Reputation and loss of brand value remain top concerns of large UK companies according to the Allianz Risk Barometer 2013. The concern relates to the rise in popularity of social media, with phenomena such as viral messaging and re-tweeting allowing negative comments to spread globally, regardless of merit, within very short time frames. However, priorities change with mid size enterprises which are more concerned about the availability of credit, with loss of brand value less of an issue.

One particular concern unites companies around the world: their operations come to a standstill due to force majeure. Business and supply chain interruption, natural disasters and fire and explosion are the key risks faced by companies globally, with regulatory or market-related changes also highlighted in the report.

The Allianz risk barometer ranks the top ten concerns of businesses globally as follows:

Business interruption, supply chain risk
Natural catastrophes such as storm, flood, earthquake
Fire, explosion
Changes in legislation
Intensified competition
Quality deficiencies, serial defects
Market fluctuations e.g. exchange or interest rates
Market stagnation or decline
Eurozone breakdown
Loss of reputation or brand value

The Allianz survey gathered opinions from 529 corporate and industrial insurance experts from across the Allianz Group on the most important risks that companies, in particular regions and sectors, face in 2013.

According to the research, while many businesses are ensuring they are fully protected against the risks they class as serious they are simultaneously underestimating others. For example, IT failures – whether self-inflicted by human error or due to cyber crime – can entail high economic losses in an increasingly digitised economy. Nonetheless, just six per cent of Allianz experts think that their clients are really aware of this risk.

Similarly, the risk of supra-regional power blackouts features on few companies’ risk radar. “Reliability of power supply will decrease in the future due to aging infrastructure and the lack of substantial investments,” explains Michael Bruch, head of R&D risk consulting. If a blackout occurs, the impacts are much higher today than 10 to 15 years ago due to the high dependence on information and communication technologies and the lack of preparedness on the part of businesses.

Axel Theis, CEO of AGCS says: “Today’s global companies operate in a complex risk landscape that features traditional risks such as fire as well as ultra-modern risks like supply chain interruptions and cyber crime.”

In many cases, business interruption is caused by natural disasters, the second-largest business risk (44% of responses). Although 2012 was a relatively moderate year for natural catastrophes – with the exception of Hurricane Sandy – this is no reason to sound the all-clear: “Insurance claims caused by natural disasters have risen 15-fold over the past 30 years. And they will continue to grow because of the increase in insured assets in Asia, in particular, and the ongoing shift towards development in high-risk coastal regions,” explains Markus Stowasser, meteorologist at Allianz Re. Europe, too, can expect more frequent local weather extremes such as heavy rainfall.

One age-old risk features surprisingly prominently on corporate agendas: fire and explosion was named as the third-most important global business risk. Fires are relatively rare, but can cause high property and business interruption claims especially in manufacturing industries. According to AGCS loss statistics, of seven large industrial property losses exceeding 10 million euros each in 2012, six were caused by fire.

“Companies should not compromise on high fire protection standards due to economic pressure,” stresses Paul Carter, global head of risk consulting at AGCS.

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