[BreachExchange] Cyber risk and disasters top fears for businesses in 2019

[Destry Winant]

https://www.thenational.ae/business/economy/cyber-risk-and-disasters-top-fears-for-businesses-in-2019-1.814575

Cyber risks and unforeseen interruptions to business are the top
commercial risks globally in 2019 and beyond, according to a survey.

Cyber breaches are most feared while interruption to operations – loss
due to disaster-related closure or due to rebuilding after a
catastrophe – scenarios are becoming more complex with rising costs
globally, according to Allianz Risk Barometer 2019, an annual
corporate risk survey.

“Companies need to plan for a range of disruptive scenarios and
triggers, as this is where their big exposure lies in today’s
networked society,” said Chris Hirs, chief executive of Allianz Global
Corporate & Specialty.

Thirty seven per cent of respondents considered cyber attacks and
business interruptions among the top risks faced by the corporate
world today.

Disruptive risks can be physical, such as fire or storms, or virtual,
such as an IT outage that can be caused by malicious and accidental
means, said Mr Hirs.

“Whatever the trigger, the financial loss for companies following a
standstill can be enormous.”

Companies are also worried year-on-year about matters such as US-China
trade tensions, rising tariffs and the Brexit issue, with 27 per cent
of respondents considering legislation and regulation as a major
corporate challenge in 2019.

The survey polled 2,415 business experts from 86 countries, including
chief executives, risk managers, brokers and insurance professionals.

Business interruption has been the top threat for companies worldwide
for seven years but this year it is joined by cyber concerns as the
leading global risk.

“Potential business interruption scenarios are becoming ever more
diverse and complex in a globally connected economy, including
breakdown of core IT [information technology] systems, product recalls
or quality issues, terrorism or political rioting or environmental
pollution,” said the report.

Both cyber and business interruption risks are increasingly
interlinked as ransomware attacks or accidental IT outages often
result in disruption of operations and services, costing hundreds of
millions of dollars.

Around $600 billion, nearly 1 per cent of global domestic product, is
lost to cybercrime each year, up from 2014 global losses of nearly
$445bn, according to a report last year by Centre for Strategic and
International Studies based in Washington.

For the first time, shortage of skilled workers appeared among the 10
top business risks globally as well as for many countries including
the US, Australia, the UK and nations in Central and Eastern Europe.
It is driven by factors such as changing demographics, Brexit
uncertainty and a shallow pool of talent in the digital economy.

“Skilled workforce – and human capital more generally – has become the
scarce resource of the digital economy,” said Ludovic Subran, deputy
chief economist of Allianz.

Competition is fierce to hire new recruits with competencies in
artificial intelligence and data science as most of these jobs did not
exist 10 years ago, said Mr Subran.