Allianz Risk Barometer 2024 -
Rank 6: Fire, explosion

Although fire risks are well understood and typically well risk managed, fire remains a significant cause of business interruption (BI) and supply chain disruption, especially where critical components are concentrated geographically and among a small number of suppliers.

According to Allianz Risk Barometer respondents it is the third top cause of business interruption they fear most (after cyber incidents and natural catastrophes). Allianz Commercial analysis of more than 1,000 BI insurance claims over the past five years (worth US$1.3bn+) shows it is the most frequent driver of these claims and accounts for over a third by value (36%).

“The degree of disruption from fire and explosion can be very high, as it can take longer to recover from than many other perils, and the impact on suppliers can often be great,” says Alberto Barani, a Business Interruption Group Leader at Allianz Commercial. “For example, pharmaceutical and chemical sectors deal with highly flammable and explosive materials. Damaged plants can sometimes take years to rebuild and get production back up and running to full capacity.”

Fire has also become an elevated risk with electrification and the growing prevalence of lithium-ion batteries. Inadequate handling and transportation of these batteries has been linked to several large fire incidents at sea and on land in recent years.

Regularly assessing and updating prudent fire mitigation practices, including preventative measures, fire extinguishing methods and contingency planning remain essential for all businesses to lower the risk of loss from an incident.