Allianz Risk Barometer 2026 -
Global risk #6: Climate change (19%)

Article | January 2026

2025 marked yet another year of record global losses and growing climate risk. The year’s standout event was the California wildfires in January, which took place outside the traditional fire season and spread quickly in urban areas, incurring insured losses of $40bn, according to Swiss Re [1].  Along with severe convective storms, the wildfires were a main driver of the $100bn+ global natural catastrophe losses incurred in 2025, of which $89bn were in the US. 

Climate change features as a top three risk for four European countries – Austria, Greece, Italy, and Netherlands – alongside the Philippines and Thailand in Asia. Austria experienced intense heat, flood, drought, and storm events in 2025, while Greece was hit by major wildfires worsened by record-breaking heat and drought. In Italy and Greece it is now mandatory for companies to buy insurance for natural events including wildfires, flood and earthquake. 

In Asia, a delayed onset of the tropical cyclone season brought a devastating end to the year, with flooding and landslides exerting a high human and economic toll in a region where the insurance protection gap remains high – over 80% [2]. 

“While the accumulation of insured assets in highly exposed areas, inflation, and economic growth remain key drivers of the upward trend we’ve seen in losses, shifting weather patterns are a reminder that natural catastrophe risks are becoming more volatile and in many events climate change is playing a contributing role,” says Lena Fuldauer, Head of Resilience and Business Development, Risk Consulting, Allianz Commercial. 

Supply chain reliance on just-in-time manufacturing and interconnected global supply chains means a climate event in one region can have ripple effects worldwide.

“Business interruption impact is the climate concern that tops the list [63%] according to Allianz Risk Barometer respondents,” says Denise De Bilio, Innovation and Transformation Leader, Allianz Commercial. “An example of what’s at stake is the November flooding in South-East Asia, specifically Thailand, which is projected to cut rubber output by up to 90,000 metric tons causing an estimated loss of $140mn [3], raising concerns over global supply and price volatility of the commodity in 2026.”

Physical impact, such as damage to production sites due to extreme weather events, ranks #2 at 57%, while environmental / chronic risks impact is #3 (40%). This reflects a world increasingly exposed to rising sea levels, higher temperatures, changing land use, and urbanization. Heatwaves and flooding can reduce agricultural yields and disrupt food production, while water scarcity can affect water-intensive industries.

“Connected to this are concerns around disruption to energy infrastructure and supply, which were an issue for a quarter of respondents,” says Fuldauer. “Businesses that depend on water for generation or for cooling are increasingly vulnerable to heat and drought, which can impact energy reliability.”

Businesses remain under pressure to change their climate ways – 2030 is a key year for many national and corporate sustainability targets, and the regulatory environment remains stringent. 

According to Allianz Risk Barometer respondents, the top three steps businesses are taking to address sustainability risks are: adapting carbon-reducing business methods; creating contingency plans for climate change-related eventualities; and adapting or increasing insurance protection. 

“The fact that the top 5 risks are similarly rated is significant,” says Fuldauer. “Companies are addressing evolving sustainability risks both from a transition perspective – such as improving their internal efficiency – as well as to boost their climate resilience.”

Contingency planning can involve building up workforce resilience via remote working, supply chain diversification, and investing in infrastructure to withstand and recover speedily from disasters and disruptions. 

Adapting insurance protection highlights how the sector can support businesses in de-risking investments in cleaner technologies, like carbon capture and storage, through risk-financing tools, making projects investable and speeding up deployment.

“The increasing severity and frequency of climate perils are likely to pose ongoing operational and financial challenges to businesses, with the indirect economic cost of climate events leading to loss of production, loss of revenue and reputational risks exceeding the direct physical economic losses to assets,” says De Bilio. “With year-on-year losses from natural catastrophes and climate hazards continuing to intensify, there is a real imperative for businesses to act.”