Cyber risks the fastest growing concern
Business interruption and supply chain risks caused by flooding and extreme weather patterns have topped the Allianz Risk Barometer 2014.
According to the research, which surveyed over 400 corporate insurance managers from 33 countries, the impact of natural catastrophes is also increasing the complexity of business risks, especially for large corporates with international exposures.
Allianz Global Corporate and Specialty (AGCS) chief executive Alex Theis said: “Identifying the impact of interconnectivity between different risks is a top priority for risk managers. Today’s business continuity plans must prepare for an increasing range of risk scenarios that need to reflect the sometimes hidden knock-on effects. For example, a natural catastrophe can result in BI [business interruption], IT-systems failure and power blackouts, among other perils.”
Some 43% of respondents said BI and supply chain risks were their chief concern. AGCS estimates that BI and supply chain losses account for 50% to 70% of insurance property catastrophe losses, as much as £26bn a year.
The Allianz Risk Barometer survey results support this, with 43% of respondents citing business interruption/supply chain as a primary concern.
Cyber risks was the biggest mover in this year’s ranking, rising up to eighth place from 15th. Reputation management moved up to six from 10.
In the UK, market stagnation and decline rose as a concern from ninth to third place.
AGCS UK chief executive Carsten Scheffel said: “From a pure insurance perspective, increased trading from a growing economy may mean larger inventories and greater assets at risk – and greater liabilities. It’s essential that businesses match their coverage to their risks as they grow. Economic upturn can mean M&A opportunities, and this can bring a whole new set of challenges. One of the most important is to create a unified risk management strategy across the new company and it’s not unreasonable to budget up to 10% over and above the pure acquisition costs to bring risk management to the right level.”