14 January 2015 Insurance

Cyber in top 5 business risks: Allianz

The risk of cyber crime and IT failures has continued its rapid rise, moving into the top five business risks globally for the first time.

This is according to Allianz’s risk barometer, which added that in Germany, the UK and the US cyber risks are among the top three corporate risks. Globally, cyber crime was ranked as the eighth business risk in 2014 and 15th in 2013.

This follows a series of cyber attacks in 2014, including the high profile hacking attack on Sony Pictures. According to Allianz, the recent attack demonstrates that cyber crimes typically come with additional reputation fall out that can be even more damaging.

It added that cyber crime is also evolving, with the amount of malware and malicious software for Android devices rocketing by 400 percent since 2012.

“The growing interdependency of many industries and processes means businesses are now exposed to an increasing number of disruptive scenarios. Negative effects can quickly multiply. One risk can lead to several others. Natural catastrophes or cyber attacks can cause business interruption not only for one company, but to whole sectors or critical infrastructure,” said Chris Fischer Hirs, chief executive officer of Allianz Global Corporate & Specialty (AGCS).

Despite a growing awareness of cyber risks, many companies still underestimate the different impacts, according to 73 percent of responses. Budgetary constraints are another reason why companies are not better prepared to combat cyber risks.

“Cyber risks are very complex. Different stakeholders such as IT security architects and business continuity managers need to share their knowledge to identify and evaluate threat scenarios,” said Jens Krickhahn, practice leader cyber & fidelity at AGCS financial lines, Germany & Central Europe. “Previously siloed knowledge needs to be incorporated in one’ think tank’ which can look at risks holistically. The ‘human factor’ should also not be underestimated, as employees can cause IT security incidents, inadvertently and deliberately.”

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