- 11th Allianz survey: Cyber incidents remain top business risk for the fifth consecutive year while Pandemic outbreak and Business interruption round up the top three risks for businesses in India for 2022 – all strongly interlinked
- Natural catastrophes moves up two spots to #4 and Climate change falls a notch to #5
- Globally, Cyber, business interruption and natural disasters are the top three business risks in 2022.
- AGCS CEO Joachim Mueller: “’Business interrupted’ will likely remain the key underlying risk theme for this year. Building resilience is becoming a competitive advantage for companies.”
India, January 19, 2022
The same perils continue to dominate India’s risk landscape with Cyber incidents (#1 with 51% responses), Pandemic outbreak (#2 with 39%) and Business Interruption (#3 with 33%), reflecting the potential disruption and loss scenarios companies have been facing in recent times. Natural catastrophes moves up two spots to (#4 with 28%), and Climate change is at (#5 with 22%) as extreme weather events and transition risks mount.
Globally, Cyber perils are the biggest concern for companies in 2022, according to the Allianz Risk Barometer. The threat of ransomware attacks, data breaches or major IT outages worries companies even more than business and supply chain disruption, natural disasters or the Covid-19 pandemic, all of which have heavily affected firms in the past year.
Cyber incidents tops the Allianz Risk Barometer for only the second time in the survey’s history (44% of responses), Business interruption drops to a close second (42%) and Natural catastrophes ranks third (25%), up from sixth in 2021. Climate change climbs to its highest-ever ranking of sixth (17%, up from ninth), while Pandemic outbreak drops to fourth (22%). The annual survey from Allianz Global Corporate & Specialty (AGCS) incorporates the views of 2,650 experts in 89 countries and territories, including CEOs, risk managers, brokers and insurance experts. View the full global and country risk rankings.
“’Business interrupted’ will likely remain the key underlying risk theme in 2022,” AGCS CEO Joachim Mueller summarizes. “For most companies the biggest fear is not being able to produce their products or deliver their services. 2021 saw unprecedented levels of disruption, caused by various triggers. Crippling cyber-attacks, the supply chain impact from many climate change-related weather events, as well as pandemic-related manufacturing problems and transport bottlenecks wreaked havoc. This year only promises a gradual easing of the situation, although further Covid-19-related problems cannot be ruled out. Building resilience against the many causes of business interruption is increasingly becoming a competitive advantage for companies.”
Top Asia Pacific Risks
Cyber incidents (#1 with 40% responses), is the top Asia Pacific risk for the third consecutive year while Business interruption (#2 with 37%) and Pandemic outbreak (#3 with 27%) make up the top three business risks followed by Natural catastrophes (#4 with 25% ) rounding out the key issues in the region.
In Asia Pacific, Cyber was the top risk in India, Japan and Australia reflecting the recent technology woes of companies in the region.
As expected, Changes in legislation and regulation (#5 with 22%) also kept its place amongst the top five Asia Pacific risks in 2022 for the fourth consecutive year. In China, there is continuing crackdown on big internet companies and the US-China geopolitical rivalry has had widespread pressure on economic activity, ranging from trade to technology and investment. 2022 may likely see further political challenges, as the US heads into mid-term elections and China gathers for an all-important Communist Party Congress.
Top India risks
In India, Cyber ranks ranks #1 for the fifth consecutive year. The Internet Crime Report for 2020, revealed that India stands third in the world among top 20 countries that are victims of internet crimes, excluding US. Last year, Chinese hacking group, APT10 targeted the IT systems of two Indian vaccine makers whose coronavirus shots were being used in the country’s immunisation campaign. Last month, hackers also launched over a million attacks on companies globally, including across Asia Pacific in just four days, through a previously unnoticed vulnerability in a widely-used piece of open-source software called Log4J.
Pandemic outbreak remains a major concern for companies in India ranking #2, despite falling two places to fourth position in Global rankings (although the survey predated the emergence of the Omicron variant). While the Covid-19 crisis continues to overshadow the economic outlook in many industries, encouragingly, businesses do feel they have adapted well. The majority of respondents (80%) think they are adequately or well-prepared for a future incident. Improving business continuity management is the main action companies are taking to make them more resilient.
Business interruption (BI) ranks as the third most concerning risk in India and has been ranked a top three risk for the past five consecutive years. In a year marked by widespread disruption, the extent of vulnerabilities in modern supply chains and production networks is more obvious than ever. According to the survey, the most feared cause of BI is cyber incidents; reflecting the rise in ransomware attacks but also the impact of companies’ growing reliance on digitalization and the shift to remote working. Natural catastrophes and pandemic are the two other important triggers for BI in the view of respondents.
In the past year post-lockdown surges in demand have combined with disruption to production and logistics, as Covid-19 outbreaks in Asia closed factories and caused record congestion levels in container shipping ports. Pandemic-related delays compounded other supply chain issues, such as the Suez Canal blockage or the global shortage of semiconductors after plant closures in Japan, Taiwan and Texas from weather events and fires.
According to a recent Euler Hermes Global Trade Report, the Covid-19 pandemic will likely drive high levels of supply chain disruption into the second half of 2022, although mismatches in global demand and supply and container shipping capacity are eventually predicted to ease, assuming no further unexpected developments.
Awareness of BI risks is becoming an important strategic issue across entire companies. “There is a growing willingness among top management to bring more transparency to supply chains with organizations investing in tools and working with data to better understand the risks and create inventories, redundancies and contingency plans for business continuity,” says Maarten van der Zwaag, Global Head of Property Risk Consulting at AGCS.
The rise of Natural catastrophes and Climate change to fourth and fifth position respectively is telling, with both upwards trends closely related. Last year, India was hit by severe cyclones that caused widespread damage and fatalities. With climate change increasing sea surface temperatures, the cyclonic storms that barrel in from the Bay of Bengal have become fiercer and more frequent, particularly in the last decade, according to researchers.
Commenting on the India results CB Murali, CEO and Senior Account Manager AGCS India said: “It is no surprise that Cyber remains as the top India risk for the fifth consecutive year in light of the high-profile cyber attacks, combined with challenges caused by accelerating digitalization and remote working.
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 India. Meanwhile, the pandemic has exposed the extent of vulnerabilities in modern supply chains, and how multiple risks 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.”