While BI remains the top global business risk for the fourth year in succession, the competitive market environment and cyber incidents appear in the top three for the first time, reported the Allianz Risk Barometer 2016, published today (January 13).
In its fifth year, the Barometer surveyed over 800 risk managers and insurance experts from more than 40 countries.
Five new risks have entered the UK top 10: market developments, macroeconomic developments, new technologies, talent shortage/ageing workforce and eurozone disintegration, it said.
Cyber incidents
The two highest rising risks for the UK are cyber incidents – rising from third in 2015 to first in 2016 – and changes in legislation and regulation, rising from fourth in 2015 to second. Companies are said to be worried about the increasing sophistication of cyber-attacks, but tend to underestimate technical IT failure as the cause of costly outages.
The Barometer claimed the risk landscape for businesses was substantially changing in 2016. While businesses were less concerned about the impact of traditional industrial risks, such as natural catastrophes or fire, they were increasingly worried about the impact of other disruptive events, fierce competition in their markets and cyber incidents.
“The corporate risk landscape is changing as many industrial sectors are undergoing a fundamental transformation,” said Allianz Global Corporate & Specialty (AGCS) ceo Chris Fischer Hirs.
‘The Internet of Things’
“New technologies, increasing digitalisation and the ‘Internet of Things’ are changing customer behaviour, industrial operations and business models, bringing a wealth of opportunities, but also raising awareness of the need for an enterprise-wide response to new challenges.
“As insurers we need to work together with our corporate clients to help them to address these new realities in a comprehensive manner.”
Digital innovation and the introduction of new technologies was a new risk that had entered the list of top 10 UK risks for the first time in 2016, the Barometer reported.
In 2020 it is forecast that more than 50bn devices will be linked together, which Allianz claimed clearly demonstrated the growing reliance on technology. However, it created further risks for business, such as increasingly sophisticated production processes and security threats.
‘Eurozone disintegration’
In the UK, uncertainty remained about eurozone disintegration, the Barometer claimed. It noted that while the outcome was yet unknown, uncertainty about it was rising up the risk register, having entered the UK findings for the first time.
Regarding the risks arising from an increasingly competitive landscape,Bettina Stoob, head of innovation at AGCS, said: “Businesses constantly have to be on their toes, turning out new products, services or solutions in order to stay relevant to the customer and to thrive in this rapidly changing and globally competitive environment.
“Innovation cycles are becoming rapidly shorter; market entry barriers are coming down; increasing digitalisation and new ‘disruptive’ technologies have to be quickly adopted while potentially more agile start-ups are entering the game”
Axel Theis, member of the board of management at Allianz SE, added: “Businesses need to prepare for a wider range of disruptive forces in 2016 and beyond.
“The increasing impacts of globalisation, digitalisation and technological innovation pose fundamental challenges.”
Download more information and the full report at Allianz Risk Barometer