- 10th
Allianz survey: Business interruption,
Pandemic outbreak and Cyber
incidents are the top three global business risks for 2021 -- all strongly
interlinked. - Globally,
Pandemic outbreak rockets to #2 from
#17 and is seen as main cause of business interruption in 2021, followed by Cyber
incidents. Companies look to de-risk supply chains and boost business
continuity management for extreme events. - In
Asia Pacific, the top three risks are mirrored although Business interruption swaps places with Cyber incidents, which ranks #1 for the second consecutive year. -
Market developments (#4), Macroeconomic
developments (#8) and Political
violence (#10) are all rising global risks. Socioeconomic consequences of the pandemic
will bring more insolvencies and likely fuel further civil unrest in 2021. Climate change falls to #9 globally but
will be back on the board agenda as a priority in 2021.
JOHANNESBURG/LONDON/MUNICH/NEW YORK/PARIS/SAO
PAULO/SINGAPORE -�Media OutReach�-�19 January 2021 -�A trio of Covid-19 related risks heads up
the 10thAllianz Risk Barometer 2021, reflecting potential disruption and loss
scenarios companies are facing in the wake of the coronavirus pandemic. Business
interruption (#1
with 41% responses) and Pandemic outbreak (#2 with 40%) are this year's top global business risks with
Cyber incidents (#3 with 40%) ranking a close third. The
annual survey on global
business risks from Allianz Global Corporate & Specialty (AGCS)
incorporates the views of 2,769 experts in 92 countries and territories, including
CEOs, risk managers, brokers and insurance experts.
�
"The Allianz Risk Barometer 2021 is
clearly dominated by the Covid-19 trio of risks. Business interruption,
pandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities
of our highly globalized and connected world," says Joachim M�ller, CEO of
AGCS. "The coronavirus 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 ready ourselves for
more frequent extreme scenarios, such as a global-scale cloud outage or
cyber-attack, natural disasters driven by climate change or even another
disease outbreak."
�
The Covid-19 crisis continues to represent
an immediate threat to both individual safety and businesses, reflecting why pandemic
outbreak has rocketed 15 positions up to #2 in the global rankings at the
expense of other risks. Prior to 2021, it had never finished higher than #16 in
10 years of the Allianz Risk Barometer, a clearly underestimated risk. However,
in 2021, it's the number one risk in 16 countries and among the three biggest
risks across all continents and in 35 out of the 38 countries which qualify for
a top 10 risks analysis. Japan, South Korea and Ghana are the only exceptions.
�
Market developments (#4 with 19%) also climbs up the global rankings of the Allianz Risk Barometer
2021, reflecting the risk of rising insolvency rates following the pandemic. According to Euler Hermes, the bulk
of insolvencies will come in 2021. The trade credit insurer's global insolvency
index is expected to hit a record high for bankruptcies, up 35% by the end of
2021, with top increases expected in the US, Brazil, China and core European
countries. Further, Covid-19
will likely spark a period of innovation and market disruption, accelerating
the adoption of technology, hastening the demise of incumbents and traditional
sectors and giving rise to new competitors. Other risers include Macroeconomic developments (#8
with 13%) and Political risks and
violence (#10 with 11%) which are, in large part, a consequence of
the coronavirus outbreak, too. Fallers in
this year's global rankings include Changes in legislation and regulation
(#5 with 19%), Natural catastrophes (#6 with 17%), Fire/explosion
(#7 with 16%), and Climate change (#9 with 13%), all clearly superseded
by pandemic concerns.
�
Top Asia Pacific Risks
Similar to the global results, Cyber incidents (#1 with
41% responses), Pandemic outbreak
(#2 with 39%) and Business
interruption (#3 with 38%) skyrocketed to the top three business risks in
Asia Pacific followed by Natural catastrophes (#4 with 27% ) rounding out the key issues in the region.
�
As
expected, Changes in legislation and regulation (#5 with 22%) also kept
its place amongst the top five Asia Pacific risks in 2021 for the third
consecutive year. This was largely due to the several elections and change in
leaderships that took place across the region in Singapore, Taiwan, Indonesia, South
Korea and Malaysia, as well as the broader implications on supply chains as a
result of China's trade wars and greater uncertainty brought on by governments
introducing tough lock down measures.
�
Commenting
on the Asia Pacific results Mark Mitchell, AGCS APAC Managing Director, said:
"Companies and even entire sectors, have suffered large business interruption
events as a result of the pandemic of 2020 and it's the largest catastrophic
event to hit a modern, globalised and interconnected economy. The Pandemic has
demonstrated just how vulnerable the world and businesses have become to
unpredictable multi-country events and this has forever changed the risk
landscape for clients and society more generally.
�
The
COVID-19 pandemic has not only changed our society, but has also fundamentally
changed the way businesses operate, especially the acceleration towards greater
digitalisation driven by more companies working remotely. Our hope is that
businesses and clients can learn from their experiences in 2020 and make sure
they have in place measures which will reduce the impact of similar events in
the future."
