Businesses face new challenges from a rise of disruptive scenarios in an increasingly interconnected corporate environment, according to the fourth Allianz Risk Barometer 2015. In addition, traditional industrial risks such as business interruption and supply chain risk (46 percent of responses), natural catastrophes (30 percent), and fire and explosion (27 percent) continue to concern risk experts, heading this year’s rankings. Cyber (17 percent) and political risks (11 percent) are the most significant movers. The survey was conducted among more than 500 risk managers and corporate insurance experts from both Allianz and global businesses in 47 countries.
“The growing interdependency of many industries and processes means businesses are now exposed to an increasing number of disruptive scenarios. Negative effects can quickly multiply. One risk can lead to several others. Natural catastrophes or cyber attacks can cause business interruption not only for one company, but to whole sectors or critical infrastructure,” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty SE (AGCS), the dedicated insurer for corporate and special risks of Allianz SE. “Risk management must reflect this new reality. Identifying the impact of any interconnectivity early can mitigate or help prevent losses occurring. It is also essential to foster cross-functional collaboration within companies to tackle modern risks.”
The risk of cyber crime and IT failures continues its rapid rise in the Allianz Risk Barometer, moving into the top five business risks globally for the first time (in 2014, cyber risks ranked 8th and in 2013 just 15th). In Germany, the United Kingdom and the United States cyber risks are now among the top three corporate risks. Loss of reputation (61 percent) and business interruption (49 percent) are regarded as the main causes of economic loss following an incident.
Although awareness of cyber risks is increasing, many companies are still underestimating the different impacts, according to 73 percent of responses. Budgetary constraints are another reason why companies are not better prepared to combat cyber risks.
“Cyber risks are very complex. Different stakeholders such as IT security architects and business continuity managers need to share their knowledge to identify and evaluate threat scenarios,” explains Jens Krickhahn, Practice Leader Cyber & Fidelity at AGCS Financial Lines, Germany & Central Europe. “Previously siloed knowledge needs to be incorporated in one’ think tank’ which can look at risks holistically. The ‘human factor’ should also not be underestimated, as employees can cause IT security incidents, inadvertently and deliberately.”
Political/social upheaval is a much bigger concern for businesses in the 2015 Allianz Risk Barometer, rising nine positions to 9th overall compared with last year’s survey. The risk appears in the top 10 risks in the EMEA region for the first time in 8th. It is also a new entrant in the top 10 risks for Brazil, has become one of the top three risks in Russia and Switzerland and is ranked the top business concern in Ukraine. Furthermore, it is the second top cause of supply chain disruption (53 percent) after natural catastrophes.
Read the report (pdf).