• 9^th
  annual survey on top business risks attracts record participation of 2,700+ experts
  from over 100 countries, including China
• Business
  interruption ranks #1 for third consecutive year and remains a key challenge
  with digitalization and civil unrest creating new causes of disruption and loss
  of income
• Natural
  catastrophes remains at #2 despite economic losses arising from nat cats
  declining by 20% globally
• Cyber
  incidents and market developments are tied at the third spot while climate
  change debuts in the top 10 at #5

SHANGHAI, CHINA�-�Media
OutReach�- January
21, 2020 - For the third consecutive
year, Business Interruption (30% of
responses) ranks as the most important business risk for Chinese companies in
the ninth Allianz Risk Barometer 2020. Natural
catastrophes remains at (#2 with 26% of responses) while rounding
up the top three is Cyber incidents
and Market developments tied at the
third spot (24% of responses.) The annual survey on global business risks from
Allianz Global Corporate & Specialty (AGCS) incorporates the views of a
record 2,718 experts in over 100 countries including CEOs, risk managers,
brokers and insurance experts.

�

Business
interruption -- an undiminished threat with new causes

After seven years as the top risk globally, BI
drops to the second position but maintains top spot in China in the Allianz
Risk Barometer reflecting the continuing trend for larger and more complex BI
losses. Causes are becoming ever more diverse, ranging from fire, explosion or
natural catastrophes to digital supply chains or even political violence. In
Australia, the total damage and economic loss caused by wildfires from
September 2019 and into 2020 is estimated to cost $110 billion^[1].

�

Businesses are also increasingly exposed to the direct or
indirect impact of riots, civil unrest or terrorism attacks. Escalating civil
unrest in Hong Kong has resulted in property damage, BI and general loss of
income for both local and multinational companies as shops closed for months,
customers and tourists stayed away or employees couldn't access their workplace
due to safety concerns. The consequence is a business interruption without
physical losses but high financial ones.

Natural
Catastrophes remain as a top three risk

�

Devastating typhoons in Asia and record breaking wildfires
in Australia were among the disasters which dominated global headlines in 2019.
However, economic losses from natural catastrophe events actually declined 20%
year on- year to around $133bn.

�

In recent years, significant
non-weather-related nat cat events, such as earthquakes or tsunamis, have been
rare and, consequently, the importance of these risks has declined in the
Allianz Risk Barometer. "Nevertheless, nat cat risks are in the top three risks
in many regions across the globe that are frequently affected by
meteorological, geophysical, climatological and hydrological events including China,
US and Japan," says Patrick Zeng, CEO Hong Kong &
Greater China.

�

Cyber risks
continue to evolve

�

Awareness of the cyber threat has grown rapidly in recent years, driven
by companies' increasing reliance on data and IT systems and a number of
high-profile incidents. Businesses face the
challenge of larger and more expensive data breaches, an increase in ransomware
and spoofing incidents, as well as the prospect of privacy-driven fines or
litigation after an event. A mega data breach ? involving more than one million
compromised records ? now costs on average $42mn^[2],
up 8% year-on-year. "Incidents are becoming more damaging, increasingly
targeting large companies with sophisticated attacks and hefty extortion
demands. Five years ago, a typical ransomware demand would have been in the
tens of thousands of dollars. Now they can be in the millions," says Marek
Stanislawski, Deputy Global Head of Cyber, AGCS.

�

Extortion demands are just one
part of the picture: Companies can suffer major BI losses due to the
unavailability of critical data, systems or technology, either through a
technical glitch or cyber-attack. "Many incidents are the results of human
error and can be mitigated by staff awareness trainings which are not yet a
routine practice across companies," says Stanislawski.

�

Mr Zeng added: "With China locked in an ongoing trade war
with the US that does not look to be fully resolved fully any time soon, risk
managers in the country are concerned about the impact it will have on Business Interruption as the
unpredictable nature of tariff announcements have made it difficult to plan
accurately for the future. Also noteworthy is Cyber risks making the top 3 for the first time in China, as
businesses in the country show a growing appreciation of the perils of
non-traditional risks."

�

Also taking the third
spot, Market Developments are a key
risk for China companies. 2019 was characterized by high market
volatility, which will continue in 2020, according to Ludovic Subran, Chief
Economist at Allianz. Uncertainties caused by trade conflict and political
risks will continue to affect markets. Low growth- low-inflation may hide more
direct pass-through from political risks to financialmarkets, and the need to
manage negative externalities of interventionist policy-makers.

�

He adds, "Higher volatility from the US-China trade
conflict will keep the dollar strong. The renminbi should depreciate further. A
more fragmented world also means volatile commodity prices, currencies and
capital flows for emerging markets."

�

Climate
change brings added risk complexity

�

Climate change, making its debut in the top 10, ranking in
fifth place in China is a huge riser regionally, jumping to third from eighth
last year in the Asia Pacific standings, driven by risk management experts in
countries and territories such as Australia, Hong Kong, India and Indonesia.
Ongoing wildfires engulfing Australia, as well as severe floods in Jakarta have
certainly hammered home the consequences of increasingly volatile weather for
businesses.

An increase in physical losses is the exposure businesses fear most (49% of
responses) as rising seas, drier droughts, fiercer storms and massive flooding
pose threats to factories and other corporate assets, as well as transport and
energy links that tie supply chains together. Further, business are concerned
about operational impacts (37%), such as relocation of facilities, and
potential market and regulatory impacts (35% and 33%). Companies may have to
prepare for more litigation in future -- climate change cases targeting 'carbon
majors' have already been brought in 30 countries around the world, with most
cases filed in the US.

�

"There is a growing awareness among companies that the
negative effects of global warming above two degrees Celsius will have a
dramatic impact on bottom line results, business operations and reputation,"
says Chris Bonnet, Head of ESG Business Services at AGCS. "Failure to take
action will trigger regulatory action and influence decisions from customers,
shareholders and business partners. Therefore, every company has to define its
role, stance and pace for its climate change transition -- and risk managers
need to play a key role in this process alongside other functions."

More information on the findings of the Allianz Risk
Barometer 2020 is available here:

• Top 10 global business risks
• Full report
• Individual country and industry
  sector results

About Allianz Global Corporate & Specialty

Allianz
Global Corporate & Specialty (AGCS) is a leading global corporate insurance
carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk
transfer
for a wide spectrum of commercial, corporate and specialty risks across 12
dedicated lines of business.

Our customers
are as diverse as business can be, ranging from Fortune Global 500 companies to
small businesses, and private individuals. Among them are not only the world's
largest consumer brands, tech companies and the global aviation and shipping
industry, but also wineries, satellite operators or Hollywood film productions.
They all look to AGCS for smart answers to their largest and most complex risks
in a dynamic, multinational business environment and trust us to deliver an
outstanding�claims experience.

Worldwide,
AGCS operates with its own teams in 33 countries and through the
Allianz Group network and partners in over 200 countries and territories,
employing over 4,400 people. As one of the largest Property-Casualty units of
Allianz Group, we are backed by strong and stable financial ratings. In 2018, AGCS generated
a total of �8.2 billion gross premium globally.

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