The Allianz Risk Barometer identifies business interruption as biggest corporate worry

Business interruption remains the top corporate peril for the fifth year in succession, according to the Allianz Risk Barometer for 2017, which is based on the views of more than 1,000 risk experts from more than 50 countries.

Some 37 percent of responses rating it as one of the three most important risks companies face in 2017 – partly because it is so closely linked and connected to many other risks.

“Many of the top 10 risks in this year’s barometer can have severe BI implications; evidence that a shift in BI risk is occurring,” the report said. “In today’s interconnected industrial world, the reasons for BI are expanding from damage-driven events, such as natural catastrophe or fire incidents, to intangible hazards or formerly uninsurable events.

“For example, a cyber incident, or the indirect impact of a terrorism or political violence event, such as denial of access to the affected location afterwards, can result in a large loss of income for companies, without them actually suffering a physical loss.”

The report noted that perils such as natural catastrophes and fires are the causes that businesses fear most, but the nature of the risk is shifting increasingly towards non-damage events.

“A cyber incident or the indirect impact of an act of terrorism or political violence are events that can result in large losses without causing physical damage,” it stressed. “More of these types of events are expected to occur in future.”

The report also found that companies recognise that they will need to invest more resources into better monitoring of politics and policy-making around the world in order to anticipate, and adapt to, any sudden changes of rules that could impact business models and markets. “This comes amid fears of increasing protectionism and anti-globalization, which could produce a business interruption threat of a different kind,” it said.

Terrorism risk is rising, it noted, and a business does not have to be the direct victim of an act to feel the effects. “Locations can become inaccessible and supply chains impacted in the wake of an attack. The growing risk of political violence, acts such as war, civil war, insurrection and other politically motivated incidents, which focus on countries rather than certain locations, should also not be underestimated, as the impact for global businesses can be much greater and longer-lasting.”

Market developments ranked as the second top risk for businesses overall but the top perils vary by industry sector. Increasing reliance on technology and automation is transforming, and disrupting, companies across all industry sectors, it noted.