Allianz Risk Barometer: Cyber incidents and business interruption also worry Swiss companies
According to the Allianz Risk Barometer 2019, cyber incidents, along with business interruption, are among the biggest business risks worldwide. For the first time, both risks rank almost equally at the top of the global ranking - thus cyber risks continue their steady rise in the ranking. Fear of legal changes also made a big leap in Switzerland, ranking among the top 3 risks for the first time.
The Allianz Risk Barometer provides an important ranking of the biggest business risks. It also looks at Swiss companies. However, there were some surprising changes in the Barometer in 2018: Although the risk of a business interruption (58%) continues to dominate from a company's perspective, fear of a cyber incident rose by one rank to second place (48%). Concerns about legal changes in the economic environment, caused for example by trade wars, tariffs, economic sanctions or the still uncertain Brexit negotiations, also took third place in the Swiss ranking for the first time (29%), putting it on a par with the risk of natural disasters (29%).
New in the top ten are concerns about a shortage of skilled workers (15%) and a loss of reputation (10%).
"The environment for companies has become more unpredictable, the risks have increased - this is clearly shown by the survey of risk experts. This makes it all the more important to recognize the risk potential in the company at an early stage and to take action," emphasizes Gregor Huber, Head of Corporate Insurance at Allianz Suisse. Insurance companies in particular, with their risk expertise, are important partners here, he says, as they provide support in risk analysis and offer products for protection. For example, Allianz Suisse recently expanded its cyber insurance for SMEs to include the additional cover "Cyber Crime - Social Engineering", which covers damage caused by fraudulent instructions and invoices.
Cyber: growing awareness, growing losses
The growing concern over cyber incidents follows a year of numerous data scandals, hacker attacks and IT mishaps. "We are now at a point where cyber is as important to businesses as traditional risks," says Jens Krickhahn, Practice Leader Cyber, AGCS Central and Eastern Europe. Cybercrime is now estimated to cost $600 billion (€520 billion) per year, up from $445 billion (€385 billion) in 2014 (source: Center for Strategic and International Studies).
This compares to an average economic loss of $208 billion (€180 billion) from natural disasters over the last ten years - only about a third. While criminals are using more innovative methods for data theft, online fraud or cyber extortion, the threat from hacker groups closely linked to nation states is also growing. They aim to attack critical infrastructure operators or steal valuable data or trade secrets from foreign companies.
Business interruptions: More causes, higher losses
Business interruption (BI) leads the Allianz Risk Barometer for the seventh year in a row. However, the scenarios and triggers are becoming increasingly diverse and complex. In addition to fire and natural disasters, IT failures, product recalls, quality problems, terrorism, political unrest or environmental pollution are increasingly leading to business interruption. A recent claims analysis by AGCS highlights the growing importance of business interruption: According to the study, almost all major property losses now include a BU element, which usually accounts for the largest share of the loss. It is also striking that cyber and BU risks are increasingly linked, as ransomware attacks or IT failures often lead to business and service interruptions. For example, according to the Allianz Risk Barometer, cyber incidents are the most feared trigger of business interruption (50% of responses), followed by fire/explosion (40%) and natural disasters (38%).
Legal changes: New risks in 2019
2018 was a turning point for global trade - accordingly, companies in the export nation of Switzerland are also increasingly concerned about legal changes in the economic environment. The trade war between the United States and China, rising tariffs and economic sanctions (Russia, Iran) are weighing on foreign trade. In 2019, further risks are emerging due to the upcoming elections in Europe, lower growth prospects for the eurozone and the USA, and the uncertain outcome of the Brexit negotiations.
For more information, including the full report and infographics, please visit www.agcs.allianz.com
Allianz Risk Barometer 2019: Cyber risks are still on the rise
