An increasingly interconnected corporate environment means rising risk – but what is the greatest threat facing your commercial clients?
According to the fourth Allianz Risk Barometer 2015, businesses are facing new challenges from a rise of disruptive scenarios.
“The growing interdependency of many industries and processes means businesses are now exposed to an increasing number of disruptive scenarios” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty SE (AGCS), the dedicated insurer for corporate and special risks of Allianz SE. “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.”
Traditional industrial risks such as business interruption and supply chain risk (46 per cent of responses), natural catastrophes (30 per cent), and fire and explosion (27 per cent) continue to concern risk experts, heading this year’s rankings. Cyber (17 per cent) and political risks (11 per cent) are the most significant movers.
“Risk management must reflect this new reality,” says Hirs. “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 survey was conducted among more than 500 risk managers and corporate insurance experts from both Allianz and global businesses in 47 countries.
Business risk rankings in North America mirror global risks with business interruption and supply chain risk the top concern for 55 per cent of the responses. Cyber risk, which includes cyber crime, IT failures, espionage and data breaches, was cited as a major business risk by 25 per cent of participants, up from 11 per cent in 2014.
Budget constraints and siloed knowledge impair cyber protection
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 the United States, Germany, and the United Kingdom cyber risks are now among the top three corporate risks. Loss of reputation (61 per cent) and business interruption (49 per cent) are regarded as the main causes of economic loss following an incident. (continued.)