Cyber incidents tops the Allianz Risk Barometer for businesses, followed by business interruption
Cyber perils are the biggest concern for companies in Africa and Middle East in 2022, according to the latest annual Allianz Risk Barometer from Allianz Global Corporate & Specialty (AGCS). The threat of ransomware attacks, data breaches or major IT outages worries companies even more than business and supply chain disruption, natural disasters or the Covid-19 pandemic, all of which have heavily affected firms in the past year. The annual survey incorporates the views of 2,650 experts in 89 countries and territories, including CEOs, risk managers, brokers and insurance experts.
For only the second time in the global survey’s history, cyber incidents tops the Allianz Risk Barometer (44 percent of responses), business interruption drops to a close second (42 percent) and natural catastrophes ranks third (25 percent), up from sixth in 2021. Climate change climbs to its highest-ever ranking of sixth (17 percent, up from ninth), while pandemic outbreak drops to fourth (22 percent).
Cyber incidents ranks as a top three peril in most countries and regions surveyed including Africa and Middle East. The main driver is the recent surge in ransomware attacks, which are confirmed as the top cyber threat for the year ahead by survey respondents (57 percent). Recent attacks have shown worrying trends such as ‘double extortion’ tactics combining the encryption of systems with data breaches; exploiting software vulnerabilities which potentially affect thousands of companies. Cyber security also ranks as companies’ major environmental, social and governance (ESG) concern with respondents acknowledging the need to build resilience and plan for future outages or face the growing consequences from regulators, investors and other stakeholders.
Business interruption ranks as the second most concerning risk globally. In a year marked by widespread disruption, the extent of vulnerabilities in modern supply chains and production networks is more obvious than ever. In the past year post-lockdown surges in demand have combined with disruption to production and logistics, as Covid-19 outbreaks in Asia closed factories and caused record congestion levels in container shipping ports. Pandemic-related delays compounded other supply chain issues, such as the Suez Canal blockage or the global shortage of semiconductors after plant closures in Taiwan, Japan and Texas from weather events and fires. Awareness of business interruption risks is becoming an important strategic issue across entire companies.
Pandemic outbreak remains a major concern for companies but drops from first to third position in Africa and Middle East and from second to fourth globally (although the survey predated the emergence of the Omicron variant). While the Covid-19 crisis continues to overshadow the economic outlook in many industries, encouragingly, the majority of respondents (80 percent) think they are adequately or well-prepared for a future incident. Improving business continuity management is the main action companies are taking to make them more resilient.
The rise of natural catastrophes and climate change to third and sixth position globally respectively is telling, with both upwards trends closely related. Allianz Risk Barometer respondents are most concerned about climate-change related weather events causing damage to corporate property (57 percent), followed by business interruption and supply chain impact (41 percent). However, they are also worried about managing the transition of their businesses to a low-carbon economy (36 percent), fulfilling complex regulation and reporting requirements and avoiding potential litigation risks for not adequately taking action to address climate change (34 percent).
Other risers and fallers in this year’s Allianz Risk Barometer:
Shortage of skilled workforce (13 percent) is a new entry in the top 10 risks at number nine. Attracting and retaining workers has rarely been more challenging. Respondents rank this as a top five risk in the engineering, construction, real estate, public service and healthcare sectors, and as the top risk for transportation.
Changes in legislation and regulation remains fifth (19 percent) globally but moves up three places to fifth in Africa and Middle East. Prominent regulatory initiatives on companies’ radars in 2022 include anti-competitive practices targeting big tech, as well as sustainability initiatives with the EU taxonomy scheme.
Fire and explosion (17 percent) is a perennial risk for companies, ranking seventh as in last year’s survey.
Market developments (15 percent) falls from fourth to eighth year-on-year globally but moves up two places to seventh in Africa and Middle East.
Macroeconomic developments (11 percent) falls from eighth to 10th and from fourth to seventh in Africa and Middle East.
