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Pandemic outbreaks are now among the top business risks globally, while political risks and violence have returned to the ranks of the top global perils for the first time in three years in the Allianz Risk Barometer 2021, released Tuesday.
Business interruption was the top-ranked global peril, followed by pandemic outbreak, which was the biggest climber, up 15 positions to second place, Munich-based Allianz Global Corporate & Specialty SE said in the report. Cyber incidents ranked a close third, Allianz said.
Given the unprecedented disruption caused by the coronavirus outbreak, it was no surprise that business interruption and pandemic outbreak top this year’s annual barometer, Allianz said.
“Covid-19 is a reminder that not all perils are insurable and that risk management and business continuity planning play a critical role in helping businesses survive extreme events,” the report said.
All three risks and many others in this year’s top 10 are interlinked, demonstrating the growing vulnerabilities and uncertainty of a highly connected world, Allianz said.
The results were based on a survey of 2,769 experts, including Allianz customers, brokers, industry trade organizations and staff, from 92 countries and territories, conducted in October and November. Survey participants were asked to name up to three risks they were most concerned about for their industries.
Some 41% of respondents to Allianz’s 10th survey said they were concerned about business interruption, compared with 40% for pandemic outbreak. The pandemic shows companies need to prepare for a wider range of business interruption triggers and extreme events than previously, Allianz said.
“We talk about non-physical damage business interruption happening with cyber and power outages, and now the pandemic is part of that,” said Thomas Varney, Chicago-based regional manager of risk consulting, North America, at AGCS.
Business continuity planning needs to become more holistic and dynamic, with companies taking an approach that develops alternative or multiple suppliers and invests in digital supply chains, Mr. Varney said.
Organizations need to develop a network of interconnected supply chains that is monitoring conditions in real-time and improving supplier selections, he said.
Companies also need to remember there are still traditional business interruption events that can occur. “Fires, explosions, natural catastrophes — we don’t want to forget those because they are still there,” he said.
The survey results showed the effects of the pandemic further down the rankings as well.
Several of the rising risk concerns, such as market developments, macroeconomic developments and political risks and violence, are in large part a consequence of the coronavirus outbreak, Allianz said.
Socioeconomic consequences of the pandemic will bring more insolvencies and likely fuel further civil unrest this year, the report said.
Cyber incidents are now the top corporate concern globally, overtaking business interruption events which had ranked as the top global peril for seven years in the annual Allianz Risk Barometer 2020, released Tuesday.