The latest Allianz Risk Barometer for 2021 shows that, while South African businesses are concerned about interruptions brought about by the Covid-19 pandemic, cyber incidents and security issues remain the biggest risk to their operations.
The barometer, published by Allianz Global Corporate & Specialty (AGCS), is based on a global survey that incorporates the views of 2,769 experts in 92 countries and territories. The experts include CEOs, risk managers, brokers and insurance experts. There were 207 respondents from South Africa.
AGCS CEO Joachim Müller said business interruptions, pandemic outbreaks and cyber incidents are interlinked vulnerabilities of a globalised and connected world.
“While the pandemic continues to have a firm grip on countries around the world, we also have to ready ourselves for more frequent extreme scenarios, such as a global-scale cloud outage or cyber-attack, natural disasters driven by climate change or even another disease outbreak,” Müller added.
Before Covid-19, pandemic outbreaks never finished higher than 16th on the list of possible risks. It is now the top risk in 16 out of the 38 countries included, and in the top 10 of the 35 of these countries. Japan, South Korea and Ghana were the only exceptions.
Cyber incidents emerged as the top risk for South African businesses for the fifth time since the survey was launched in the country in 2016.
Almost half (48%) of respondents flagged cyber incidents as the top local risk, followed by business interruption (32%) and a pandemic outbreak (29%).
The move towards digitisation and working from home has exacerbated IT vulnerabilities, with cyber crime now estimated to cost the global economy over R14.934 trillion ($1 trillion) – up 50% from two years ago.
This is because ransomware incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands.
“Attackers are innovating using automated scanning to identify security gaps, attacking poorly secured routers or even using ‘deepfakes’ – realistic media content modified or falsified by artificial intelligence,” said Catharina Richter, head of the Allianz Cyber Center of Competence at AGCS.
Political risks and violence returned to the top 10 for the first time since 2018.
Allianz said the number, scale and duration of many recent events, including Black Lives Matter protests, anti-lockdown demonstrations and unrest around the US presidential election, have been “exceptional”.
“As the socioeconomic fallout from Covid-19 mounts, further political and social unrest is likely, with many countries expected to experience an increase in activity in 2021 and beyond, particularly in Europe and the Americas,” Allianz said.
Allianz said that changes in legislation and regulation in South Africa slid down from the top spots.
“The pandemic may have caused some delays of the regulatory train, but it did not stop or even derail it. Quite the opposite, 2021 promises to become a very busy year in terms of new legislation and regulation, particularly in the areas of data and sustainability,” Ludovic Subran, Allianz chief economist, said.
Climate change fell to number six.
“With the vaccination campaign coming into effect, climate change will be back on the board agenda as a priority in 2021,” says Michael Bruch, Global Head of ESG at AGCS.
“Many companies need to adjust their business for a low-carbon world – and risk managers need to be at the forefront of this transition,” he added.