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Business interruption is the biggest risk facing companies, according to a survey by Allianz Global Corporate & Specialty S.E., while cyber incidents continue to generate growing concern.
The Allianz Risk Barometer: Top Business Risks for 2018, released Tuesday, is based on responses from risk managers, underwriters, brokers and other insurance industry participants. According to the report, 42% of respondents from companies of all sizes named business interruption as the most important risk faced by companies.
Cyber incidents marched up the ranks to become the second-greatest risk faced, named by 40% of respondents, after placing 15th five years ago. Cyber incidents also ranked as the most feared business interruption trigger for the first time, according to the report.
Natural catastrophes ranked third on the list of most important risks. The report pointed to global insured loss estimates as high as $135 billion in 2017 and noted that “Given the wide-ranging impact of (hurricanes Harvey, Irma and Maria) — from flood damage by Harvey in Houston to business interruption from record power outages in Puerto Rico caused by Maria — it may be some time before the final loss total is known.”
Among small and medium sized enterprises, the results were similar. The report said that small- to medium-sized business experts now account for 47% of Risk Barometer responses.
For enterprises of less than €250 million ($300.8 million) in annual revenue, business interruption topped the list of risks, followed by cyber incidents and natural catastrophes, then market developments and changes in legislation.
For medium-sized firms of between €250 million and €500 million, the first two switched as cyber topped the list and business interruption placed second, followed by natural catastrophes, then fire, explosion and market developments.
Geographical results were similar, as business interruption and cyber jostled for the top two spots in most countries and natural catastrophes often placed third.
U.S. respondents ranked cyber, business interruption and natural catastrophes as the top three risks, while the U.K. respondents saw cyber, changes in legislation and regulation, and business interruption as the top three risks.
One notable difference was Nigeria, which ranked theft, fraud and corruption as the top risk, followed by market developments and changes in legislation and regulation.
This is the seventh Risk Barometer from Allianz Global Corporate & Specialty and the broadest yet, according to the Munich-based insurer.
Responses include views from 1,911 respondents in 80 countries, including Allianz customers, global businesses, brokers, risk consultants, underwriters, senior managers and claims experts in the corporate insurance segment of both Allianz Global Corporate & Specialty and other Allianz entities, the rep ort said.
The survey was conducted during October and November of 2017. Large enterprises provide the largest portion of responses at 53%, followed by small enterprises at 25% and midsize enterprises at 22%.
As more businesses come to realize that cyber attacks pose a serious threat to business operations, revenue streams and contingency planning, the market is starting to expand and develop new products to address business interruption, or BI, resulting from a cyber attack. Some of the more common cyber attacks against businesses include denial-of-service, brute force (to obtain passwords), insertion of malware or malicious code, ransomware, backdoor attacks and social engineering. This article provides a primer on the issues that may arise when the traditional concept of first-party BI coverage is married to cyber coverage.