Howden, a global insurance intermediary, has provided an in-depth analysis of key risks faced by Australian businesses in 2024.
The company also shared projections for 2025, focusing on opportunities for organisations to adapt and innovate in response to shifting market conditions.
Last year, Australian businesses encountered several significant risks, including increasing cyber threats, climate change impacts, labour shortages, the challenges of AI adoption, and global economic volatility. Each issue created both challenges and pathways for growth.
The frequency and sophistication of cyberattacks grew in 2024, driven by advancements in AI and state-sponsored hacking campaigns. Phishing scams, ransomware, and data breaches highlighted vulnerabilities in digital systems.
To address these risks, many businesses enhanced their defences with AI-enabled tools, bolstered data privacy protections, and implemented stricter cybersecurity protocols.
Intense El Niño conditions resulted in extreme weather events such as bushfires and floods, exposing weaknesses in supply chains and infrastructure.
Howden noted that regulatory pressures, including Australia’s forthcoming mandatory climate disclosure requirements, spurred companies to adopt more sustainable practices. Sectors like agriculture and renewable energy invested in technology and government-supported initiatives to mitigate climate-related risks and capitalise on emerging opportunities.
Labour shortages persisted across sectors such as construction, healthcare, and IT due to migration trends, post-pandemic shifts, and cost-of-living pressures. Organisations responded by automating repetitive tasks, implementing employee retention programs, and encouraging workforce participation from skilled retirees. Upskilling initiatives also helped bridge gaps in expertise.
The rapid implementation of AI technologies presented ethical and regulatory dilemmas, including privacy risks and challenges involving third-party providers.
Businesses proactively developed AI governance frameworks and compliance strategies, ensuring alignment with Australian laws, such as the Privacy Act, while improving operational efficiencies.
Geopolitical tensions, inflation, and supply chain disruptions created an uncertain economic environment. Businesses worked to stabilise operations by diversifying suppliers, engaging alternative trading partners, and conducting frequent risk assessments.
Howden predicts competitive conditions will persist in 2025, supported by robust capacity and evolving market dynamics.
Focusing on re/insurance, Howden Re CEO Tim Ronda said the sector offers significant growth opportunities.
“Companies across the sector are executing strategies that not only meet their cost of capital but, in many cases, exceed return hurdles. Investors should view the sector as one rich with growth potential and attractive opportunities,” he said.
David Howden, the company’s founder and CEO, emphasised the need for innovation in the sector.
“Greater emphasis on innovation, on collaboration, and on listening to the needs of the customer will mean a win-win-win for clients, society, and insurance companies alike,” he said.
