Allianz Global Corporate & Specialty (AGCS) conducts annual research on the views of 2,769 industry experts in 92 countries and territories, including CEOs, risk managers, brokers, and insurance experts. The 2021 Allianz Risk Barometer identified the “Covid Trio”—business interruption, pandemic outbreaks, and cyber incidents—as 2021’s major business risks:
- Business interruption. Although Covid-19 emerged as the dominant risk last year, it only added to multiple other concerns for business interruption. This is the 8th time that business interruption has fallen as the top risk for the annual Allianz Risk Barometer report. More traditional business interruption risks like natural catastrophes, extreme weather, and fire, remain major threats for business interruption across many industries. Additionally, there is growing awareness of other risks such as political instability, violence, and terrorism.
- Pandemic outbreaks. The 2020 Covid-19 global outbreak demonstrated that business interruption events on an extreme, global scale are real possibilities. According to expert Philip Beblo of AGCS’s global property underwriting team, “The consequences of the pandemic—wider digitalization, more remote working and the growing reliance on technology of businesses and societies—will likely heighten BI risks in coming years.”
- Cyber incidents. The world recently accelerated its trend toward remote work and digitalization as a result of the need to stay at home during the pandemic. The FBI reported that during the first wave of lockdowns in April 2020, cybercrime incidents increased by 300%. Cybercrime is estimated to cost the global economy more than $1 trillion, which is a 50% increase from two years ago. For several countries, including Brazil, France, India, Japan, and the U.S., cyber incidents are a top three risk.
The report notes that building greater resilience in business models will be key to mitigating future disruption.
Although it’s a new year, Covid-19 and its effects are not yet in the rearview mirror. American businesses are still struggling. Policymakers have not yet executed a viable, sustainable, and inclusive government-backed solution to provide relief for the COVID-19 business interruption crisis, or established a solution for the inevitable crises of a similar caliber in our future. As the 2021 Allianz Risk Barometer indicates, the pandemic and business interruption concerns are too important for stability to dismiss. It’s essential that policymakers prioritize building resilience in 2021, and a necessary first step is a federal backstop for this pandemic and for future ones.
You can read the full report on 2021’s major business risks here.