The globalization of today’s economy means that busi- nesses are more interconnected than ever, creating a greater risk of business interruption, supply chain disruption, and exposures that can quickly multiply.
According to UNCTAD.org, over the last 50 years the number
of multinational companies has grown exponentially from 7,000
to almost 104,000, and could reach more than 140,000 by 2020.
The Allianz Risk Barometer 2015 surveyed more than 500 risk
managers and corporate insurance experts in 47 countries to
identify the primary challenges facing businesses this year. Some
risks such as political upheaval, cybercrime and business interruption were viewed as a greater risk, while natural catastrophes,
technological innovation and market stagnation were viewed as
having less of an impact.
Here are the top five business risks for 2015 as identified by the
Allianz Risk Barometer.
1. Business interruption
and supply chain risks
Business interruption (BI) and
impacts to the supply chain con-
tinued to lead the list of major
concerns for businesses for the
third year in a row. With so many busi-
nesses interconnected on a global scale, the
impact of an event in one part of the world
can have negative repercussions halfway
around the globe.
“The growing interdependency of many
industries and processes means businesses
are now exposed to an increasing number
of disruptive scenarios. Negative effects can
quickly multiply. One risk can lead to sev-
eral others. Natural catastrophes or cyber-
attacks can cause business interruption not
only for one company, but to whole sectors
or critical infrastructure,” says Chris Fisch-
er Hirs, CEO of Allianz Global Corporate
& SpecialtySE (AGCS). “Risk management
must reflect this new reality. Identifying the
impact of any interconnectivity early can
mitigate or help prevent losses from oc-
curring. It is also essential to foster cross-
functional collaboration within companies
to tackle modern risks.”
The top risks leading to supply chain dis-
ruptions are: natural catastrophes, the polit-
ical environment in a country, and global-
ization, particularly for specialty suppliers.
The major causes of business interruption
that concern companies the most include: fire/explosion, natural
catastrophes, and a service delivery failure by a supplier.
2. Natural catastrophes
( 30 percent)
Despite a relatively quiet year in
terms of catastrophes, companies
are still acutely aware of the impact Mother Nature can have on
their balance sheets.
“The lessons of the Bangkok floods and Japan tsunami have resulted in growing awareness from businesses of the knock-on effect from BI and supply chain management,” explains Mark Mitchell, regional CEO, Asia, AGCS. “Companies now have a greater
understanding of the need to monitor risk aggregations, not just
geographically, but also in business interruption exposures.”
( 27 percent)
An analysis by AGCS found that
fire is the number two cause of
business loss overall, with business interruption causing more
damage than the actual fire itself.
Allianz survey identifies
5 business risks for 2015
By Patricia L. Harman, PropertyCasualty360.com