Insurance News: Business interruption and cyber breaches joint top Australia threats

Published on March 04, 2022
Insurance News: Business interruption and cyber breaches joint top Australia threats

Supply disruption and other forms of business interruption, along with cyber breaches, pose the biggest threats to corporate Australia over the next 12 months, while pandemic outbreak, the top risk last year, slipped to sixth in an annual Allianz Global Corporate and Specialty (AGCS) survey.

According to the Allianz Risk Barometer survey, 41% of 59 respondents in Australia included business interruption in their top three risks, with 41% also including digital incidents such as attacks, IT failure and ransomware crime. This made them the joint top perils this year. The two risks placed second and third in the survey last year.

Climate change placed third (34%), followed by natural catastrophes (29%) and changes in legislation and regulation (27%).
Rounding out the top-10 list are pandemic outbreak (24%), shortage of skilled workforce (19%), market developments (15%), loss of reputation or brand value, and macroeconomic developments (14% each).

AGCS APAC MD Mark Mitchell says while the pandemic may have dropped, the implications of COVID-19 on supply chains remains a major concern in Australia.

“This is one of the reasons why business interruption tops the list of risks for 2022 in Australia and is a close second globally,” he told today.

He says pandemic outbreak would likely have ranked higher in Australia if the survey was carried out in January. The survey was undertaken in October and November, which was shortly after NSW and Victoria eased out of lockdowns.

He says business interruption would be expected to worsen if further government-mandated lockdowns occurred.

“While these are not expected in response to the Omicron variant, this could occur if a new, more virulent variant emerged in 2022,” Mr Mitchell said. “That said, the impact Omicron is having on the workforce and supply chains suggests that business disruption, if not interruption, will be an ongoing issue for some months, and possibly longer depending on the combined impact of COVID and the expected return of a traditional winter influenza season, as is currently occurring in the northern hemisphere.”

Globally the survey of 2650 respondents – which includes CEOs, risk managers, and insurance experts – in 89 economies list the three leading risks as cyber (44%), business interruption (42%) and natural catastrophes (25%).

Pandemic outbreak moved down two spots to fourth (22%) and climate change climbed from three places up to sixth (17%)
Allianz says this is only the second time in the survey’s history that cyber risk has occupied the top spot, reflecting the severity of the impact of data breaches, ransomware attacks and other digital disruptions to businesses including in Australia. Cyber first topped the risk list in 2020.

Since the pandemic broke out in March 2020, cyber crime has worsened significantly as digital crooks – some believed to be backed by rogue states – have exploited the world’s overnight shift to remote working and shopping.

“It is no surprise that cyber is the top Asia Pacific risk for the third consecutive year and second in Australia in light of the high-profile ransomware attacks, combined with problems caused by accelerating digitalisation and remote working,” Mr Mitchell said.

“Following a year of unprecedented global supply chain disruption, business interruption is a consequence of many of the other risks in the rankings, such as cyber and natural catastrophes and will be a perennial concern for companies the world over and in Asia Pacific.

“Meanwhile, the pandemic has exposed the extent of vulnerabilities in modern supply chains, and how multiple events can come together to create disruption.

“There will be a greater need for companies to build resilience to cope with the interconnectivity of risks in future.”

Blog Submission: Peter Sellwood

Procurement Australia InsureRight – Insurance & Risk Management

Source: Insurance News

Contact us today to speak to our insurance specialists for more information.

Contact A Representative