Business interruption (BI) remains top peril (figure 1) for the fifth year in succession. In today’s interconnected industrial world, the reasons for BI are expanding from damage-driven events to intangible hazards or formely uninsurable events. Physical perils like fire and explosion and natural catastrophes are the top causes of BI that businesses fear most (figure 2).
However, so-called non-physical or non-damage causes of BI are becoming a much bigger issue. Cyber incidents, terrorist attacks, changing political landscape (Brexit, Trump, upcoming EU elections etc.) can cause large losses for companies without causing property damage. Another threat to businesses is supplier failure, which is related to using single-source, low-cost suppliers or plants in countries where labor is cheapest. As stated in the report, companies need to maintain the right level of supplier diversification at cost-competitive prices.
This year, the second priority concern for businesses is market developments. In addition to the concerns expressed about impact of volatile and stagnant markets and M&A, increasing digitalization and deployment of new technologies is also impacting existing business models and industry risk profiles.
“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty SE. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite.” The company urges businesses to think about mitigation of these risks as they continue to evolve in the future.
The annual Allianz Risk Barometer is published by Allianz Global Corporate & Speciality SE and is based on a survey conducted among 1,237 risk experts from 55 countries.
Published: January 2017
Source: Allianz Global Corporate & Specialty. Figure 1 and 2 represent the percentage of answers of all participants who responded (499).
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