Pandemic drives disruption -- now and in
future
Prior to the Covid-19 outbreak, Business interruption (BI) had
already finished at the top of the global rankings of the Allianz Risk
Barometer seven times and it returns to the top spot after being replaced by
cyber incidents in 2020. The pandemic shows that extreme global-scale BI events
are not just theoretical, but a real possibility, causing loss of revenues and
disruption to production, operations and supply chains. 59% of respondents
highlight the pandemic as the main cause of BI in 2021, followed by Cyber incidents (46%) and Natural catastrophes and Fire and explosion (around 30% each).
The pandemic
is adding to the growing list of non-physical damage BI scenarios such as cyber
or power blackouts. "The consequences of the pandemic -- wider digitalization, more
remote working and the growing reliance on technology of businesses and
societies -- will likely heighten BI risks in coming years," explains Philip
Beblo, expert in AGCS's global Property underwriting team. "However,
traditional physical risks will not disappear and must remain on the risk
management agenda. Natural catastrophes, extreme weather or fire remain the
main causes of BI for many industries and we continue to see a trend for larger
losses over time."
In response to
heightened BI vulnerabilities, many companies are aiming to build more
resilient operations and to de-risk their supply chains. According to Allianz
Risk Barometer respondents, improving business continuity management is the
main action companies are taking (62%), followed by developing alternative or
multiple suppliers (45%), investing in digital supply chains (32%) and improved
supplier selection and auditing (31%). According to AGCS experts, many companies
found their plans where quickly overwhelmed by the pace of the pandemic. Business
continuity planning needs to become more holistic, cross-functional, and
dynamic, monitor and measure emerging or extreme loss scenarios, be constantly
updated and tested and embedded into an organization's strategy.
Cyber perils intensify
Cyber incidents may have slipped to
#3 globally, in Asia Pacific it ranks #1 for the second consecutive year.
Elsewhere in the world, it still ranks as a top three risk in many countries,
including Brazil, France, Germany, India, Italy, Japan, South Africa, Spain, UK
and the US. The acceleration towards greater digitalization and remote
working driven by the pandemic is also further intensifying IT vulnerabilities.
At the peak of the first wave of
lockdowns in April 2020, the FBI reported a 300% increase in incidents alone,
while cyber crime is now estimated to cost the global economy over $1trn, up 50% from two years ago. Already high in frequency, ransomware
incidents are becoming more damaging, increasingly targeting large companies
with sophisticated attacks and hefty extortion demands, as highlighted in the
recent AGCS cyber risk trends report.�
"Covid-19 has shown how quickly
cybercriminals are able to adapt and the digitalization surge driven by the
pandemic has created opportunities for intrusions with new cyber loss scenarios
constantly emerging," says Catharina Richter, Global Head of the Allianz Cyber
Center of Competence at AGCS. "Attackers are innovating using automated
scanning to identify security gaps, attacking poorly secured routers or even
using 'deepfakes' -- realistic media content modified or falsified by artificial
intelligence. At the same time, data protection and privacy regulation and
fines for data breaches continue their upward trend."
Risers and fallers
Macroeconomic developments is up to #8 globally and Political risks and violence
(#10) returns to the global top
10 for the first time since 2018, reflecting the fact that civil unrest, protests
and riots now challenge terrorism as the main exposure for companies. The
number, scale and duration of many recent events, including Black Lives Matter
protests, anti-lockdown demonstrations, Hong Kong riots and unrest around the
US presidential election, have been exceptional.
As the socioeconomic fallout
from Covid-19 mounts, further
political and social unrest is likely, with many countries expected to experience an
increase in activity in 2021 and beyond, particularly in Europe and the
Americas.
Changes in
legislation and regulation drops from the Global ranking from #3 to #5
year-on-year. "The pandemic may have caused some delays of the regulatory train,
but it did not stop or even derail it. Quite the opposite, 2021 promises to
become a very busy year in terms of new legislation and regulation,
particularly in the areas of data and sustainability," predicts Ludovic Subran,
Chief Economist at Allianz. Natural catastrophes falls to #6 from #4 in
the global rankings, reflecting the fact that although aggregated losses from
multiple smaller events such as wildfires or tornadoes still led to widespread
devastation and considerable insured losses in 2020, it was also the third
consecutive year without a single large event, such as Hurricane Harvey in
2017.
Climate change also falls to #9 globally. However, the need to combat climate change
remains as high as ever, given 2020 was the joint hottest year ever recorded. "With
the vaccination campaign coming into effect, climate change will be back on the
board agenda as a priority in 2021," says Michael Bruch, Global Head of ESG at
AGCS. "Many companies need to adjust their business for a low-carbon world --
and risk managers need to be at the forefront of this transition."
More information on the findings of the Allianz Risk
Barometer 2021 is available here:
- Top
10 global business risks - Full
report - Individual
country and industry sector results - Watch a short film
about the top 10 risks for 2021
About Allianz Global Corporate & Specialty SE
Allianz
Global Corporate & Specialty (AGCS) SE 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 10
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 31 countries and through the
Allianz Group network and partners in over 200 countries and territories,
employing over 4,450 people. As one of the largest Property-Casualty units of
Allianz Group, we are backed by strong and stable financial ratings. In 2019, AGCS
generated a total of �9.1 billion gross premium globally.
www.agcs.allianz.com
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Twitter: 
@AGCS_Insurance
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