The top risks in companies: Cyberattacks and business interruptions

Almost every day we read in the media about cyberattacks by criminals that cause considerable damage and even lead to production losses. Companies are increasingly afraid of becoming victims of such attacks themselves. This is also shown by the Allianz Risk Barometer, for which around 2,700 experts in 89 countries and territories worldwide were surveyed on top risks. The respondents included CEOs, risk managers, brokers and insurance experts. For example, cyber incidents are the top risk for companies (44 % of responses), business interruption ranks second globally (42 %), while natural catastrophes have advanced to third place (25%, up from 6th last year).

Resilience is becoming a competitive factor

Naturally, the risks are weighted somewhat differently depending on the sector. However, it is noticeable that business interruptions were named as the No. 1 risk globally in more than half of the industries surveyed (in 11 out of 20 sectors), while cyber ranked at the top in "only" five out of twenty industries. "Business disruption is likely to remain the most important risk issue in 2022," said Christoph Müller, CEO of AGCS, summarizing this year's survey. "For most companies, the biggest fear is not being able to manufacture their products or provide their services. In 2021, disruptions occurred on an unprecedented scale, caused by a variety of triggers: Crippling cyberattacks, the impact of numerous climate change-related weather events on the supply chain, and pandemic-related production problems and transportation bottlenecks wreaked havoc. This year promises only a gradual easing of the situation, although further problems related to Covid-19 cannot be ruled out. Building resilience to the many causes of business disruption is increasingly becoming a competitive advantage for companies." According to the Euler Hermes Global Trade Report, further disruptions in the global supply chain are expected to continue into the second half of 2022.

Top risks in Switzerland: cyber in first place

In Switzerland, the ranking is also dominated by cyber incidents (1st place with 61%) and business interruption (2nd place with 57%). Market changes, for example caused by volatility, increased competition/new competitors, stagnating markets or market fluctuations (25%), follow in third place. According to Allianz, uncertainty at the political level is also likely to play a role here: The lack of a framework agreement with the EU, unresolved problems in connection with Brexit or even monetary policy would lead to a kind of "feeling of powerlessness" in companies, as Christoph Müller explains.

In the context of cyber risk, Christoph Müller sees "double extortion tactics" as particularly worrying: Increasingly, cybercriminals not only limit themselves to extorting ransom after data has been encrypted, but also subsequently threaten to publish sensitive data if payment is not made again. "Ransomware has become big business for cybercriminals, who are refining their tactics and lowering the barriers to entry - it hardly takes any technical knowledge to carry out an attack, and the relevant tools can be conveniently booked on the web. The commercialization of cybercrime makes it easier to exploit vulnerabilities on a large scale. We will see more attacks on supply chains and critical infrastructure," explains Ivo Heeb, Underwriting Expert Financial Lines at AGCS in Switzerland.

New among the top risks: Skills shortage

The biggest climber among the top risks, alongside market changes, is climate change (5th place with 17 %). New in the top ten are the risk of a shortage of skilled workers, which ranks 7th (12%), as well as concerns about the failure of critical infrastructure (9th place with 11 %) and loss of reputation (9th place with 11 %). Worries about Covid-19 or another pandemic are of significantly less concern to companies than they were in 2021 (6th place with 15%).

According to the latest Allianz Risk Barometer, attracting and retaining workers has rarely been as difficult as it is today. Respondents ranked this as one of the top five risks in engineering, construction, real estate, public services and healthcare, and the biggest risk in transportation. The pandemic in particular has led to a change in thinking among many employees and also employers, says Ivo Heeb. The loss of orders and closures, but also an increased workload, have led to an exodus of workers in some sectors. Many have reoriented themselves professionally or are looking for jobs with a better work-life balance. As a result, where there is economic recovery after the pandemic, there is now a short-term shortage of skilled workers.

Business interruption remains top risk

But business interruption also remains a dominant issue for companies. In a year marked by widespread disruption, the extent of vulnerabilities in modern supply chains and production networks is more apparent than ever. In addition to cyber incidents, the impact of companies' increasing reliance on digitalization and the shift of work to remote locations are also important causes. Natural disasters and pandemics are the other two important triggers for business interruption, according to respondents. "The pandemic highlighted the extent of interconnectedness in modern supply chains and how inherently unrelated events can come together to cause widespread outages. For the first time, the resilience of supply chains has been severely tested on a global scale," says Christoph Müller, CEO of AGCS in Switzerland.

Source and further information: www.agcs.allianz.com