- \n
- 10th<\/sup>
\nAllianz survey: Business interruption,
\nPandemic outbreak<\/b> and Cyber
\nincidents<\/b> are the top three global business risks for 2021 — all strongly
\ninterlinked.<\/li>\n- Globally,
\nPandemic outbreak<\/b> rockets to #2 from
\n#17 and is seen as main cause of business interruption in 2021, followed by Cyber
\nincidents. Companies look to de-risk supply chains and boost business
\ncontinuity management for extreme events.<\/li>\n- In
\nAsia Pacific, the top three risks are mirrored although Business interruption<\/b> swaps places with Cyber incidents<\/b>, which ranks #1 for the second consecutive year.<\/li>\n- \nMarket developments<\/b> (#4), Macroeconomic
\ndevelopments<\/b> (#8) and Political
\nviolence<\/b> (#10) are all rising global risks. Socioeconomic consequences of the pandemic
\nwill bring more insolvencies and likely fuel further civil unrest in 2021. Climate change <\/b>falls to #9 globally but
\nwill be back on the board agenda as a priority in 2021.<\/li>\n<\/ul>\nJOHANNESBURG\/LONDON\/MUNICH\/NEW YORK\/PARIS\/SAO
\nPAULO\/SINGAPORE –\u00a0Media OutReach<\/a>\u00a0–\u00a019 January 2021 –\u00a0A trio of Covid-19 related risks heads up
\nthe 10th<\/sup>Allianz Risk Barometer 2021<\/a>, reflecting potential disruption and loss
\nscenarios companies are facing in the wake of the coronavirus pandemic. Business
\ninterruption<\/b> (#1
\nwith 41% responses) and Pandemic outbreak<\/b> <\/b>(#2 with 40%) are this year’s top global business risks with
\nCyber incidents<\/b> (#3 with 40%) ranking a close third. The
\nannual survey on global
\nbusiness risks<\/a> from Allianz Global Corporate & Specialty (AGCS)
\nincorporates the views of 2,769 experts in 92 countries and territories, including
\nCEOs, risk managers, brokers and insurance experts.<\/p>\n\u00a0<\/p>\n
“The Allianz Risk Barometer 2021 is
\nclearly dominated by the Covid-19 trio of risks. Business interruption,
\npandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities
\nof our highly globalized and connected world,” says Joachim M\u00fcller, CEO of
\nAGCS. “The coronavirus pandemic is a reminder that risk management and business
\ncontinuity management need to further evolve in order to help businesses
\nprepare for, and survive, extreme events. While the pandemic continues to have
\na firm grip on countries around the world, we also have to ready ourselves for
\nmore frequent extreme scenarios, such as a global-scale cloud outage or
\ncyber-attack, natural disasters driven by climate change or even another
\ndisease outbreak.”<\/p>\n\u00a0<\/p>\n
The Covid-19 crisis continues to represent
\nan immediate threat to both individual safety and businesses, reflecting why pandemic
\noutbreak has rocketed 15 positions up to #2 in the global rankings at the
\nexpense of other risks. Prior to 2021, it had never finished higher than #16 in
\n10 years of the Allianz Risk Barometer, a clearly underestimated risk. However,
\nin 2021, it’s the number one risk in 16 countries and among the three biggest
\nrisks across all continents and in 35 out of the 38 countries which qualify for
\na top 10 risks analysis. Japan, South Korea and Ghana are the only exceptions. <\/p>\n\u00a0<\/p>\n
Market developments<\/b> (#4 with 19%) also climbs up the global rankings of the Allianz Risk Barometer
\n2021, reflecting the risk of rising insolvency rates following the pandemic. According to Euler Hermes, the bulk
\nof insolvencies will come in 2021. The trade credit insurer’s global insolvency
\nindex is expected to hit a record high for bankruptcies, up 35% by the end of
\n2021, with top increases expected in the US, Brazil, China and core European
\ncountries. Further, Covid-19
\nwill likely spark a period of innovation and market disruption, accelerating
\nthe adoption of technology, hastening the demise of incumbents and traditional
\nsectors and giving rise to new competitors. Other risers include Macroeconomic developments <\/b>(#8
\nwith 13%) and Political risks and
\nviolence<\/b> (#10 with 11%) which are, in large part, a consequence of
\nthe coronavirus outbreak, too. Fallers in
\nthis year’s global rankings include Changes in legislation and regulation<\/b>
\n(#5 with 19%), Natural catastrophes<\/b> (#6 with 17%), Fire\/explosion<\/b>
\n(#7 with 16%), and Climate change<\/b> (#9 with 13%), all clearly superseded
