The 9th annual survey reveals cyber risk and climate change as two critical challenges companies need to monitor in 2020
Cyber incidents rank as the most significant business risk worldwide in the Allianz Risk Barometer 2020, with 39% of responses. Business interruption (BI) takes the second spot with 37% of responses followed by changes in legislation and regulation at 27% and climate change at 17%. Awareness of the cyber threat has increased in recent years due to the rise in companies’ reliance on data and IT systems and several high-profile incidents.
The annual survey on global business risks garnered views of over 2,500 experts in more than 100 countries, including CEOs, risk managers, and insurance experts. Offering details about the top five US specific business risks, the survey reveals that cyber incidents were at the top with 43% of responses followed by BI at 37%, and natural catastrophes 32%. Market developments (24%) and changes in legislation and regulation stood at 24% and 23%, respectively.
Cyber incidents are among the top three risks in many of the countries surveyed – Austria, France, India, South Korea, the UK, and the U.S., among others. Enterprises are facing massive and more expensive data breaches along with a surge in ransomware and spoofing incidents, the survey found. A mega data breach with more than one million compromised records costs, on average $42 million up 8%YoY, stated the study. Cyber incidents are targeting top companies with sophisticated attacks and massive extortion demands. Companies can suffer significant BI losses due to the unavailability of critical data, systems or technology, either through a technical glitch or cyber-attack. Businesses are also increasingly exposed to civil unrest or terrorist attacks.
Nearly 50% of respondents said a rise in physical losses is the exposure businesses fear most. This is mostly owing to natural calamities. Companies may have to prepare for more litigation in future – climate change cases targeting ‘carbon majors’ have already been brought in 30 countries around the world, with most cases filed in the U.S.