Allianz Risk Barometer 2025 -
Global risk #6: Fire, explosion (17%)

Fire risks are well understood by businesses and typically well risk managed. However, fire remains a significant cause of business interruption (BI) and supply chain disruption, especially where critical components such as semiconductor chips or automotive components are concentrated geographically or are among a small number of suppliers.

According to Allianz Risk Barometer respondents, fire is the third top cause of business interruption companies fear most (43% of respondents, ranking behind only cyber incidents [49%] and natural catastrophes [49%]). Meanwhile, Allianz Commercial analysis of more than 1,000 BI insurance industry claims over a five-year period ending in 2023 (with a value in excess of US1.3bn), shows fire is the most frequent driver of these claims and accounts for over a third of the entire value (36%).

The degree of disruption 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. 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, storage or transportation of these batteries has been linked to an increasing number of fire incidents on land and at sea 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 any incident.