Business interruption following a cyber threat remains top risk for 2021 - Airmic
Business interruption following a cyber threat tops this year’s list of top risks in the Annual Survey 2021 from UK risk management association Airmic.
Released on the first day of Airmic’s annual conference, the report provides a picture of the risk environment facing Airmic members amid unprecedented challenges. Other top risks include loss of reputation and/or brand value and failure of operational resilience. These, with business interruption following a cyber threat, remain the top three front-of mind risks as they were in 2020.
This year’s Airmic Annual Survey consists of a main report, plus five themed reports, each of which addresses a top concern revealed by the research: ESG meets ERM; cyber threats; working together to tackle climate risks; agility and adaptability; and remote working.
Risks associated with the pandemic have changed the risk profile of the world. While the disease and pandemics didn’t make it into the top five risks of the 2021 Airmic survey, risk connectivity means that every risk in the Airmic top ten has been and continues to be touched by the pandemic and its systemic effect.
Fuelled by technology, the speed of the shift to a virtual economy during 2020 and into 2021 has encouraged organisations to examine their purpose and their core business model, and how they deliver their products and services.
The top risks continue to focus on the resilience of infrastructure and the value of reputation. There is the tip of a people risk iceberg, as concerns about mental health risks and musculoskeletal risks surface.
Airmic members are important insurance buyers. Although the lack of adequate cover at an affordable premium has become a risk in itself, Airmic members report some reduction in the throttle of premium rates increases and the imposition of cover limitations and capacity. There are positive signs that insurers and brokers are working hard on their client relationships, which have increased in fragility over the past two years.
Looking to the future, ESG has emerged as one key area where insurance buyers and insurers can work better together through more collaboration and engagement. Airmic says there needs to be more collaboration in the insurance industry on how to deal with climate risks, and the measurement, management and risk financing of those risks. This is especially significant given most insurers are now signed up to the same climate commitments.
The report reveals regulatory compliance in the context of ESG as the leading topic of concern to risk professionals this year. This does not mean that they are only concerned about climate threats and diversity and inclusion issues from the point of view of regulatory risk. In fact, more than 40 percent of risk professionals believe that climate change will have a material impact on their organisations within one to two years.
Equally, they see regulations and reporting requirements such as the Task Force on Climate related Financial Disclosures (TCFD) as an opportunity for them to sharpen their focus on the ESG issues that matter to their business.
Ransomware is the second greatest concern to risk professionals. The global pandemic has been one of the key drivers and accelerators of many of these trends in cyber threats.
The switch to remote working was made almost overnight and, with that, the related cyber risks of having employees accessing company data from home increased potential cyber risk touchpoints.
Claire Combes, Chair, Airmic, commented: “This survey provides contemporary insight into our current world, the concerns and priorities of our members, and an indication of where Airmic resources and energy should be directed. The survey underlines the importance of the connectivity of risks and the need for risk professionals to speak up in order to achieve the attention of top management.”
Julia Graham (pictured), CEO, Airmic, added: “The report, and the accompanying themed reports, provide a picture of how Airmic members and risk professionals have been stepping up to the challenge over the course of the global pandemic. As a profession, they are driving transformation and shaping the future of their organisations.”
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