Risk Barometer 2020: Business interruption is being displaced by IT risk

Reports of spectacular hacker attacks and data thefts are increasing. Companies are threatened with millions of euros in damage, loss of image and even a business interruption that could threaten their very existence if cybercriminals steal data, smuggle malware into networks or paralyze servers with their attacks. This development is also reflected in the "Allianz Risk Barometer 2020", for which more than 2,700 risk experts worldwide were surveyed: IT threats have displaced the risk of business interruption as the top risk.

What does the Hazard Barometer say for Switzerland?

In Switzerland, too, cyber risks ranked first for the first time among the 60 or so survey participants, with 57 percent of responses, ahead of business interruption (56% of responses), Allianz writes. Following at a considerable distance in third place, with 34 percent, were concerns about legal changes in the economic environment, such as trade wars or increasing protectionism. A brand new addition to the top 10 is the risk of product recalls, quality defects and serial faults (11%). Concerns about natural disasters, on the other hand, continue to decline, ranking only 9th (11%). "Cyberattacks can happen anytime, anywhere. Companies of all sizes would do well to protect themselves against the new risks. Allianz Suisse alone is recording double-digit growth rates for cyber insurance. At the same time, the number of claims is also rising," emphasizes Carlos Casian, cyberrisk expert at Allianz Suisse. "Nevertheless, cyber insurance is currently still a niche product in Switzerland. This will certainly change in the coming years," Casian is convinced.

Companies could also suffer major losses following business interruptions when critical data, systems or technologies are unavailable - either due to a technical glitch or following a cyberattack. "Many incidents are the result of employee inattention. Companies can only get a handle on the human risk with targeted employee training. In our opinion, there is still a lot of need for action here," says Ivo Heeb, Chief Underwriter Financial Lines at AGCS in Switzerland.

Climate change is a concern

Globally, IT threats (39% of responses) displaced the risk of business interruption (37% of responses) in second place. Business interruption had held the top spot in the ranking since 2013, when cyber was still in 15th place with 6 percent of responses. Concerns about legal changes in the business environment (3rd place with 27%) and the impact of climate change (7th place with 17%) are the biggest risers globally in the "Allianz Risk Barometer 2020." "Cyber threats and climate change are the two big challenges for companies in the new decade," says Joachim Müller, CEO of AGCS. If boards and risk managers do not address cyber and climate risks, it could have a significant impact on their companies' operational performance, financial results and reputation, Müller said.

Larger and more complex business interruption 

However, the trend toward larger and more complex business interruptions (BU) continues unabated. The causes are becoming more diverse and range from fires, explosions or natural disasters to failures in digital supply chains and political violence, Allianz said. "Today, digital supply chains and platforms enable full transparency and traceability of goods. However, a fire in a data center, a technical glitch or a hacker attack can cause costly outages for multiple companies at the same time, all using the same system and unable to quickly switch back to manual processes," said Christoph Müller, CEO of AGCS in Switzerland. Companies are also increasingly exposed to the direct or indirect effects of civil unrest, riots or terrorist attacks. Source: Allianz Suisse

For more information on the results of the Allianz Risk Barometer 2020, click here: https://ots.ch/7wicfe