Business interruption (BI) remains the top risk for the fourth year in succession in Allianz Global Corporate and Specialty’s (AGCS) Risk Barometer report.
However, increased risks from cyber-attacks, geo-political instability and technology failure add new potential drivers to disruption, rather than traditional physical threats.
The competitive market environment and cyber incidents appear in the report’s top three global business risks for the first time.
Among US managers BI continues to top concerns, followed by natural catastrophes and cyber.
Companies are worried about increasing sophistication of cyber-attacks, but tend to underestimate technical IT failure as cause of costly outages, said the report.
AGCS surveyed over 800 risk managers and insurance specialists in more than 40 countries.
“Business interruption continues to be the primary concern of risk managers and how well a company responds will determine how well it survives to compete,” said Hugh Burgess, global head of mid-corporate and head of corporate lines, North America.
“As global supply chains continue to grow and increase in complexity, the threat of BI continues to incubate in numerous and increasing areas, which in turn, continues to weigh on the minds of risk managers today,” he said.
The study noted that though the cyber insurance market is still in its infancy in Europe, it is developing fast, and the US market has already reached maturity, sustaining substantial losses.
“The US is unique in that we have already paid losses in the hundreds of millions to cover cyber loss,” said Emy Donavan, AGCS’s national practice leader for cyber.
“Breaches happen everywhere, but the US has complex regulatory regimes and an extremely active plaintiff's bar. These dynamics have driven the price of loss higher in the US than anywhere else,” she said.
“Boards and C-suites in the US are acutely aware of the individual risk they may have if a cyber event occurs on their watch. Litigation trends and case law are developing so quickly that potential liability associated with clients’ normal operations can change literally overnight,” added Donavan.