Prolonged drought, cyberattacks, worsening climate conditions, and the failure to implement digital transformation are the most pressing threats to Cyprus’s economy, according to a study conducted by the Cyprus Economy and Competitiveness Council (SOAK).

The study, which was presented on Wednesday at a press conference, was conducted between November 29 and December 31, 2024. It gathered assessments from 50 senior executives in the economic sector, who provided their evaluations of potential risks.

The results were presented by Council members Evangelos Tryfonos and Adonis Pigasios, alongside Panayiotis Panayiotou, Director of the research firm Pulse Market Research, who analyzed the data.

The study ranked economic risks based on a risk index, which combines the probability of occurrence with the severity of potential consequences. The highest-ranking risk was prolonged drought leading to water shortages, with an index of 85%. Concern over this issue has risen significantly compared to previous years, with the probability of occurrence at 88% and the severity of consequences at 82%. Experts predict this risk will materialize within the next 0-2 years.

Council member Tryfonos expressed hope that the government would take this risk seriously and implement necessary measures, as water shortages could impact not only agriculture but also tourism and the country's self-sufficiency in essential goods.

Following closely behind, cyberattacks targeting critical infrastructure ranked second, with a risk index of 84%. The likelihood of such attacks occurring is estimated at 85%, with an expected impact severity of 83%. This risk is also considered imminent, with a projected timeframe of 0-2 years.

The deterioration of climate conditions remains a high-ranking concern, with a risk index of 82% (85% probability and 79% severity). However, unlike the other immediate threats, this risk is expected to unfold over a longer timeframe of 5-10 years.

Another major concern is the failure to implement digital transformation, which holds a risk index of 81% (78% probability and 85% severity). This is followed by the escalation of armed conflicts outside Cyprus with economic repercussions for the country, which has a risk index of 78% (80% probability and 75% severity).

Lastly, the study identified the potential collapse of the General Healthcare System (GeSY) as a significant risk, with an index of 77% (68% probability and 86% severity).

The study also evaluated 18 additional risks, including:

• Tensions in the Eastern Mediterranean and the possibility of military conflict with Turkey
• A significant decline in Cyprus’s corruption rankings
• Persistent inflation and rising prices
• Deterioration of public finances and increased public debt
• Higher corporate taxation
• A sharp drop in Cyprus’s exports
• Large-scale migration inflows
• The risk of a terrorist attack on Cypriot soil
• Continued pandemic-related challenges or a new health crisis
• A sharp decline in tourist arrivals
• Natural disasters such as wildfires, floods, and earthquakes
• The potential collapse of a systemic bank

According to SOAK President Dimitris Georgiades, some critical risks—such as energy costs—were not included in the study due to methodological reasons. However, discussions are underway to incorporate them in future risk assessments.