Cyber risks and unforeseen interruptions to business are the top commercial risks globally in 2019 and beyond, according to a survey.
Cyber breaches are most feared while interruption to operations – loss due to disaster-related closure or due to rebuilding after a catastrophe – scenarios are becoming more complex with rising costs globally, according to Allianz Risk Barometer 2019, an annual corporate risk survey.
“Companies need to plan for a range of disruptive scenarios and triggers, as this is where their big exposure lies in today’s networked society,” said Chris Hirs, chief executive of Allianz Global Corporate & Specialty.
Thirty seven per cent of respondents considered cyber attacks and business interruptions among the top risks faced by the corporate world today.
Disruptive risks can be physical, such as fire or storms, or virtual, such as an IT outage that can be caused by malicious and accidental means, said Mr Hirs.
"Whatever the trigger, the financial loss for companies following a standstill can be enormous."
Companies are also worried year-on-year about matters such as US-China trade tensions, rising tariffs and the Brexit issue, with 27 per cent of respondents considering legislation and regulation as a major corporate challenge in 2019.
The survey polled 2,415 business experts from 86 countries, including chief executives, risk managers, brokers and insurance professionals.
Business interruption has been the top threat for companies worldwide for seven years but this year it is joined by cyber concerns as the leading global risk.
“Potential business interruption scenarios are becoming ever more diverse and complex in a globally connected economy, including breakdown of core IT [information technology] systems, product recalls or quality issues, terrorism or political rioting or environmental pollution,” said the report.
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Both cyber and business interruption 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.
Around $600 billion, nearly 1 per cent of global domestic product, is lost to cybercrime each year, up from 2014 global losses of nearly $445bn, according to a report last year by Centre for Strategic and International Studies based in Washington.
For the first time, shortage of skilled workers appeared among the 10 top business risks globally as well as for many countries including the US, Australia, the UK and nations in Central and Eastern Europe. It is driven by factors such as changing demographics, Brexit uncertainty and a shallow pool of talent in the digital economy.
“Skilled workforce – and human capital more generally – has become the scarce resource of the digital economy,” said Ludovic Subran, deputy chief economist of Allianz.
Competition is fierce to hire new recruits with competencies in artificial intelligence and data science as most of these jobs did not exist 10 years ago, said Mr Subran.