Cyber tops list of most important risks for global businesses: Allianz

The evolving nature of cyber risk coupled with businesses’ increasing reliance on IT systems means that cyber incidents have now become the most important risk for businesses globally, according to 39 percent of respondents to the Allianz Risk Barometer 2020.

The research showed that cyber incidents were deemed a greater risk than business interruption, with 37 percent of survey responses, changes in regulation and legislation, with 27 percent, and climate change, with just 17 percent.

Allianz's figures indicate that cyber risk has evolved at a staggering pace given that seven years ago it accounted for just 6 percent of responses. And, as cyber attacks have become more sophisticated, the potential costs for businesses has grown substantially. For example, a mega data breach – involving more than one million compromised records – is said to cost a business around $42 million. Cyber incidents can be multifaceted with extortion, ransomware and spoofing incidents all playing a part in the prevalence of risk associated with it. The report added that by limiting access to vital data and technology, a cyber incident can also lead to business interruption.

Business interruption ranked second for respondents but causes of business interruption are also become more diverse, ranging from natural disasters to political violence. Finally, climate change has risen to its highest ever position with rising seas, fierce storms and wildfires caused by intense droughts threatening factories, transport and infrastructure.

Joachim Müller, CEO of AGCS, said: “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.

“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 digitalisation and global warming.”