Business interruption, pandemic, cyber incidents top global business risks

KUALA LUMPUR: Covid-19related issues, namely business interruptions, pandemic outbreak and cyber incidents are the top three business risks this year, according to the Allianz Risk Barometer 2021.

The annual survey on global business risks by Allianz Global Corporate and Specialty (AGCS) incorporates the views of 2,769 experts, including chief executive officers (CEOs), risk managers, brokers and insurance experts in 92 countries and territories.

AGCS CEO Joachim Müller said the Covid-19 risks are strongly interlinked, demonstrating the growing vulnerabilities of the highly globalised and connected world.

“The pandemic is a reminder that risk management and business continuity management need to further evolve in order to help businesses prepare for -- and survive -- extreme events.

“While the pandemic continues to have a firm grip on countries around the world, we also have to be ready for more frequent extreme scenarios, such as a globalscale cloud outage or cyber-a ack, natural disasters driven by climate change or even another disease outbreak,” he said in a statement yesterday.

He said the Covid-19 crisis drove ‘pandemic outbreak’ to rank second in the Allianz Risk

Barometer, when it had never risen higher than the 16th spot in the past decade.

“In 2021, it’s the number one risk in 16 countries and among the three biggest business risks across all continents and in 35 out of the 38 countries.

“Japan, South Korea and Ghana are the only exceptions,” said Müller.

Meanwhile, according to the credit insurance company, Euler Hermes, the global insolvency index is expected to hit a record high, up 35 per cent by end-2021, with top increases expected in the United States (US), Brazil, China and core European countries.

The Allianz Risk Barometer survey respondents revealed that companies are taking various steps to improve their sustainability.

This includes improving business continuity management (62 per cent), developing alternative or multiple suppliers (45 per cent), investing in digital supply chains (32 per cent) and improving supplier selection and auditing (31 per cent).

“Many companies found their plans quickly overwhelmed by the pace of the pandemic.

“Business continuity planning needs to become more holistic, cross-functional, and dynamic,” AGCS said.

Cyber incidents remain a key peril, ranking as one of the top three risks in many countries, including Brazil, France, Germany, India, Italy, Japan, South Africa, Spain, United Kingdom and the US.

Catharina Richter, global head of the Allianz Cyber Center of Competence, noted that the pandemic has shown how quickly cybercriminals are able to adapt, and the digitalisation surge driven by the pandemic has created opportunities for intrusions with new cyber loss scenarios constantly emerging.