• 8^th annual
  survey on top business risks sees record participation of 2,415 experts from 86
  countries, including Japan
• High loss
  activity pushes natural catastrophes to top risk in Japan, overtaking business
  interruption and cyber incidents
• Other rising
  risks include market developments, climate change and product recall
• 2019 edition sees
  shortage of skilled workforce as new entrant in Japan top 10

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TOKYO, JAPAN�-�Media OutReach�- February 21, 2019 -
Natural catastrophes are the top business risk in Japan for 2019 with
companies increasingly concerned over increasing economic losses caused by
disasters and climate change. While there was not a single major natural
catastrophe event comparable in size with 2017 hurricane events, aggregate
losses from multiple smaller and mid-sized events in 2018 have still led to
considerable losses and are of concern for businesses, according to the eighth
annual Allianz Risk Barometer. Published by Allianz Global Corporate
& Specialty (AGCS), the 2019 report is based on the insights of 2,415 risk
experts across 86 countries, including Japan.

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In Japan, natural catastrophes (49% of responses), is the top risk of 2019,
as the country was the most heavily hit by natural catastrophes in the Asia
Pacific region, with the top three most expensive events of the year all
affecting Japan. Typhoons Jebi, Trami and Prapiroon caused a combined total of
$27.5bn in economic losses and $13.75bn in insured losses[1],
with the former being on record as the most expensive typhoon according to the
General Insurance Association of Japan (GIAJ). Such losses are unlikely to
abate in the near future, as AGCS predicts that 80% of the world's top 10
exposed flood locations in 2070 will be in Asian cities, including Tokyo.

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While business interruption (BI) (#2 with 46% of responses) fell from its
top spot in 2018, businesses are still concerned over the impact that
traditional industrial risks can have on business. According to AGCS, the
average BI property insurance claim now totals at �3.1m, more than a third
(39%) higher than the corresponding average direct property damage loss of
�2.2m, with these figures significantly higher than five years ago.

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Rounding up the top three are cyber incidents with 42% of responses.
According to AGCS analysis of insurance industry claims over the past five
years, the average insured loss from a cyber incident is now in excess of �2m,
compared with almost �1.5m from the average claim for a fire / explosion
incident.

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"Companies need to plan for a
wide range of disruptive scenarios and triggers, as this is where their big
exposure lies in today's networked society," says Ken Motoda, CEO of AGCS Japan
"Disruptive risks can be physical, such as fire or storms, or virtual, such as an
IT outage, which can occur through malicious and accidental means. They can
stem from their own operations but also from a company's suppliers, customers
or IT service providers. Whatever the trigger, the financial loss for companies
following a standstill can be enormous. New risk management solutions, analytical
tools and innovative partnerships can help to better understand and mitigate
the modern myriad of BI risks and prevent losses before they occur."

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Besides natural catastrophes, market
developments (#4 with 28% of responses, up from #6 in 2018), climate change (#5 with 19% of
responses, up from #9 in 2018) and product recall (#6 with 18% of
responses, up from #9 in 2018) are top risers, while shortage of skilled workforce (#9 with 11% of responses) is the
sole new entrant into the Japan top 10.

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Global Results : BI threats continue to evolve

Businesses globally picked the
same top 3 risks as Japan, but ranked them differently. Despite falling in rank
locally, BI remains the top threat
for businesses globally and in Asia Pacific for the seventh year running. Potential
BI scenarios are becoming ever more diverse and complex in a globally connected
economy, including breakdown of core IT systems, product recalls or quality
issues, terrorism or political rioting or environmental pollution. Both cyber
and BI risks are increasingly interlinked as ransomware attacks or accidental
IT outages often result in disruption of operations and services costing
hundreds of millions of dollars. Cyber
incidents rank as the BI trigger most feared by businesses globally (50% of
responses), followed by fire (40%) and natural catastrophes (38%). At the same
time, BI is seen as the biggest cause of financial loss for businesses after a
cyber incident (69% of responses).

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"Businesses across Asia
Pacific are deeply concerned about the impact of business interruption, which
can be a consequence of the other top risks in the region, cyber and natural
catastrophes. The risk of BI is heightened by today's increasingly
interconnected and global business environment," said Mark Mitchell, Regional
CEO Asia Pacific. "Almost all large property insurance claims include a major
BI element. As manufacturing shifts east and with growing frequency of natural
catastrophe activity in the region, Asia Pacific is increasingly exposed to
these losses reflecting the importance for companies to adopt a holistic
approach to risk management."

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More information on the
findings of the Allianz Risk Barometer 2019, including global results, is
available here:

• Top
  10 global business risks
• Executive
  summary
• Full
  report
• Video
• Appendix
  Results for 34 countries
• Selected
  infographics

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