Allianz Risk Barometer 2020: Cyber incidents now rank as biggest threat to business
The business landscape of the 2020s is being shaped by an intensification of familiar threats – as the latest Allianz Risk Barometer finds, changes in legislation and regulation have now risen into the top 3 major risks, while consistently high-ranking cyber risks now represent the greatest business hazard.
In an era marked by transition toward digitalization, the biggest threat for businesses in 2020 is that of cyber incidents – data breaches and unlawful access to confidential material – which have become increasingly advanced in recent years.
“Cyber incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands,” says Marek Stanislawski, Deputy Global Head of Cyber, Allianz Global Corporate & Specialty (AGCS). “Five years ago, a typical ransomware demand would have been in the tens of thousands of dollars. Now they can be in the millions.”
After seven years as the number-one threat, business interruption (including supply chains) is now situated at the #2 position, with factors such as civil unrest and natural disasters creating the most damage. According to AGCS, fires and explosions account for almost a third of business interruption, while the effects of political violence – protests, rioting and looting – have immense impact on business in the areas affected.
In recent years, natural catastrophes, fires and cyber-attacks have all impacted multiple companies in multiple countries. Industries such as automotive manufacturing and pharmaceuticals may have developed highly efficient global supply chains, but this also makes them vulnerable. For example, a fire at an auto-parts manufacturing plant in the US in 2018 caused supply shortages for a number of car manufacturers and was the catalyst for hundreds of millions of losses throughout the industry.
Changes in legislation and regulation are the next biggest risk, with the U.S-China trade war incorporating just one of the 1,300 new trade barriers instigated in 2019. Besides the potential implications of Brexit, companies in Europe will also be affected by strict sustainability regulations launched by the EU this year.
Meanwhile, climate change has risen to its highest-ever position, claiming the #7 spot as the risk of extreme weather poses greater threat for loss through physical damage and supply chain interruption. Beyond the heightened risk of flooding due to global warming, another concern is the market impact resulting from phasing out fossil fuels as industries transition to bio-fuel and renewable energy sources. — Liam Heitmann-Rice
Published: January 2020