Out-Law / Your Daily Need-To-Know

Businesses are worried about disruption from technological innovation and cyber attacks, says Allianz

15 Jan 2015, 5:00 pm

Companies around the world are most concerned about cyber risks manifesting themselves over the next five years, and have longer term worries about how technological innovation will disrupt their business, according to a new report by insurance provider Allianz.

In its Risk Barometer report for 2015 (14-page / 5.19MB PDF), Allianz said that the top business risk currently identified by the businesses from across 47 countries, which includes the UK, US, France, Germany and China, that had responded to its survey was business interruption (BI) and supply chain risk.

Natural catastrophes and the risk of fire or explosions were the second and third most commonly cited risk businesses are concerned about at the moment, according to the study.

"The lessons of the Bangkok floods and Japan tsunami have resulted in growing awareness from businesses of the knock-on effects from BI and supply chain management," Mark Mitchell, regional chief executive of Allianz Global Corporate & Specialty (AGCS) in Asia, said. "Companies now have a greater understanding of the need to monitor risk aggregations, not just geographically, but also in business interruption exposures."

However, cyber risk was identified by survey respondents as being the "top emerging risk for the next five years", the report said. Among the other top risks businesses identified that they are concerned they could have to contend with over the next five years is political or social upheaval and terrorism.

According to the report, many businesses are underestimating the cyber risks they face and budget constraints also mean some are not as well prepared as they should be to deal with the disruption that could be caused if those risks materialise.

"All industries surveyed found cyber risks to be more of a concern than last year," the report said. "The financial services, manufacturing, power and utilities and engineering sectors were the most influential in ranking cyber risks higher."

Allianz said that the effect of climate change is the top risk identified by businesses as coming over the next five to 10 years. Technological innovation was the fourth most frequently cited risk businesses cited as posing a potential issue for them during that period.

"Longer-term, companies face a dual challenge as they can expect further disruption from technological innovations while also being exposed to more volatile environmental conditions," the report said. "Companies will have to address the business risks, as well as the opportunities, of so-called 'disruptive technologies' such as 3D printing and nanotechnology, while also having to deal with climate change impact as an underlying risk which is not within their direct control."