The risk scene is set to change significantly for businesses in 2016. Apart from traditional accidents like fire outbreaks and natural disasters, there are other top risks which business owners need to consider.
According to the fifth annual survey on corporate risks published by Allianz Global Corporate & Specialty (AGCS), titled “2016 Allianz Risk Barometer,” business owners are increasingly worried about several issues this year, including disruptive events, fierce competition and cyber incidents. The survey of the report covered over 800 risk managers and insurance experts from more than 40 countries.
Here are some of the risks business owners should be worried about in 2016:
Business Interruption (BI)
This is mitigated by the fact that many of the other top 10 global risks such as natural catastrophes, fire and explosion, cyber incidents and political instability can also have severe business interruption (BI) implications. According to Risk Barometer responses, the major causes of BI that companies are most worried about include natural catastrophes (51%), closely followed by fire and explosions (46%). Supplier failure ranks third (32%).
“Businesses need to prepare for a wider range of disruptive forces in 2016 and beyond. The increasing impacts of globalisation, digitalisation and technological innovation pose fundamental challenges,” said Axel Theis, Member of the Board of Management, Allianz SE.
Market developments
Many industrial businesses are facing a growing number of wide-ranging challenges which include successfully adapting to, and managing, challenges of business models posed by increasing automation, digitalization and interconnectivity of industry. There is also the threat posed by the continuing emergence of potentially more agile start-ups and the ongoing development of “disruptive technologies.” These innovations help to create a new market and value network, which eventually disrupt the old one. Business owners need to be more innovative themselves, in order to effectively serve the next generation of customers.
Cyber Incidents
Cyber risk appears in many forms, all of which can represent major threats to business. Companies constantly face new exposures, including first and third-party damage, business interruption and regulatory consequences. It is estimated that cyber-crime alone costs the global economy approximately $445bn a year, with the world’s largest economies accounting for around half of this. Data analysed in an AGCS report titled “A Guide to Cyber Risk: Managing The Impact of Increasing Interconnectivity” shows that the threat posed by such incidents is expected to increase further in 2016.
“Attacks by hackers are becoming more target-oriented, lasting for longer and can trigger continuous penetration,” said Jens Krickhahn, Practice Leader Cyber & Fidelity, at AGCS Financial Lines Central & Eastern Europe.
“The fact that companies often only recognize the loss when an attack has already happened means all they can do is try and prevent further damage. This is why prevention is such a key element in IT security. Managing cyber risk has to be an integral part of any company’s risk management strategy,” Jens also said.
Infographics from the 2016 Allianz Risk Barometer
A snapshot of top business risks around the world
Top 10 Global Business Risks for 2016
Top business risks in 2016 by industry
