COVID-19 related risks top global threats in 2021, finds Allianz
Risks related to the COVID-19 pandemic are the top threats in 2021, reflecting potential disruption and loss scenarios faced by companies worldwide, according to Allianz Risk Barometer 2021.
The findings are based on the views of 2,769 experts from more than 92 countries, including CEOs, risk managers, brokers and insurance professionals.
Around 41 percent of respondents identified business interruption (BI) as this year's top business risks, followed by pandemic outbreak and cyber incidents with 40 percent each. All the three risks are interlinked and related to the ongoing impacts of COVID-19.
“The Allianz Risk Barometer 2021 is clearly dominated by the COVID-19 trio of risks," said Joachim Müller, CEO of AGCS. "Business interruption, pandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities of our highly globalized and connected world.”
Business interruption risk returned to the top spot after being replaced by cyber incidents in 2020. BI was at the top of the Allianz Risk Barometer seven times until 2019.
BI is seen as the biggest cause of revenue losses and disruption to production, operations and supply chains, with 59 percent of respondents highlighting the pandemic as the main cause of BI in 2021, followed by cyber incidents (46 percent) and natural catastrophes and fire and explosion (around 30 percent each).
Philip Beblo, AGCS’s global property underwriting specialist, explained: “The consequences of the pandemic – wider digitalization, more remote working and the growing reliance on technology of businesses and societies – will likely heighten BI risks in coming years.
"However, traditional physical risks will not disappear and must remain on the risk management agenda. Natural catastrophes, extreme weather or fire remain the main causes of BI for many industries and we continue to see a trend for larger losses over time.”
AGCS noted that organisations need to improve their business continuity management by becoming more holistic, cross-functional, and dynamic, as well as monitoring and measuring emerging or extreme loss scenarios.
Müller said: “The coronavirus pandemic is a reminder that risk management and business continuity management need to further evolve in order to help businesses prepare for, and survive, extreme events. While the pandemic continues to have a firm grip on countries around the world, we also have to ready ourselves for more frequent extreme scenarios, such as a global-scale cloud outage or cyber-attack, natural disasters driven by climate change or even another disease outbreak.”
Furthermore, the report highlighted that cyber incidents still remain a key peril with more respondents than in 2020 and still ranking as a top three risk in many countries, including Brazil, France, Germany, India, Italy, Japan, South Africa, Spain, UK and the US.
The acceleration towards greater digitalization and remote working driven by the pandemic is also further intensifying IT vulnerabilities. At the peak of the first wave of lockdowns in April 2020, the FBI reported a 300 percent increase in incidents alone, while cyber crime is now estimated to cost the global economy over $1 trillion, up 50 percent from two years ago.
Additionally, the report found that ransomware incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands.
“COVID-19 has shown how quickly cybercriminals are able to adapt and the digitalization surge driven by the pandemic has created opportunities for intrusions with new cyber loss scenarios constantly emerging,” said Catharina Richter, global head of the Allianz Cyber Center of Competence at AGCS.
“Attackers are innovating using automated scanning to identify security gaps, attacking poorly secured routers or even using ‘deepfakes’ – realistic media content modified or falsified by artificial intelligence. At the same time, data protection and privacy regulation and fines for data breaches continue their upward trend.”
