Cyber joins business interruption as leading global risk
In the wake of mega data breaches and privacy scandals, major IT outages and the introduction of tighter data protection rules in the European Union and other countries, cyber risk is now a core concern for businesses in 2019 and beyond. According to the Allianz Risk Barometer 2019, ‘cyber incidents’ (37% of responses) are neck-and-neck with ‘business interruption’ (BI) (37% of responses) as the top business risks globally.
‘Climate change’ (#8 with 13% of responses) and ‘shortage of skilled workforce’ (#10 with 9% of responses) are the biggest climbers globally. At the same time, companies are more worried year-on-year about ‘changes in legislation and regulation’ (#4 with 27% of responses) resulting in impacts such as Brexit, trade wars and tariffs. The annual survey on global business risks from Allianz Global Corporate & Specialty (AGCS) incorporates the views of a record 2,415 experts from 86 countries including CEOs, risk managers, brokers and insurance experts.
“Companies need to plan for a wide range of disruptive scenarios and triggers, as this is where their big exposure lies in today’s networked society,” said Chris Fischer Hirs, CEO of AGCS. “Disruptive risks can be physical, such as fire or storms, or virtual, such as an IT outage, which can occur through malicious and accidental means. They can stem from their own operations but also from a company’s suppliers, customers or IT service providers. Whatever the trigger, the financial loss for companies following a standstill can be enormous. New risk management solutions, analytical tools and innovative partnerships can help to better understand and mitigate the modern myriad of BI risks and prevent losses before they occur.”
‘Shortage of skilled workforce’ appears for the first time among the ten top business risks globally as well as for many countries in Central and Eastern Europe, the UK, US, Canada and Australia. It is driven by factors such as changing demographics, Brexit uncertainty and a shallow pool of talent in the digital economy.
“Skilled workforce — and human capital more generally — has become the scarce resource of the digital economy,” said Ludovic Subran, Deputy Chief Economist of Allianz. “Competition is fierce between companies to get new recruits with competencies in artificial intelligence, data science or ‘frontier risk management’ such as managing cyber or reputational risk, as most of these jobs did not exist ten years ago. Even attractive salaries do not suffice as the pool of recruits with the needed skillset is limited and the urgency to onboard them does not allow for on-the-job training.”
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