Cyber incidents and business interruption (BI) are tied as the most concerning risks for global businesses in 2019 and beyond, according to the results of the latest Allianz Risk Barometer report.
The annual survey by Allianz, which questioned 2,415 experts from 86 countries, found that 37% of respondents identified cyber as their biggest risk while 37% said BI.
Climate change (13% of responses) and shortage of skilled workforce (9%) were the biggest climbers on Allianz’s list, while companies were also more worried about changes in legislation and regulation (27%).
In the UK, cyber threats and Brexit were considered the top risks, each receiving 48% of responses.
“Companies need to plan for a wide range of disruptive scenarios and triggers, as this is where their big exposure lies in today’s networked society,” said Chris Fischer Hirs, Chief Executive Officer (CEO) of Allianz Global Corporate & Specialty (AGCS).
“Disruptive risks can be physical, such as fire or storms, or virtual, such as an IT outage, which can occur through malicious and accidental means. They can stem from their own operations but also from a company’s suppliers, customers or IT service providers.”
Allianz noted that both cyber and BI risks are becoming increasingly interlinked as ransomware attacks or accidental IT outages often result in disruption of operations and services, costing hundreds of millions of dollars.
BI was also ranked as the biggest cause of financial loss for businesses after a cyber incident (69% of respondents), while cyber incidents were considered the BI trigger most feared by businesses (50%), followed by fire (40%) and natural catastrophes (38%).
“Whatever the trigger, the financial loss for companies following a standstill can be enormous,” continued Fischer Hirs. “New risk management solutions, analytical tools and innovative partnerships can help to better understand and mitigate the modern myriad of BI risks and prevent losses before they occur.”
“It’s no surprise to see changes in legislation and regulation as the new top risk in the UK, jointly with cyber threats,” added Tracey Hunt, Deputy CEO of AGCS, UK. “Uncertainty around Brexit along with concerns around a potential increase in the regulatory burden and global trade disputes have made confidence fragile.”
“UK businesses also continue to be occupied by the threat of cyber-attacks,” she explained. “The consequences of a major data beach have never been greater since the EU’s General Data Protection Regulation (GDPR) came into force with data breaches potentially now resulting in huge fines.”
Shortage of skilled workers also appeared in Allianz’s top 10 global risks rankings for the first time this year, driven by factors such as Brexit uncertainty, changing demographics and a shallow pool of talent in the digital economy.
“Skilled workforce — and human capital more generally — has become the scarce resource of the digital economy,” explained Ludovic Subran, Deputy Chief Economist at Allianz.
“Competition is fierce between companies to get new recruits with competencies in artificial intelligence, data science, or ‘frontier risk management’ such as managing cyber or reputational risk as most of these jobs did not exist 10 years ago.”