Cyber threat now major global risk
Cyber attacks and other forms of cyber threats have become one of the top business risks, according to a new survey by Allianz Global Corporate & Specialty (AGCS).
AGCS’s seventh annual Allianz Risk Barometer, based on insight from 1,911 risk experts from 80 countries, said that business interruption (42 percent) and cyber incidents (40 percent) were the top two business risks, globally. Larger losses from natural catastrophes (30 percent) are a rising concern for businesses, with the record-breaking 2017 disaster year. Climate change and increasing volatility of weather ranked in the top 10 business risks globally for the first time. Five years ago, cyber incidents ranked fifteenth in the Allianz Risk Barometer.
“For the first time, business interruption and cyber risk are neck-and-neck in the Allianz Risk Barometer and these risks are increasingly interlinked,” said Chris Fischer Hirs, chief executive officer, AGCS. “Whether resulting from attacks such as WannaCry, or more frequently, system failures, cyber incidents are now a major cause of business interruption for today’s networked companies whose primary assets are often data, service platforms or their groups of customers and suppliers. However, last year’s severe natural disasters remind us that the impact of perennial perils shouldn’t be underestimated either. Risk managers face a highly complex and volatile environment of both traditional business risks and new technology challenges in future.”
The risk impact of new technologies (15 percent) is one of the biggest climbers on the global list, as companies recognize innovations such as artificial intelligence or autonomous mobility could create new liabilities and larger-scale losses in the future.
The risk from cyber incidents (45 percent) took the top spot on the US rankings for the first time and includes cybercrime, data breaches and IT failure. Business interruption (39 percent), including impact on supply chains, ranked second followed closely by natural catastrophes (38 percent).
Recent events such as the WannaCry and Petya ransomware attacks brought significant financial losses to a large number of businesses. Others, such as the Mirai botnet, the largest-ever distributed denial of service attack on major internet platforms and services in Europe and North America, at the end of 2016, demonstrate the interconnectedness of risks and shared reliance on common internet infrastructure and service providers.
On an individual level, recently identified security flaws in computer chips in nearly every modern device reveal the cyber vulnerability of modern societies. The potential for so-called “cyber hurricane” events to occur, where hackers disrupt larger numbers of companies by targeting common infrastructure dependencies, will continue to grow in 2018.
The Allianz Risk Barometer results also showed that awareness of the cyber threat has risen sharply among small- and medium-sized businesses, with a significant jump from # 6 to # 2 for small companies and from # 3 to # 1 for medium-sized companies. With regard to sector exposure, cyber incidents rank top in the entertainment & media, financial services, technology and telecommunications industries.