What Nordic Risk Managers should focus on in 2025

Reflecting on the risks identified for 2024, we anticipated a volatile landscape with key areas of concern including natural catastrophes, greenwashing, artificial intelligence, and geopolitical uncertainty.

 

In retrospect, these areas proved to be significant. Natural catastrophe costs reached $320 billion, marking the fifth highest since 1980 according to Munich Re. Geopolitical uncertainty escalated throughout the year, reaching unprecedented levels by early 2025. The rapid advancement of AI continues to present both opportunities and new risks. While greenwashing remains a critical issue, the climate transition appears increasingly uncertain, with waning commitment from political leaders.

 

Looking ahead, numerous perils loom on the horizon. However, for risk managers, particular attention should be given to the global protection gap, environmental concerns, cyber security, and geopolitical conflicts.

 

The Global Protection Gap 

A significant area of concern that has further developed is the global protection gap and its impact on the relevance of the insurance industry. This issue is particularly evident when it comes to cyber risks, where only $23 billion of losses were insured, despite the total cost being estimated at $10.5 trillion. Similarly, for climate-related losses in 2024, only $140 billion was insured out of the $320 billion in total losses.

 

The widening protection gap threatens to diminish the relevance of the insurance industry, while simultaneously increasing risks for businesses, potentially hindering investment and growth. This situation could also intensify the declining trust in financial institutions, making customers less likely to purchase insurance.

 

Climate 

Similar to last year, natural catastrophes will remain a critical focus area for 2025. The severity and frequency of heat waves, droughts, severe storms, and flooding continue to rise. Notably, 2024 became the warmest year on record, marking the first time the average global temperature exceeded 1.5°C above pre-industrial levels.

 

While much of the attention has been on regions vulnerable to convective storms, there is now an increasing focus on Europe, particularly following the September floods in Eastern Europe and the October floods in Spain. As prediction models are continually updated, Nordic risk managers must prioritize building resilience and developing contingency plans for operations that were previously not considered at risk. It is evident that we must be prepared for the unexpected when it comes to climate disasters in 2025.

 

Geopolitical Risks 

There is no sign that geopolitical risk will decrease in the coming year. According to the Global Risks Report 2025, “State-armed conflict” has emerges as the top immediate risk. For Nordic risk managers of international companies, this means an increased focus on supply chain disruptions, which could affect both property program exposure and marine cargo exposure. Consequently, production contingency plans will need to be updated to address these challenges in 2025.

 

Cyber 

Following several years of increasing claims activity, particularly around ransomware, the situation reached a tipping point in 2022, where stronger risk management and higher rates improved loss ratios for insurers. Looking ahead to 2025, the trend of rising phishing attacks is expected to continue, with AI enabling higher levels of sophistication. Risk managers in specific sectors, such as healthcare and financial services, should be particularly vigilant, as attacks are becoming more targeted toward high-value industries. The increased sophistication of these attacks is likely to result in more large-scale data breaches, which in turn heightens the risk of class actions, especially in the US. Data breaches have become one of the fastest-growing areas of class action litigation.

 

In difficulty lies opportunity

With uncertainties on the horizon, it is crucial for businesses to adopt a proactive approach to anticipate, identify, monitor, and mitigate risks. By prioritizing these key areas, Nordic Risk Managers can build resilience and ensure the enduring success of their organizations in 2025.

 

Zurich is one of the world’s leading insurance providers. In the Nordic region, we assist businesses and the brokers that serve them in the global corporate, large corporate, and middle-market categories, helping them navigate the evolving risk landscape. To learn more about how Zurich can help your company meet tomorrow prepared, please contact Mattias Fritz, CEO of Zurich Nordic.