The FINANCIAL — Business interruption and supply chain, natural catastrophes and fire/explosion are the principal risks that continue to occupy the attention of global companies at the start of 2014, according to the third annual Allianz Risk Barometer, which surveyed over 400 corporate insurance experts from 33 countries.
2014 will also be a critical year for companies when it comes to dealing with the threat posed by a number of emerging perils explains Axel Theis, CEO of Allianz Global Corporate & Specialty SE (AGCS): “Recognizing the impact of interconnectivity between different risks is a top priority for risk managers. Today’s business continuity plans must prepare for an increasing range of risk scenarios which need to reflect the sometimes hidden knock-on effects.”
In its 2014 Risk Barometer, Allianz highlights that businesses are more concerned about cyber and reputational risks than ever before. In the prolonged sluggish economic environment, they also worry more about market stagnation/decline and, especially in growth markets, about talent shortages, according to Allianz.
Not least due to the ‘Energiewende’ (energy transformation), German companies in particular are highly occupied by changes in regulation and legislation, elected a top three risk. “With the planned transition to renewable energies in Germany, business strategies for the power supply industry have to be reconsidered. On the other hand, there is big potential for Germany to benefit from its new energy policy by leading the transition to the energy world of the future,” said Michael Bruch, Head of R&D, Risk Consulting, AGCS.
The most heightened risk awareness in 2014 is around cyber and loss of reputation issues. Cyber is the biggest mover in this year’s Risk Barometer climbing up to rank 8 from 15, while reputation moved up to 6 from 10, according to the Allianz experts.
Many of the top ten risks in the Risk Barometer are closely interconnected with a potential cumulative effect, particularly changes in legislation, cyber risk and loss of reputation.
Amid rising cyber crime, IT-security is not enough. A comprehensive set of information and network security policies and procedures backed by the board of directors is essential. They also need to be properly implemented, tested and updated on a regular basis, according to Allianz.
“Still, even with the best risk management framework, companies will never be totally safe from glitches in their IT-infrastructure, failure of internal processes or external cyber-attacks that result in network interruption or data loss. A business needs to decide whether it can afford to carry that risk itself or transfer it by taking out a cyber-insurance policy,” said Nigel Pearson, Global Head of Fidelity (including Cyber) at AGCS.
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