Top 10 Business Risk in Today’s Interconnected World: The Allianz Risk Pulse
A new Alliance Risk Pulse global survey of more than 500 Allianz corporate insurance experts focused on Top 10 Business Risks by region in 2013 provides a fascinating insight into the kinds of corporate headaches that keep senior business leaders and risk managers up at night. The Alliance “Risk Barometer” survey divides into three global regions – North and South, Europe, and Asia/Pacific and was conducted among risk consultants, underwriters and claims experts. It then takes an intriguing look at perceptions of business risks on a country by country basis.
According to the Risk Barometer 2013
- Business interruptions, natural disasters and fire are the top risks for global companies
- Businesses underestimate the risk of power outages and cyber crime
As one might expect, perception of risks vary on a granular country by country basis. The “big three,” however – Business interruption/supply chain risk, Natural catastrophes and Fire/explosion – remain a constant in the medal positions despite the order changing slightly with “Nat Cats” coming at number one in Asia/Pacific and business interruption/supply chain risk replacing it at top spot in North America and South America, and Europe.
Following the recent spate of natural disasters, which include floods, earthquakes and tsunamis in Asia, it is hardly surprising that Nat Cats are high on the risk register in these territories. The fact that Business Interruption and supply chain risk are top of the charts in North America, South America and Europe may also be related, to some extent, because we all know that businesses are increasingly interconnected so that a flood in Bangkok today could lead to a non-delivery of a crucial microchip in Silicon Valley tomorrow.
Are there any surprises on the list? Well, it may came as a surprise to some that Euro zone breakdown is number 6 in the Asia/Pacific list but only number 8 in Europe, which suggests that risk managers in the Far East are less relaxed that their counterparts in Europe about the prospects of an imminent Euro zone recovery! But again this just shows how interconnected global risk is today if Euro zone breakdown can register high on an Asia Pacific business person’s risk radar.
Other risks to watch out for include changes in legislation and regulation, which feature in the top 5 in Europe and the Americas, most likely due to the increasingly stringent burdens being placed on businesses by regulators in those jurisdictions. Loss of reputation or brand value has also crashed into two of the lists at number 8 in the Americas and number 7 in Asia/Pacific.
The good news is that as the global risk environment evolves, so does the capacity of insurance carriers and brokers to provide bespoke solutions to mitigate exposures and take liabilities off balance sheet. For example, who knew that a new market for reputational risk exposures has just been created at Lloyd’s of London? Well it has, but that is another story for another time! You can read about it here For more insights into how Lockton’s experts can make your business better, read more white paper reports here www.locktonmarketupdate.com