\nby pandemic concerns.<\/p>\n\u00a0<\/p>\n
Top Asia Pacific Risks<\/u><\/b><\/p>\n
Similar to the global results, Cyber incidents<\/b> (#1 with
\n41% responses), Pandemic outbreak<\/b>
\n(#2 with 39%) and Business
\ninterruption<\/b> (#3 with 38%) skyrocketed to the top three business risks in
\nAsia Pacific followed by Natural catastrophes<\/b> (#4 with 27% ) rounding out the key issues in the region. <\/p>\n\u00a0<\/p>\n
As
\nexpected, Changes in legislation and regulation<\/b> (#5 with 22%) also kept
\nits place amongst the top five Asia Pacific risks in 2021 for the third
\nconsecutive year. This was largely due to the several elections and change in
\nleaderships that took place across the region in Singapore, Taiwan, Indonesia, South
\nKorea and Malaysia, as well as the broader implications on supply chains as a
\nresult of China’s trade wars and greater uncertainty brought on by governments
\nintroducing tough lock down measures.<\/p>\n\u00a0<\/p>\n
Commenting
\non the Asia Pacific results Mark Mitchell, AGCS APAC Managing Director, said:
\n“Companies and even entire sectors, have suffered large business interruption
\nevents as a result of the pandemic of 2020 and it’s the largest catastrophic
\nevent to hit a modern, globalised and interconnected economy. The Pandemic has
\ndemonstrated just how vulnerable the world and businesses have become to
\nunpredictable multi-country events and this has forever changed the risk
\nlandscape for clients and society more generally. <\/p>\n\u00a0<\/p>\n
The
\nCOVID-19 pandemic has not only changed our society, but has also fundamentally
\nchanged the way businesses operate, especially the acceleration towards greater
\ndigitalisation driven by more companies working remotely. Our hope is that
\nbusinesses and clients can learn from their experiences in 2020 and make sure
\nthey have in place measures which will reduce the impact of similar events in
\nthe future.”<\/p>\n![](\"https:\/\/release.media-outreach.com\/i\/118195\/Picture-1.jpg\")
<\/p>\nPandemic drives disruption — now and in
\nfuture<\/b><\/p>\nPrior to the Covid-19 outbreak, Business interruption<\/b> (BI) had
\nalready finished at the top of the global rankings of the Allianz Risk
\nBarometer seven times and it returns to the top spot after being replaced by
\ncyber incidents in 2020. The pandemic shows that extreme global-scale BI events
\nare not just theoretical, but a real possibility, causing loss of revenues and
\ndisruption to production, operations and supply chains. 59% of respondents
\nhighlight the pandemic as the main cause of BI in 2021, followed by Cyber incidents<\/b> (46%) and Natural catastrophes<\/b> and Fire and explosion<\/b> (around 30% each).<\/p>\nThe pandemic
\nis adding to the growing list of non-physical damage BI scenarios such as cyber
\nor power blackouts. “The consequences of the pandemic — wider digitalization, more
\nremote working and the growing reliance on technology of businesses and
\nsocieties — will likely heighten BI risks in coming years,” explains Philip
\nBeblo, expert in AGCS’s global Property underwriting team. “However,
\ntraditional physical risks will not disappear and must remain on the risk
\nmanagement agenda. Natural catastrophes, extreme weather or fire remain the
\nmain causes of BI for many industries and we continue to see a trend for larger
\nlosses over time.”In response to
\nheightened BI vulnerabilities, many companies are aiming to build more
\nresilient operations and to de-risk their supply chains. According to Allianz
\nRisk Barometer respondents, improving business continuity management is the
\nmain action companies are taking (62%), followed by developing alternative or
\nmultiple suppliers (45%), investing in digital supply chains (32%) and improved
\nsupplier selection and auditing (31%). According to AGCS experts, many companies
\nfound their plans where quickly overwhelmed by the pace of the pandemic. Business
\ncontinuity planning needs to become more holistic, cross-functional, and
\ndynamic, monitor and measure emerging or extreme loss scenarios, be constantly
\nupdated and tested and embedded into an organization’s strategy. <\/p>\nCyber perils intensify<\/b><\/p>\n
Cyber incidents<\/b> may have slipped to
\n#3 globally, in Asia Pacific it ranks #1 for the second consecutive year.
