Climate change and the threat from cyber-attack are the two major issues for global business according to the latest research from Allianz Global Corporate & Specialty (AGCS).
The underwriter issued its ninth Allianz Risk Barometer 2020, with the issues around cyber now the biggest immediate concern for businesses across the globe.
“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.
For the first time ever, cyber incidents (35% of responses) ranks as the most important business risk in Asia-Pacific, relegating perennial top peril Business interruption (BI) (34% of responses) to second place.
The region’s results mirror a global trend that has seen awareness of the cyber threat growing rapidly in recent years, driven by companies increasing reliance on data and IT systems and a number of high-profile incidents. It is a stark change from seven years ago when it did not even feature in the top 10 risks on the mind of risk managers regionally.
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.
The results of the survey found growing concern over the impact of climate change.
“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.”
Global results largely mirror the region’s, with Climate change also moving up the rankings vis-à-vis the previous year, though not as drastically as Asia-Pacific, a reflection of how the effects of global warming have been more severely felt in the region. Changes in legislation and regulation (27%) rounds up the top 3 globally as businesses are increasingly concerned over the US-China trade war and Brexit.
“The Allianz Risk Barometer 2020 highlights that cyber risk and climate change are two significant challenges that companies need to watch closely in the new decade,” says Joachim Müller, CEO of AGCS. “Of course, there are many other damage and disruption scenarios to contend with but if corporate boards and risk managers fail to address cyber and climate change risks this will likely have a critical impact on their companies’ operational performance, financial results and reputation with key stakeholders. Preparing and planning for cyber and climate change risks is both a matter of competitive advantage and business resilience in the era of digitalization and global warming.”