Business Interruption, Encompassing Many Risks, Remains a Top Corporate Concern in 2017

January 11, 2017

Business interruption is a top global corporate risk for the fifth year in a row. But worries about Brexit and incoming U.S. President Donald Trump also made the list of companies’ 2017 fears and uncertainties in a new Allianz report.

About 37 percent of respondents rated business interruption as their biggest risk worry, essentially even with 2016, the latest annual Allianz Risk Barometer noted. This year’s report – Allianz’s sixth annual – was based on a survey of 1,237 risk experts from 55 countries.

Business interruption remains at the top of the list because there is a constant influx of new triggers behind the risk, according to Volker Muench, global practice group leader for property underwriting with Allianz Global Corporate & Specialty.

Triggers “can range from cyber incidents to market developments to the changing political landscape,” Muench said in prepared remarks included in the report. “Going forward we expect there to be more non-damage triggers of [business interruption]. It is important that our insured customers understand the evolving threats they are facing.”

There are many causes of business interruption, and respondents ranked those they fear the most. The top 5: fire, explosion (44 percent), natural catastrophes (43 percent), supplier failure/lean processes (33 percent), cyber incidents (29 percent), machinery breakdown (29 percent).

This year, cyber incidents continued to be a top global business risk, placing third (30 percent) on the Allianz list. Worries in this category include concerns about cyber crime, IT failure and data breaches. Natural catastrophes also ranked high as an individual business risk, placing fourth, with 24 percent of respondents wary about weather events such as storms, floods and earthquakes.

Market developments are again in second place as a top global business risk. About 31 percent of respondents said they saw M&A, market stagnation, volatility and intense competition as a major risk.

Wariness about legislative and regulatory changes also remains high. This ties with natural catastrophes as the fourth-ranked top global risk for 2017 (24 percent), and it encompasses a wide range of concerns over issues such as governmental change, economic sanctions, protectionism and regulation.

New technologies ranks as the 10th top global risk, involving issues such as drones, 3-D printing, artificial intelligence, nanotechnology and more.

Current events have also emerged as significant corporate risks. Allianz said that the United Kingdom’s Brexit vote to leave the European Union, and possible EU disintegration, scored as the 16th biggest corporate risk in 2017. Respondents also noted Donald Trump’s U.S. presidential election win as a point of concern, with resulting uncertainties about economic and foreign policy.

Underscoring how new risks can emerge seemingly out of nowhere, the Allianz report noted that both Brexit and a Trump election win were “outcomes widely unexpected 12 months ago.”

Source: Allianz