Cyber Incidents And Competition Are Major Business Threats

• Business interruption (BI) remains the top risk for fourth year in succession, with cyber-attacks, geo-political instability and technology failure as new potential drivers of BI losses
• The competitive market environment and cyber incidents appear in the top three global business risks for the first time
• BI continues to lead top concerns for U.S. managers, followed by natural catastrophes and cyber
• Companies are worried about increasing sophistication of cyber-attacks, but tend to underestimate technical IT failure as cause of costly outages

NEW YORK--(BUSINESS WIRE)-- The risk landscape for businesses is substantially changing in 2016. While businesses are less concerned about the impact of traditional industrial risks such as natural catastrophes or fire, they are increasingly worried about the impact of other disruptive events, fierce competition in their markets and cyber incidents. These are the key findings of the Allianz Risk Barometer 2016, the fifth annual survey on corporate risks published by Allianz Global Corporate & Specialty® (AGCS), which surveyed over 800 risk managers and insurance experts from more than 40 countries.

According to the Allianz Risk Barometer, Business and Supply Chain Interruption (BI) remains the top risk for businesses globally for the fourth year in succession. However, many companies are concerned that BI losses, which usually result from property damage, will increasingly be driven by cyber-attacks, technical failure or geo-political instability as new “non-physical damage” causes of disruption.

Market Developments, which consist of market volatility, intensified competition and market stagnation, together with Cyber Incidents, debuted in the top three global business risks; Cyber Incidents also was cited as the most important long-term risk for companies in the next 10 years. In contrast, Natural Catastrophes dropped two positions to fourth year-over-year, reflecting the fact that in 2015 losses from natural disasters reached their lowest level since 2009.

In the U.S., BI was cited by 39% of respondents as the top business risk, followed by Natural Catastrophes (33%) and Cyber (32%).

“Business interruption continues to be the primary concern of risk managers and how well a company responds will determine how well it survives to compete,” said Hugh Burgess, global head of mid-corporate and head of corporate lines, North America. “As global supply chains continue to grow and increase in complexity, the threat of BI continues to incubate in numerous and increasing areas, which in turn, continues to weigh on the minds of risk managers today.”

Rising sophistication of cyber attacks

Another area of increasing concern for businesses globally is the threat of Cyber Incidents, which include cyber crime, data breaches and technical IT failures. Cyber Incidents gained 11 percentage points year-over-year, to move from fifth position to debut into the top three risks (28% of global responses). Five years ago, Cyber Incidents were identified as a risk by just 1% of responses in the inaugural Allianz Risk Barometer; Loss of reputation (69%) is cited as the main cause of economic loss for businesses after a cyber incident, followed by BI (60%) and liability claims after a data breach (52%).

While the cyber insurance market is still in its infancy in Europe albeit developing quickly, the U.S. market has already reached maturity and has experienced substantial losses.

“The U.S. is unique in that we have already paid losses in the hundreds of millions to cover cyber loss. Breaches happen everywhere, but the U.S. has complex regulatory regimes and an extremely active plaintiff's bar. These dynamics have driven the price of loss higher in the U.S. than anywhere else,” said Emy Donavan, national practice leader - cyber. “Boards and C-suites in the U.S. are acutely aware of the individual risk they may have if a cyber event occurs on their watch. Litigation trends and case law are developing so quickly that potential liability associated with clients’ normal operations can change literally overnight.”

Specific risk profiles for regions and sectors

In addition to a regional analysis (including the U.S./North America), the Allianz Risk Barometer also explores sector-specific risks, for example, in manufacturing, marine & shipping and other major industries.

For more information and to download the full report please visit:
http://www.agcs.allianz.com/assets/PDFs/Reports/AllianzRiskBarometer2016.pdf

About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) SE is the Allianz Group's dedicated carrier for corporate and specialty insurance business. AGCS provides insurance and risk consultancy across the whole spectrum of specialty, alternative risk transfer and corporate business: Marine, Aviation (incl. Space), Energy, Engineering, Entertainment, Financial Lines (incl. D&O), Liability, Mid-Corporate and Property insurance (incl. International Insurance Programs).

Worldwide, AGCS operates in 28 countries with own units and in more than 160 countries through the Allianz Group network and partners. In 2014 it employed more than 3,500 people and provided insurance solutions to more than half of the Fortune Global 500 companies, writing a total of €5.4 billion gross premium worldwide annually. AGCS SE is rated AA by Standard & Poor’s and A+ by A.M. Best.

For more information please visit www.agcs.allianz.com or follow us on Twitter @AGCS_Insurance LinkedIn and Google+.

Cautionary Note Regarding Forward-Looking Statements

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Allianz Global Corporate & Specialty
Sabrina J. Glavan, 646-472-1510
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Erin Burke, 631-239-6903
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Source: Allianz Global Corporate & Specialty