Global 2022 Allianz Risk Barometer corporate report: cyber and business interruption top risks
Published 15 February 2022
Cyber security has climbed to the top concern globally in this year’s Allianz Risk Barometer 2022, followed by business interruption (BI), then natural disasters, with pandemic outbreaks in 4th place, and cyber is the most feared cause of BI in this year’s survey. Changes to legislation and climate change are 5th and 6th.
This industry leading report is based on the views of 2,650 risk survey respondents from 89 countries and territories, including businesses from 22 industry sectors and insurance experts.
In Australia business interruption and cyber incidents were equal 1st risk concerns, with climate change in 3rd place, a large jump up from previous years.
With increasing digitalisation of supply chains and growing reliance on digital infrastructure the risk of cyber attacks is of growing concern, especially ransomware attacks and data breaches, both rated top cyber concerns by 57% of respondents.
Ransomware claims have increased in numbers as criminals have become more organised and better resourced, with access to inexpensive malware. Extortion demands have more than doubled in recent years while business interruption losses have escalated as larger companies and their supply chains are targeted.
In response to the evolving cyber risk landscape insurers are moving towards to a service-oriented offering that combines insurance policies with technology, risk engineering and response services. Businesses seeking cover can expect increased underwriting scrutiny of their cyber security risk management and protocols, including actions such as regular backups, patching, training, business continuity arrangements and crisis response capabilities.
Domino effects bring business interruption to the forefront corporate risk concerns.
The Risk Barometer results strongly reflect the year of unprecedented cyber threats, business interruption, supply chain disruption and natural catastrophes. The ripple effects of the pandemic and surges in COVID-19 infections, along with crippling cyber-attacks and extreme weather events tested business resilience and pushed supply chains to breaking point.
“Business interrupted’ will likely remain the key underlying risk theme in 2022,” the report summarises. For most companies the biggest fear is not being able to produce their products or deliver their services,” the report summarises.
Ransomware attacks, combined with the potential risks from digitalisation and the shift to remote working, are driving increased concern about cyber security and the business effects of breaches that pose critical business interruption risks, while the COVID-19 pandemic has exposed the fragility and complexity of modern supply chains. The coalition of multiple problematic events coming together has raised awareness of the need for greater business resilience and through stronger business interruption risk mitigations.
Catastrophes, climate and regulatory change also top concerns
The rise of natural catastrophes and climate change to third and sixth place respectively is telling. Recent years have shown the frequency and severity of weather events are increasing. In 2021 global insured catastrophe losses were in excess of $100 billion – the fourth highest year on record. More than half of the losses came from so-called secondary perils such as floods, thunderstorms, tornadoes and even winter freezes, often local but increasingly costly events.
“The pressure on businesses to act on climate change has increased noticeably over the past year, with a growing focus on net-zero contributions,” the report observes.
While respondents are concerned about the physical loss to corporate property and supply chain impact from climate change-related weather events, they are also worried about managing the transition to a low carbon economy and increasing climate related regulation, reporting requirements and litigation. “Lack of actions taken to address climate change” being the second highest ESG concern behind cyber.
The shortage of skilled workforce ranked in the top 10 risks for the first time, a key business challenge being felt across industries globally, with worker/ employee shortages presenting highest risks in sectors of transportation, construction, healthcare, engineering, real estate and public service.
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