Economic risks, business interruption and destructive natural catastrophes are the risks which business fear the most, according to a recent study by Allianz Glabal Corporate & Speciality (AGCS). At the other end of the scale, and perhaps lacking good reason, is cyber risks, with many companies underestimating online dangers.
AGCS, the global corporate and specialty insurer in the Allianz Group, carried out a survey among risk consultants at the end of last year to identify the risks expect to trouble companies most in the future. The most frequently mentioned type of risk was economic (21 percent of respondents). Specifically, companies are concerned about a looming recession and the sovereign debt crisis as well as about rising commodity prices and foreign currency fluctuations.
Business interruption was the second most pressing issue, with 14% of respondents mentioning it as a risk. Centralized procurement, global purchasing, increasing outsourcing to suppliers and just-in-time production reduce costs, but also render companies more vulnerable to process interruptions.
Natural catastrophes came in at third among the greatest business risks for 2012, according to the study. From floods and torrential rains to hurricanes, typhoons or earthquakes – economic development and technological progress multiply the cost of natural catastrophes. In fact, insured claims related to weather-related natural catastrophes have increased from USD 5 billion to more than USD 40 billion over the last 30 years.
According to the study IT risks are almost completely ignored by companies around the world. Just one per cent of representatives surveyed by AGCS mentioned it as a key concern. The study suggested, however, that this lack of awareness could leave companies vulnerable to financial losses resulting from IT issues. Things such as hacking or deficiant internal processes can quickly snowball and cost revenue losses in the millions.