The 2020 Allianz Global Risk Monitor has identified changes in legislation, cyber incidents, and climate change as the most important risks facing the business community in Australia, with brokerage Gallagher adding pandemics as another area of concern due to recent events.
The Allianz report surveyed 2,718 respondents from the business and insurance sectors in 120 countries and territories, with cyber incidents, business interruption, changes in legislation, natural catastrophes, and market developments found to be the top priorities for the global business community.
Cyber incidents snatched the global number-one position for the first time due to its increasing occurrence and cost, both in losses and penalties. In 2018, cyber breaches in Australian business rose by nearly 80%.
With about 1,300 new trade barriers implemented last year, businesses face major challenges in terms of trade wars, tariffs, economic sanctions, and protectionism, as well as yet-to-be-seen fallout from Brexit. There is also the carbon reduction movement that is prompting many companies and investors to seek ethical and sustainability credentials in business partners, Gallagher said.
When it comes to natural catastrophes, Swiss Re found that global scale economic losses due to wild weather events actually declined in 2019, but numerous events caused widespread devastation. Top of mind in Australia is this summer’s record-breaking bushfires.
Another concern for businesses this 2020 are pandemics – a particularly high risk in the modern world due to the prevalence and ease of travel, which enables diseases to spread rapidly geographically, Gallagher said.
According to the World Health Organisation, in a worst-case scenario, the spread of a serious infectious disease could result in 700,000 deaths and more than $500,000 billion in annual economic losses. On a local level, pandemics can upset business operations by disrupting supply chains and access to resources, and more directly by absenteeism as authorities and schools quarantine suspected cases of illness, Gallagher said.