Cyber threats and changes in legislation and regulation, including concerns around Brexit are considered the top risks by UK risk experts, according to the Allianz Risk Barometer 2019.
Cyber incidents (37% of responses) are neck-and-neck with Business interruption (BI) (37% of responses) as the top business risks globally.
BI remains the top threat for businesses worldwide for the seventh year running and is the top risk in countries such as the US, Canada, Germany, Spain, Italy and China.
“Uncertainty around Brexit along with concerns around a potential increase in the regulatory burden and global trade disputes have made confidence fragile," said Tracey Hunt, Deputy CEO, Allianz Global Corporate & Specialty (AGCS), UK. “It’s no surprise to see changes in legislation and regulation as the new top risk in the UK, jointly with cyber threats,”
"UK businesses also continue to be occupied by the threat of cyber-attacks. The consequences of a major data beach have never been greater since the EU's General Data Protection Regulation (GDPR) came into force with data breaches potentially now resulting in huge fines.”
In the wake of mega data breaches and privacy scandals, major IT outages and the introduction of tighter data protection rules in the European Union and other countries, cyber risk is now a core concern for global businesses in 2019 and beyond.
“Companies need to plan for a wide range of disruptive scenarios and triggers, as this is where their big exposure lies in today’s networked society,” says Chris Fischer Hirs, CEO of AGCS. “Disruptive risks can be physical, such as fire or storms, or virtual, such as an IT outage, which can occur through malicious and accidental means.
Increasing concern over cyber incidents follows a watershed year of activity in 2018. “Cyber risk has been a major risk for a number of years, but as with any new risk it has struggled with awareness,” explains Marek Stanislawski, Deputy Global Head of Cyber, AGCS. “We have now reached a point where cyber is as equally concerning for companies as their major traditional exposures.”
Cyber-crime now costs an estimated $600bn a year – up from $445bn in 2014. This compares with a 10-year average economic loss from natural catastrophes of $208bn – three times as much. While criminals use more innovative methods to steal data, commit fraud or extort money, there is also a growing cyber threat from nation states and affiliated hacker groups targeting critical infrastructure providers or stealing valuable data or trade secrets from companies. Cyber incidents are increasingly likely to spark litigation, including securities and consumer class actions. Data breaches or IT outages can generate large third party liabilities as affected customers or shareholders seek to recoup losses from companies.