The risk landscape for businesses is substantially changing in 2016 according to a new report by Allianz Global Corporate and Specialty. While businesses are less concerned about the impact of traditional industrial risks such as natural catastrophes or fires, they are increasingly worried about the impact of other disruptive events such as cyber incidents.
According to the Allianz Risk Barometer, business and supply chain interruption (BI) remains the top risk for businesses globally for the fourth year in succession. However, many companies are concerned that BI losses, which usually result from property damage, will increasingly be driven by cyber attacks, technical failure or geo-political instability as new 'non-physical damage' causes of disruption.
“The corporate risk landscape is changing as many industrial sectors are undergoing a fundamental transformation,” explains AGCS CEO Chris Fischer Hirs. “New technologies, increasing digitalization and the ‘Internet of Things’ are changing customer behaviour, industrial operations and business models, bringing a wealth of opportunities, but also raising awareness of the need for an enterprise-wide response to new challenges. As insurers we need to work together with our corporate clients to help them to address these new realities in a comprehensive manner.”
An area of increasing concern for businesses globally are cyber incidents which not only include cyber crime or data breaches, but technical IT failures as well. Loss of reputation (69%) is the main cause of economic loss as result of a cyber incident followed by business interruption (60%) and liability claims after a data breach (52%). These three cyber incidents are also the top three concerns for business continuity professionals according to the Business Continuity Institute's latest Horizon Scan Report.
The top ten risks according to the Allianz Risk Barometer are:
- Business interruption (incl. supply chain disruption)
- Market developments (volatility, intensified competition, market stagnation)
- Cyber incidents (cyber crime, data breaches, IT failures)
- Natural catastrophes (storm, flood, earthquake)
- Changes in legislation and regulation (economic sanctions, protectionism)
- Macroeconomic developments (austerity programs, commodity price increase, inflation/deflation)
- Loss of reputation or brand value
- Fire, explosion
- Political risks (war, terrorism, upheaval)
- Theft, fraud and corruption