\nElsewhere in the world, it still ranks as a top three risk in many countries,
\nincluding Brazil, France, Germany, India, Italy, Japan, South Africa, Spain, UK
\nand the US. The acceleration towards greater digitalization and remote
\nworking driven by the pandemic is also further intensifying IT vulnerabilities.
\nAt the peak of the first wave of
\nlockdowns in April 2020, the FBI reported a 300% increase in incidents alone,
\nwhile cyber crime is now estimated to cost the global economy over $1trn<\/a>, up 50% from two years ago. Already high in frequency, ransomware
\nincidents are becoming more damaging, increasingly targeting large companies
\nwith sophisticated attacks and hefty extortion demands, as highlighted in the
\nrecent AGCS cyber risk trends report<\/a>.\u00a0“Covid-19 has shown how quickly
\ncybercriminals are able to adapt and the digitalization surge driven by the
\npandemic has created opportunities for intrusions with new cyber loss scenarios
\nconstantly emerging,” says Catharina Richter, Global Head of the Allianz Cyber
\nCenter of Competence at AGCS. “Attackers are innovating using automated
\nscanning to identify security gaps, attacking poorly secured routers or even
\nusing ‘deepfakes’ — realistic media content modified or falsified by artificial
\nintelligence. At the same time, data protection and privacy regulation and
\nfines for data breaches continue their upward trend.”<\/p>\nRisers and fallers <\/b><\/p>\n
Macroeconomic developments<\/b> is up to #8 globally and Political risks and violence<\/b>
\n(#10) returns to the global top
\n10 for the first time since 2018, reflecting the fact that civil unrest, protests
\nand riots now challenge terrorism as the main exposure for companies. The
\nnumber, scale and duration of many recent events, including Black Lives Matter
\nprotests, anti-lockdown demonstrations, Hong Kong riots and unrest around the
\nUS presidential election, have been exceptional.
\nAs the socioeconomic fallout
\nfrom Covid-19 mounts, further
\npolitical and social unrest is likely, with many countries expected to experience an
\nincrease in activity in 2021 and beyond, particularly in Europe and the
\nAmericas.<\/p>\nChanges in
\nlegislation and regulation<\/b> drops from the Global ranking from #3 to #5
\nyear-on-year. “The pandemic may have caused some delays of the regulatory train,
\nbut it did not stop or even derail it. Quite the opposite, 2021 promises to
\nbecome a very busy year in terms of new legislation and regulation,
\nparticularly in the areas of data and sustainability,” predicts Ludovic Subran,
\nChief Economist at Allianz. Natural catastrophes<\/b> falls to #6 from #4 in
\nthe global rankings, reflecting the fact that although aggregated losses from
\nmultiple smaller events such as wildfires or tornadoes still led to widespread
\ndevastation and considerable insured losses in 2020, it was also the third
\nconsecutive year without a single large event, such as Hurricane Harvey in
\n2017.<\/p>\nClimate change <\/b>also falls to #9 globally. However, the need to combat climate change
\nremains as high as ever, given 2020 was the joint hottest year ever recorded. “With
\nthe vaccination campaign coming into effect, climate change will be back on the
\nboard agenda as a priority in 2021,” says Michael Bruch, Global Head of ESG at
\nAGCS. “Many companies need to adjust their business for a low-carbon world —
\nand risk managers need to be at the forefront of this transition.”<\/p>\n - Globally,