Cyber incidents and business interruption (BI) are the top business risks globally, according to an annual survey conducted by Allianz Global Corporate & Specialty (AGCS). BI remains the top threat for businesses worldwide for the seventh year running and is the top risk in countries such as the US, Canada, Germany, Spain, Italy and China. Cyber incidents join BI at the top of the rankings for the first time.
Potential BI scenarios are becoming ever more diverse and complex in a globally connected economy, including the breakdown of core IT systems, product recalls or quality issues, terrorism or political rioting or environmental pollution. Both cyber and BI risks are increasingly interlinked as ransomware attacks or accidental IT outages often result in disruption of operations and services costing hundreds of millions of dollars.
Increasing concern over cyber incidents follows a watershed year of activity in 2018. “Cyber risk has been a major risk for a number of years, but as with any new risk, it has struggled with awareness,” said ACGS deputy global head of cyber Marek Stanislawski. “We have now reached a point where cyber is as equally concerning for companies as their major traditional exposures.”
Cyber crime now costs an estimated $600bn a year, up from $445bn in 2014. This compares with a 10-year average economic loss from Nat CAT of $208bn. While criminals use more innovative methods to steal data, commit fraud or extort money, there is also a growing cyber threat from nation states and affiliated hacker groups targeting critical infrastructure providers or stealing valuable data or trade secrets from companies. Cyber incidents are increasingly likely to spark litigation, including securities and consumer class actions. Data breaches or IT outages can generate large third-party liabilities as affected customers or shareholders seek to recoup losses from companies.
In the UAE, respondents of the survey cited market developments, political risks and violence, and cyber incidents as the top three threats for businesses.
The Allianz Risk Barometer 2019 incorporates the views of a record 2,415 experts from 86 countries, including CEOs, risk managers, brokers and insurance experts. M