About 37 percent of respondents rated business interruption as their biggest risk worry, essentially even with 2016, the latest annual Allianz Risk Barometer noted. This year’s report – Allianz’s sixth annual – was based on a survey of 1,237 risk experts from 55 countries.
Business interruption remains at the top of the list because there is a constant influx of new triggers behind the risk, according to Volker Muench, global practice group leader for property underwriting with Allianz Global Corporate & Specialty.
Triggers “can range from cyber incidents to market developments to the changing political landscape,” Muench said in prepared remarks included in the report. “Going forward we expect there to be more non-damage triggers of [business interruption]. It is important that our insured customers understand the evolving threats they are facing.”
There are many causes of business interruption, and respondents ranked those they fear the most. The top 5: fire, explosion (44 percent), natural catastrophes (43 percent), supplier failure/lean processes (33 percent), cyber incidents (29 percent), machinery breakdown (29 percent).
This year, cyber incidents continued to be a top global business risk, placing third (30 percent) on the Allianz list. Worries in this category include concerns about cyber crime, IT failure and data breaches. Natural catastrophes also ranked high as an individual business risk, placing fourth, with 24 percent of respondents wary about weather events such as storms, floods and earthquakes.
Market developments are again in second place as a top global business risk. About 31 percent of respondents said they saw M&A, market stagnation, volatility and intense competition as a major risk.
Wariness about legislative and regulatory changes also remains high. This ties with natural catastrophes as the fourth-ranked top global risk for 2017 (24 percent), and it encompasses a wide range of concerns over issues such as governmental change, economic sanctions, protectionism and regulation.
New technologies ranks as the 10th top global risk, involving issues such as drones, 3-D printing, artificial intelligence, nanotechnology and more.
Current events have also emerged as significant corporate risks. Allianz said that the United Kingdom’s Brexit vote to leave the European Union, and possible EU disintegration, scored as the 16th biggest corporate risk in 2017. Respondents also noted Donald Trump’s U.S. presidential election win as a point of concern, with resulting uncertainties about economic and foreign policy.
Underscoring how new risks can emerge seemingly out of nowhere, the Allianz report noted that both Brexit and a Trump election win were “outcomes widely unexpected 12 months ago.”
Allianz’ top 10 global business risks for 2017 are:
- Business interruption (including supply chain disruption and vulnerability) – named by 37 percent of respondents as one of their top three business risks
- Market developments (volatility, intensified competition/ new entrants, M&A, market stagnation, market fluctuation) – named by 31 percent of respondents as one of their top three business risks
- Cyber incidents (cyber crime, IT failure, data breaches, etc.) – named by 30 percent of respondents
- Natural catastrophes (e.g. storm, flood, earthquake) – named by 24 percent of respondents
- Changes in legislation and regulation (government change, economic sanctions, protectionism, etc.) – named by 24 percent of respondents
- Macroeconomic developments (austerity programs, commodity price increase, deflation, inflation) – named by 22 percent of respondents
- Fire, explosion – named by 16 percent of respondents
- Political risks and violence (war, terrorism, etc.) – named by 14 percent of respondents
- Loss of reputation or brand value – named by 13 percent of respondents
- New technologies (e.g. impact of increasing interconnectivity, nanotechnology, artificial intelligence, 3D printing, drones, etc.) – named by 12 percent of respondents