Business interruption (BI), cyber incidents and larger losses from natural catastrophe events are the top three business risks globally in 2018, according to the latest Allianz Risk Barometer.
The Allianz 2018 Risk Barometer, which includes responses from over 1,900 risk experts from 80 countries, ranks BI as the number one business risk globally for 2018 with 42% of responses, while cyber incidents follows closely with 40% of responses, followed by larger losses from natural catastrophe events, with 30% of responses.
BI tops the list once again, while cyber incidents has jumped from third in 2017 to second this year, compared with being ranked as the 15th top global business risk just five years ago, according to Allianz.
Chris Fischer Hirs, Chief Executive Officer (CEO) of Allianz unit, Allianz Global Corporate & Specialty (AGCS), commented; “For the first time, business interruption and cyber risk are neck-and-neck in the Allianz Risk Barometer and these risks are increasingly interlinked. Whether resulting from attacks such as WannaCry, or more frequently, system failures, cyber incidents are now a major cause of business interruption for today’s networked companies whose primary assets are often data, service platforms or their groups of customers and suppliers.
“However, last year’s severe natural disasters remind us that the impact of perennial perils shouldn’t be underestimated either. Risk managers face a highly complex and volatile environment of both traditional business risks and new technology challenges in future.”
The increased connectivity between BI and cyber incidents is further evidenced by the fact that for the first time, cyber incidents also rank as the most feared BI trigger, with BI also considered the greatest loss driver after a cyber breach.
“Businesses can be surprised about the actual cause, scope and financial impact of a disruption and underestimate the complexity of ‘getting back to business’. They should continuously fine tune their emergency and business continuity plans to reflect the new BI environment and adequately consider the rising cyber BI threat,” said Volker Muench, Global Property and BI expert, AGCS.
Up from fourth place in 2017, larger losses from natural catastrophes ranks third in 2018, likely driven by the high level of catastrophe losses experienced last year. Allianz states that for the first time, climate change and increasing volatility of weather appears in the top ten most important risks in 2018.
Ali Shahkarami, Head of Catastrophe Risk Research, AGCS, commented; “The impact of natural catastrophes goes far beyond the physical damage to structures in the affected areas. As industries become leaner and more connected, natural catastrophes can disrupt a large variety of sectors that might not seem directly affected at first glance around the world.
BI, cyber incidents and larger natural catastrophe losses are all areas that present both challenges and opportunities for global insurers and reinsurers. The fact these risks top business concerns for 2018 underlines the need for more adequate, affordable, and effective solutions that meet the evolving needs of businesses across the globe.