The main risk facing companies in the renewable-energy sector in Africa and the Middle East is business interruption, which remains the foremost risk, with 63% of respondents to financial services firm Allianz's 'Risk Barometer 2024' citing it as the main risk.

Business interruption was driven by supply chain disruptions, operational challenges and geopolitical tensions. This risk impacted project timelines and financial stability, highlighting the need for robust risk management frameworks, the risk and insurance company said.

"To mitigate business interruption risks, companies should invest in diversified supply chains, flexible operational strategies including critical equipment redundancy, and comprehensive insurance coverage that addresses potential interruptions," Allianz recommended in its report.

The second greatest perceived risk to companies in the renewable-energy sector, at 30% of responses, are natural disasters, including floods, hurricanes and earthquakes, which pose significant threats to renewable-energy projects, especially those reliant on wind and solar power.

"Implementing resilient infrastructure designs and advanced forecasting technologies can help mitigate these risks. Allianz advocates for the integration of risk assessment and climate adaptation strategies into project planning to safeguard investments against natural calamities."

Further, climate change, with 27% of responses, is considered a risk to the sector because, while it is an impetus for renewable energy, it poses operational challenges through unpredictable weather patterns and resource availability.

"To address this, stakeholders should prioritise sustainable practices and invest in research and development to enhance the resilience of renewable-energy technologies.

"Collaborative efforts between governments and private entities can foster innovation and accelerate the transition to a low-carbon economy," Allianz suggested.

Additionally, fire and explosion were highlighted in 23% of responses as risks, particularly concerning energy storage systems and biomass facilities.

To mitigate these risks, stringent safety protocols, regular maintenance and the adoption of fire prevention technologies are essential.

"Allianz emphasises the importance of adhering to industry-wide standards and regulatory compliance to enhance safety and minimise hazards."

The fifth most significant perceived risk to the renewable-energy sector at 17% of responses, is critical infrastructure blackouts. These are a growing concern, as renewable-energy systems become increasingly integrated into national grids, Allianz highlighted.

"Ensuring grid stability and security through smart grid technologies and decentralised energy systems can reduce vulnerability to blackouts. Investment in infrastructure modernisation and cross-sector collaboration is vital to maintain energy security and reliability," it advised.

The Allianz Risk Barometer 2024 is based on insights from more than 3 000 risk management professionals and business leaders.