Cyber incidents rank for the first time as the most important business risk globally, pushing the perennial top peril, business interruption (BI), into second place, according to the Allianz Risk Barometer 2020.
Cyber incidents were named by 39 percent of survey respondents from more than 2,700 risk management experts in over 100 countries and territories, said the annual survey from Allianz Global Corporate & Specialty (AGCS). Seven years ago, the survey report revealed, cyber incidents ranked only 15th with just 6 percent of responses.
“Awareness of the cyber threat has grown rapidly in recent years, driven by companies’ increasing reliance on data and IT systems and a number of high-profile incidents,” AGCS explained.
While business interruption has moved down to second place after seven years at the top, AGCS affirmed, it remains a key challenge with digitalization and civil unrest creating new causes of disruption and loss of income.
Nevertheless, the trend for larger and more complex BI losses continues unabated, AGCS said, noting that causes are becoming ever more diverse, ranging from fire, explosion or natural catastrophes to digital supply chains and even political violence.
“Digital supply chains and platforms today allow for full transparency and traceability of goods, but a fire at a data center, a technical glitch or a hack could bring large BI losses for multiple companies that all rely on and share the same system and which cannot switch back to manual processes,” said Raymond Hogendoorn, global head of Property and Engineering Claims at AGCS, who was quoted in the report.
The survey also found that changes in legislation and regulation (at No. 3 from No. 4 in 2019) and climate change (at No. 7 from No. 8 in 2019) are the biggest climbers globally as a result of concerns relating to the U.S.-China trade war, Brexit and global warming.
The top 10 risks identified by survey respondents were:
- Cyber incidents (e.g., cyber crime, IT failure/outage, data breaches, fines and penalties)
- Business interruption (including supply chain disruption)
- Changes in legislation and regulation (e.g., trade wars and tariffs, economic sanctions, protectionism, Brexit, Euro-zone disintegration)
- Natural catastrophes (e.g., storm, flood, earthquake)
- Market developments (e.g., volatility, intensified competition/new entrants, M&A, market stagnation, market fluctuation)
- Fire, explosion
- Climate change (increasing volatility of weather)
- Loss of reputation or brand value
- New technologies (e.g., impact of artificial intelligence, autonomous vehicles, 3-D printing, Internet of Things, nanotechnology, blockchain)
- Macroeconomic developments (e.g., monetary policies, austerity programs, commodity price increase, deflation, inflation).
The full AGCS Risk Barometer can be accessed here: https://www.agcs.allianz.com/news-and-insights/reports/allianz-risk-barometer.html