Business interruption remains the top global risk in 2016, Allianz Global Corporate & Specialty’s latest Risk Barometer reports. Thirty-eight percent of survey respondents rated BI as one of the three most important risks for companies, which is down from 46 percent in 2015.
But since business interruption factors into many other risksincluding cyber, which Canadian businesses rank as most importantthe peril retains the top spot overall. Respondents are most concerned with natural catastrophes (51 percent) causing BI claims, followed by fire and explosion (46 percent) and supplier failure (32 percent).
“It’s unsurprising that natural catastrophes top the causes of BI global businesses fear most as these events always lead to business interruption,” says Volker Muench, Global Practice Group Leader, Property, AGCS Property Underwriting.
AGCS also analyzed 1,800 large BI claims over the past five years and determined fire and explosions are the most common cause of BI worldwide. Each incident costs an average of $1.8 million in BI costs alone. The Tianjin explosion in August 2015, for example, has led to numerous BI losses “as a result of the subsequent interruption of flow in stock and production” after the port was closed.
And as supply chains lengthen and span greater distances, more and more disasters can injure a company. “The primary driver behind increasing BI losses is that interconnectivity of risk is growing day-by-day,” AGCS notes, “as technology, globalization and social change create a complex web of relationships and interdependencies.”
AGCS points to the hundreds of insurance claims after the earthquake in Japan and the floods in Thailand in 2011, most of which came from companies based outside the affected areas.
After business interruption, the top risks companies face worldwide are, in order: market developments (volatility, intensified competition, market stagnation); cyber incidents (cyber crime, data breaches, IT failures); natural catastrophes (storms, floods, earthquakes); changes in legislation and regulation (economic sanctions, protectionism); macroeconomic developments (austerity programs, commodity price increases, inflation/deflation); loss of reputation or brand value; fire and explosion; political risks (war, terrorism, upheaval); theft, fraud and corruption
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What risks are you worried about in 2016? Let us know by commenting below.