What are the top 5 global business risks and how could they affect you?
The annual, global Allianz Risk Barometer report, featuring insight from Risk management experts in 92 countries, has identified ‘Business interruption’ as the number one business risk for 2021, followed closely by two other major risks – the ‘Pandemic’ and ‘Cyber security’.
All of the top three risks are interlinked and have been identified as a ‘COVID-19 trio’ and apply to all countries, including Australia.
Adrian Kitchin, Resilium Insurance Broking’s Managing Director, summarises the top five global business risks from an Australian perspective and outlines ways to minimise some of those risks.
1. Business Interruption
Covid-19 has shown us that many businesses are ill-prepared for such a sudden and catastrophic event. Many businesses across the world found themselves having to scramble to implement new working from home conditions, find ways to stay in business despite lockdowns and pivot to create new opportunities in order to stay afloat.
“While most Business interruption insurance solutions exclude events like a global pandemic, it still remains an incredibly valuable insurance that can cover you for loss of profits due to any number of other unexpected business disruptions like water damage, fire or theft,” explains Adrian Kitchin.
Around 43% of uninsured businesses that experience an insurable disaster never re-open due to the income lost and lack of finance to re-build.
“Business insurances give peace of mind that your business is covered for the unexpected and will put you and your business right back to where you were before the insured event took place.”
Find out more about Resilium’s Business insurance packages.
2. The Pandemic – Covid19
With the sudden and grinding halt of supply chains, with container shipping carrying important products and goods ceasing mid-2020 the world over, a number of businesses suddenly found themselves unable to operate, still having to pay staff and live but without any livelihood.
“Covid-19 has shown us that companies need to be prepared for any eventuality and put in place comprehensive business continuity plans in preparation for the unexpected, while those affected by supply issues must now consider the possibility of alternative supply arrangements closer to home,” says Mr Kitchin.
Allianz’ Global Practice Group Leader, Philip Beblo says Allianz is already seeing clients respond to these new conditions by making changes like near-shoring (bringing production to a nearby country), some re-shoring and changing the locations of supplies.
3. Cyber Incidents
Even before the COVID-19 Pandemic, both society and businesses were already growing more dependent and reliant on technology, and with this reliance on technology comes significant risk.
“Since remote working has become the new normal for many businesses, this in itself has created a significant new Cyber risk,” explains Mr Kitchin. “For those businesses whose staff are working from home, it’s important to have Cybersafety protocols in place, authentication, cloud-based working and other Cybersecurity measures to keep Cyber hackers at bay.”
In 2020, due to the increased working from home environment, there were more cyber-attacks than ever with ransomware attacks predominating and duping employees and costing the global economy $20 billion. Cyber phishing campaigns have also increased dramatically in the last 12 months due to the changing way we now work and the consequent vulnerability of some company IT systems.
Find out more about Cyber insurance.
4. Market Developments
As Covid-19 continues to disrupt businesses all over the world, ‘market developments’ climbs one position year-on-year in the Allianz Risk Barometer, reflecting the risk of rising insolvency rates following the pandemic. The report suggests we should expect a growth in the number of insolvencies (38%) and an acceleration towards greater digitalization (55%). It’s not all bad news however, as the research also predicts a wave of innovation and new opportunities, as well as an increasing acceptance for a shift from the traditional ways in which most of us have worked.
5. Changes in Legislation and Regulation
Two key areas that are likely to have a significant business impact as far as legislation and regulation include: data and sustainability. We can expect new rules and governance around artificial intelligence and cybersecurity, as well as new standards and rules for digital finance and digital services and platforms.
Meanwhile, in the aim for a zero-carbon economy, sustainability considerations will be increasingly included in business activity. Regulation will help achieve this goal, by improving the availability of reliable reported non-financial data – including climate-related key performance indicators based on greenhouse gas emissions – all of which would help to guide businesses towards more sustainable investments.
Click here to read about the next five global business risks.
6. Natural Catastrophes
7. Fire, Explosion
8. Macroeconomic Development
9. Climate Change / Increasing volatility of weather
10. Political Risks and Violence
Talk to a Resilium Adviser for tailored insurance advice
The top 5 global business risks as detailed in this article directly apply to the Australian business landscape and understanding how to mitigate these risks is the first step to being adequately prepared for the future. Talk to a Resilium Adviser for some trusted insurance advice.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Resilium directly.