New year, new risks: Top ten business risks for 2016 identified
Written by staff reporter
The risk landscape for businesses is changing substantially, according to the annual Allianz Risk Barometer, released today. While businesses are less concerned about the impact of traditional industrial risks such as natural catastrophes or fire, Allianz’s study shows they are increasingly worried about the impact of other disruptive events, fierce competition in their markets and cyber incidents.
Allianz’s fifth annual survey, which surveyed over 800 risk managers and insurance experts from more than 40 countries, identifies business and supply chain interruption as the top risks for businesses globally for the fourth year in succession. It also shows that companies are concerned that BI losses, which usually result from property damage, will increasingly be driven by cyber attacks, technical failure or geo-political instability as new non-physical damage causes of disruption.
Two of the major risers in this year’s study of corporate risks feature in the top three for the first time with market developments ranking second and cyber incidents third. Cyber incidents are also cited as the most important long-term risk for companies in the next 10 years. In contrast, natural catastrophe drops two positions to fourth year-on-year, reflecting the fact that in 2015 losses from natural disasters reached their lowest level since 2009.
“The corporate risk landscape is changing as many industrial sectors are undergoing a fundamental transformation,” explains AGCS CEO Chris Fischer Hirs. “New technologies, increasing digitalisation and the Internet of Things are changing customer behaviour, industrial operations and business models, bringing a wealth of opportunities, but also raising awareness of the need for an enterprise-wide response to new challenges. As insurers we need to work together with our corporate clients to help them to address these new realities in a comprehensive manner.”
Digital innovation and the introduction of new technologies is a new risk that has entered the list of top 10 UK risks for the first time in 2016. In 2020 it is forecasted that more than 50 billion devices will be linked which clearly demonstrates the growing reliance on technology. This creates further risks for business such as increasingly sophisticated productions processes and security threats. In the UK, whilst there has been substantial political and financial effort there is still uncertainty regarding the eurozone disintegration. The outcome remains to be seen but the uncertainty is rising on the risk register having entered the UK resulting for the first time.
More than a third of risk professional polled cited market developments such as intensified competition or market volatility/stagnation as one of the three most important business risks in 2016, ranking this new survey category as the second top peril overall. Market developments are a particular concern in the engineering, financial services, manufacturing, marine and shipping, pharmaceutical and transportation sectors, where this risk ranks among the top three business risks respectively. In addition, this risk ranks as a top two concern in Europe, Asia-Pacific and Africa & Middle East.