What are the top risks to global businesses?
To find out, we dove into the Allianz Risk Barometer 2018, which surveyed 1,911 risk experts from 80 countries. The survey focused on large and small- to mid-size enterprises in 22 industry sectors and asked respondents to name the three risks they believed were most important.
In case you didn't have a chance to read the full report, we're sharing a recap of the top 10 global business risks, along with key insights from the report.
The Top 10 Risks To Global Businesses
- Business interruption
- Cyber incidents
- Natural catastrophes
- Market developments
- Changes in legislation and regulation
- Fire, explosion
- New technologies
- Loss of reputation or brand value
- Political risks and violence
- Climate change
Business interruption topped the list of global risks, with 42% of respondents naming it as a top risk.
Put simply, business interruption is the loss of income due to an event that forces a business to shut down temporarily. Whether it’s the result of a fire, a machinery breakdown, or even a cyber incident, business interruption can have a huge impact on a company’s bottom line. Yet, as Allianz points out, its impact is one of the hardest risks to measure.
This is the sixth consecutive year business interruption has topped the list of global risks. What’s new this year, though, is the type of scenarios that businesses fear the most. Specifically, those risks that don’t cause physical damage but result in lost income.
These are what insurers refer to as “non-damage” business interruption and can include political events or strikes that force a shutdown, withdrawal of permits or regulatory approval, or supply chain failures.
Increasingly, cyber incidents are a major concern for global businesses (40% of responses).
Today’s companies depend on technology for everything from running manufacturing equipment to shipping orders and customer data. That creates a major problem when systems fail.
In some cases, cyber incidents are due to sinister events like malware attacks and data breaches — but technical glitches and human error are much more common (and troublesome) reasons for failure.
Natural catastrophes & climate change
Not surprisingly, natural catastrophes were also among the top 3 risks to global businesses (30% of responses).
2017 was an unprecedented year for global insured losses due to hurricanes, flooding, and wildfires — $135 billion, to be exact — and many organizations fear this may be the “new normal”.
Specifically, climate change effects are a growing concern for businesses (10th, 10%). Climate change poses serious threats to organizations, and virtually no industry is immune — from food and fashion to cloud computing and banking.
While most companies recognize that climate change poses a serious threat, most aren't really sure what climate risk management should look like or how to address climate risks.
The risks companies face have changed, whether through new technology, regulatory and market changes, or an increasingly volatile climate. “New risks require new tools to help manage and mitigate potential impacts,” says Allianz.
To learn more about the tools available to help you meet these challenges, check out our guide to EHS risk management.