In an era marked by geopolitical upheaval, economic volatility, and escalating ecological pressures, Austrian businesses face an increasingly intricate risk landscape. In this exclusive interview, GrECo Austria’s GM for RIT, Andreas Schmitt, shares vital insights with Paul Johannes Spittau, Head of Group Carrier Relations and Insurance Mediation at GrECo International, on how these challenges are reshaping corporate risks and the insurance sector.
Impact of Geopolitical, Economic, and Ecological Conditions
Spittau: How are the current political, economic, and ecological conditions, combined with the challenges faced by businesses, shaping the corporate risk landscape in Austria, and what do these changes mean for the insurance industry?
Schmitt: Austrian businesses are navigating a multifaceted risk environment shaped by the interplay of geopolitical tensions, economic stagnation, and ecological challenges. Geopolitical conflicts, such as those in Ukraine, coupled with unpredictable trade policies from the US, are disrupting supply chains, escalating operational costs, and creating a climate of uncertainty. Economically, stagnation persists with high inflation rates – largely driven by volatile energy costs – exerting pressure on profit margins and long-term investment plans. Ecologically, the intensifying frequency of natural disasters attributed to climate change is further complicating the risk landscape, with certain exposures edging closer to uninsurability. Additionally, the push towards climate neutrality by 2050 is compelling companies to rethink their strategies and operations to align with sustainability goals, which often requires significant upfront investment.
For the insurance industry, these interconnected challenges demand an innovative response. Risk transfer mechanisms are becoming more complex, driven by the evolving nature of exposures. Insurers must adapt by offering tailored, forward-looking solutions that not only address traditional risks but also support businesses in building resilience against emerging threats. Enhancing risk management practices and fostering collaboration between insurers and businesses will be key to navigating this dynamic landscape successfully.
Investment Trends in Digitalisation and Green Technologies
Spittau: Which economic sectors or industries are anticipated to receive increased investments in the coming years, and how will this trend affect the risk industry?
Schmitt: We anticipate significant investments in digitalisation and green technologies, reshaping industries and presenting new opportunities and challenges for the risk sector. AI is revolutionising industries like Austria’s mechanical and plant engineering sectors, as well as all stages of construction, through innovations such as digital twins, improving efficiency and safety.
However, rising digital risks, including cyberattacks and data breaches, necessitate robust cybersecurity measures and proactive risk management.
With regards to green investments, businesses are prioritising renewable energy, energy storage, and circular economy models to reduce CO2 emissions. Limited government funding due to Austria’s budget constraints shifts the financial burden to companies, driving innovation in sustainability practices.
These trends are increasing risks such as regulatory compliance and cyber threats which is requiring insurers to tailor solutions to evolving business needs. However, while challenges persist, these investments also open avenues for innovative insurance products and services.
Regulatory Challenges for Businesses
Spittau: What regulatory challenges are companies facing?
Schmitt: Companies are facing a complex regulatory environment, particularly with the introduction of new EU regulations such as the Cyber Resilience Act which is being rolled out between 2024 and 2027, and the AI Act which is an EU regulation setting out clear rules and standards for the use of AI. These regulations require significant compliance efforts and can be particularly challenging for small and medium-sized enterprises. Furthermore, the evolving landscape of digital and technological risks necessitates continuous adaptation to new regulatory requirements.
Transformation of the Insurance Broker Market
Spittau: How is the insurance broker market evolving in your country?
Schmitt: Currently in Austria, there are around 5,000 insurance brokers and advisors, with more than 40% being single-person companies, however the market is now undergoing significant transformation. We are seeing increased M&A activity, driven by the need for scale and specialisation. The entry of foreign brokers and private equity investors is also reshaping the sector.
In the coming years, the business models of specialised market participants and the broad range of small and medium-sized enterprises are expected to diverge significantly. Digitalisation and the adoption of innovative technologies are becoming pivotal differentiators. Industry leaders like GrECo continue to prioritise investments in digital solutions, research and development, and the expansion of advisory services. These efforts are instrumental in ensuring that businesses can access tailored risk coverage solutions for their evolving risk profiles in an increasingly dynamic landscape.
Technological Advancements and Industry Impact
Spittau: How is technology shaping businesses in Austria and which industries stand to gain or struggle in the next 5–10 years?
Schmitt: Technology is reshaping industries, with artificial intelligence (AI) driving process optimisation, product quality improvements, and enhanced customer experiences. Over the next 5 -10 years, generative AI will significantly impact sectors like manufacturing, healthcare, media, and logistics. Manufacturing will see better production planning and maintenance, while healthcare will benefit from telemedicine and improved diagnostics. Media and telecommunications will also leverage AI for content creation and live translations.
However, smaller businesses, especially in traditional industries, may struggle to adapt due to limited resources. Ensuring these companies can navigate the digital shift is critical to balanced industry growth. While opportunities abound, challenges remain in ensuring equitable access to advancements across all sectors.
Spittau: And of course, with technological advancement comes new risks. What are some of the emerging digital risks that Austrian companies should prepare for?
Schmitt: Austria needs to prepare for a range of digital risks, including cyberattacks, data breaches, and the misuse of artificial intelligence. These cyber risks are already prevalent across all industries. Our increasing reliance on digital technologies and the interconnectedness of systems makes them naturally more prevalent. Companies must invest in robust cybersecurity measures and stay abreast of regulatory changes to mitigate these risks effectively.
Paul Johannes Spittau
Head of Group Carrier Relations & Insurance Mediation
T +43 664 537 17 42
Andreas Schmitt
General Manager for RIT
GrECo Austria
T +43 664 962 40 11
