate and Specialty’s (AGCS) annual survey of the top risks facing the Australian insurance industry.

The climate concerns have risen to third place from eighth in the previous survey, while legislation and regulatory changes remain the leading risk. Cyber incidents rose one place into second.

AGCS Pacific CEO James Stack says the rise of climate change as a top three concern is understandable given the recent unprecedented number of major bushfires in multiple states and increased first-hand experience of the negative impacts of weather volatility.

“These fires not only cause physical property damage, but also potential business interruption as the smoke and fire damage leads to hazardous air quality levels and impacts agricultural supply chains,” he said.

The Australian results are part of the 2020 Allianz Risk Barometer global survey, which this year incorporates the views of a record 2718 respondents from 102 countries. Participants are asked to name up to three risks they believe to be of most importance.

Globally, cyber incidents topped the rankings for the first time, rising from second place last year and up from 15th place seven years ago.

Business interruption has slipped to second place, while legislation and regulation changes, natural catastrophes and market developments round out the top five. Climate change has risen to seventh place – its highest-ever position in the global barometer.

AGCS CEO Joachim Muller says cyber risk and climate change are challenges companies will need to watch closely in the new decade, given potential impacts on operational performance, financial results and reputation with key stakeholders.