Businesses have showed huge reliance though the pandemic but fears over cyber threat and supply chain disruptions remain.
Specialist insurer Beazley has today published the first in a series of reports that will provide a benchmark for business resilience to and appetite for risk post pandemic. The report also assesses the extent to which insurance is providing the safety net and support organisations need.
The report, ‘New world, new risks: How are businesses’ attitudes to risk and resilience changing?’, found that business leaders across the UK and US felt that they had coped well with the challenges that had been created by the pandemic.
Beazley questioned 1,000 senior executives in the US and UK across 10 industry sectors and sought insight from in-depth interviews with a panel of seasoned risk and insurance industry experts.
According to the research, 85% of leaders considered the current business environment to be moderate to high risk. However, it is the technology and business-related risks that leaders perceive as easier to manage that worry them most.
While 37% ranked technology as the highest category of risk currently affecting their organisation, this was followed by business (33%), political & economic (18%) and environmental (12%).
However, cyber is the technology risk highest on leaders’ lists of concerns although they also feel relatively well prepared to handle it, with 44% feeling ‘very prepared’ to manage their cyber risk.
Pandemic is seen as high risk yet respondents also felt well prepared to manage it. This sits within the ‘environmental’ category, which is the lowest ranked risk overall.
“This does not necessarily mean leaders do not worry about environmental risk but they may consider it less pressing or harder to directly influence than other risk categories,” added the report.
Lou Ann Layton, Beazley’s Head of Broker Relations & Marketing, said: “We have carried out this research at a time of significant change for almost every organisation and industry. The insights captured in this report help us bridge knowledge gaps and build greater understanding among the insurance industry of what firms need from us now and in the future.
“As insurers we cannot rely on past perspectives of what our clients want or need. Understanding businesses’ risk appetites, where they feel most vulnerable and where they need our help to build resilience to a disorientating array of risk exposures is critical to our ability to provide the value, expertise and services our clients need.”
Respondents ranked risks according to how significant they are to their business and in turn how resilient they felt to them.
Where businesses arguably want more support from the insurance and risk management sector are within the high risk-low resilient threat categories. These include interconnected and more complex areas of risk including supply chain, business interruption, climate change, political, legislation and regulation, disruption and disintermediation, and environmental.
Nine in 10 leaders currently feel their businesses are either moderately (56%) or highly (35%) resilient, while there is a strong sense of optimism for the future with 85% expecting to feel more resilient in 12 months’ time.
Bethany Greenwood, Head of Cyber & Executive Risk and Interim Co-Chief Underwriting Officer at Beazley, added: “One of the key learnings from the pandemic is that, by and large, businesses have survived, adapted and thrived. Almost half feel more resilient than one year ago and 84% are confident they will be even more resilient in a year’s time.
“This is incredibly positive given the challenges businesses have had to contend with over the last 15 months. However despite the green shoots of economic recovery we are all aware we are not out the woods with this virus. As lockdowns end and government stimulus packages are withdrawn, organisations will need a clear view of their evolving risk exposures. The insurance industry’s role in supporting clients to proactively manage their less predictable and harder to quantify risks is even more important to help build overall resilience.”