Corporates are now most worried about these two types of risks without underestimating the business interruption risk and its implications on the supply chain.
Designed by Allianz Global Corporate & Specialty (AGCS), subsidiary of German insurer bearing the same name, the world’s seventh risk barometer analyzes the data provided by over 1 900 corporate officials and experts in insurance from 80 countries.
The study classifies major risks sustained by corporates worldwide as regional or national.
Risk barometer 2018: Top 3 business risks at the global level
Business interruption related to break in supply chain ranks, for the sixth consecutive year, at the top of the podium. This risk is the most dreaded one at the global level (as mentioned by 42% of those polled).
Computer piracy and loss of data , henceforth, come in the second position. Underestimated in the past, cyber incidents have now become a threat dreaded on the long-term basis. This kind of threat was ranking third in the previous poll and fifteenth in the 2013 poll.
With the advent of industry 4.0, cyber incidents have become at the origin of business interruption for a large number of companies. This threat is ranking first in the Americas (42% of those polled) as well as in Australia, India, Singapore and in several European countries; Austria (70%), United Kingdom (60%), Belgium (43%).
This growing concern regarding cyber risks comes after the several cyber-attacks that have highly impacted the year 2017 during which « WannaCry » ransomware [4] alone, having spread panic worldwide, set global economy back one billion USD.
Natural disasters risk has also increased in the 2018 barometer, ranking in the third position. Rising losses related to extreme events triggered concern among corporate executives.
In 2017, a record-high bill worth 330 billion USD in economic damage was reported following the passage of the devastating Harvey and Irma hurricanes [5] in the United States and the Caribbean. Insured losses amounted to 130 billion USD.
As a consequence, and for the first time, growing weather instability enters major top 10 risks, a threat that used to languish in 14th position in the 2017 standings.
Allianz risk barometer 2018: The 10 major risks perceived by corporates in 2018 worlwide
| Ranking 2018 | Ranking 2017 | The 10 major global risks in 2018 | % of respondents in 2018 | % of respondents in 2017 |
|---|---|---|---|---|
| 1 | 1 | Business interruption (including supply chain disruption) | 42% | 37% |
| 2 | 3 | Cyber incidents (cyber crimes, IT failure, data breaches) | 40% | 30% |
| 3 | 4 | Natural catastrophes (e.g. storm, flood, earthquake,...) | 30% | 24% |
| 4 | 2 | Market developments (e.g. volatility, intensified competition , new entrants, M&A, market stagnation and fluctuation) | 22% | 31% |
| 5 | 5 | Changes in legislation and regulation (government change, economic sanctions, protectionism, Brexit,...) | 21% | 24% |
| 6 | 7 | Fire, explosion | 20% | 16% |
| 7 | 10 | New technologies (e.g. impact of increasing interconnectivity, nanotechnology, artificial intelligence, 3D printing, drones,...) | 15% | 12% |
| 8 | 9 | Loss of reputation or brand value | 13% | 13% |
| 9 | 8 | Political risks and violence (e.g. war, terrorism,...) | 11% | 14% |
| 10 | 14 | Climate change, increasing volatility of weather | 10% | 6% |
Allianz risk barometer 2018: The 10 major risks perceived by corporates in Africa and the Middle East
| Ranking 2018 | Ranking 2017 | The 10 major global risks in 2018 | % of respondents in 2018 | % of respondents in 2017 |
|---|---|---|---|---|
| 1 | 6 | Business interruption (including supply chain disruption) | 31% | 22% |
| 2 | 8 | Fire, explosion | 31% | 15% |
| 3 | 3 | Political risks (war, terrorism,...) | 28% | 31% |
| 4 | 1 | Market developments (volatility, intensified competition / new entrants, M&A, market stagnation, market fluctuation) | 27% | 39% |
| 5 | 5 | Cyber incidents (cyber crimes, IT failure, data breaches) | 23% | 23% |
| 6 | 7 | Natural catastrophes (storm, flood, earthquake,...) | 22% | 17% |
| 7 | 4 | Changes in legislation and regulation (government change, economic sanctions, protectionism, Brexit,...) | 21% | 26% |
| 7 | 9 | Theft, fraud, corruption | 21% | 14% |
| 9 | 2 | Macroeconomic developments (austerity programs, commodity price increase, deflation, inflation) | 15% | 37% |
| 10 | 10 | Loss of reputation or brand value | 11% | 10% |
Another novelty, 2018 risk barometer included, for the first time, the major business in Morocco [6], in Burkina Faso [7], in Côte d’Ivoire [8] and in Togo [9]. South Africa [10] and Nigeria [11] are already present in the 2017 barometer.