Business interruption and cyber incidents interlink as the major threat facing companies over the coming year, according to a report published by Allianz Global Corporate & Specialty (AGCS).
Allianz revealed that business interruption – including supply chain disruption – ranks as the most important global risk for the sixth year in a row (listed by 42 percent of respondents).
BI scenarios include the physical damage impact of natural catastrophes and fires on facilities and the supply chain as well as new triggers stemming from digitalisation and interconnectedness, which have a high financial cost, but usually do not cause physical damage, explained the company’s seventh annual risk report.
Titled ‘Allianz Risk Barometer 2018’, the report surveyed 1,911 respondents in 80 countries, which included Allianz’ customers as well as brokers, risk consultants, underwriters, senior managers and claims experts. (The full list of top business risks is included at the bottom of this article.)
The report found that BI and cyber are bound together as a joint threat because cyber incidents, for the first time, are viewed as the most feared BI trigger, while BI is the main cause of economic loss after a cyber incident.
Although cyber BI incidents are indeed rising from hacker attacks, the report noted they are more frequently caused by technical failures and employee error.
Companies often underestimate the length of time it takes to get back in business after a business interruption, particularly when they must use alternative suppliers, Muench said.
For example, companies may have their own cyber-attack continuity plan, but might have failed to assess the impact of a cyber incident on their suppliers, which prevents them from delivering products or services, he indicated.
Allianz Top Business Risks
Although business interruption and cyber are at the top of Allianz global business risks, survey respondents listed eight additional concerns. Here are all the global risks included in Allianz’ risk barometer for 2018 with the accompanying percentage of respondents:
- Business interruption (42%)
- Cyber incidents (40%)
- Natural catastrophes (30%)
- Market developments (22%)
- Changes in legislation and regulation (21%)
- Fire, explosion (20%)
- New technologies (15%)
- Loss of reputation or brand value (13%)
- Political risks and violence (11%)
- Climate change/increasing volatility of weather (10%).
Source: Insurance Journal