Three Covid-19 related risks are top of mind for business as we enter the second year of the global pandemic. Business interruption (BI), pandemic outbreak and cyber threats were the three most frequently cited dangers businesses see on the horizon, according to the Allianz Risk Barometer 2021.
“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,” said Joachim Müller, CEO of Allianz Global Corporate & Specialty (AGCS).
“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.”
In Canada, 47 percent of respondents said business interruption was the biggest risk they face. Pandemic outbreak followed closely at 41 percent and cyber incidents was third at 37 percent. “Business interruption, pandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities of our highly globalized and connected world,” Müller added.
A continuing concern
The Covid-19 crisis continues to be an immediate threat to both individual safety and businesses, reflecting why pandemic outbreak has rocketed 15 positions up to second in the rankings. Before 2021 pandemic risk had never finished higher than 16th in 10 years of the Allianz Risk Barometer.
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. According to the survey’s respondents, improving business continuity management is the main action companies are taking (62 percent), followed by developing alternative or multiple suppliers (45 percent), investing in digital supply chains (32 percent) and improved supplier selection and auditing (31 percent).
Cyber incidents may have slipped to third place, but the acceleration towards greater digitization and remote work 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 percent increase in incidents alone, while cybercrime is now estimated to cost the global economy over US$1trillion, up 50 percent from two years ago. Already frequent, ransomware incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands.
“The consequences of the pandemic – wider digitization, more remote working and the growing reliance on technology of businesses and societies – will likely heighten BI risks in coming years,” said Philip Beblo, an expert in AGCS’s global property underwriting team.
“However, additional 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.”
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.