Cyber crime and IT failures are rapidly climbing the list of business worries but business interruption and supply chain failure remain the biggest perceived weaknesses.
Allianz has released its 2014 Risk Barometer report, surveying senior Allianz staff from across the globe about the biggest risks facing their clients.
Allianz Global Corporate and Specialty (AGCS) Head of Risk Consulting Paul Carter says the survey highlights the increasing complexity of business risks.
“As supply chains are becoming increasingly complex in a global sourcing world, any disruption – for example due to natural catastrophes, IT/telecom outages, transportation issues, a supplier’s bankruptcy or civil unrest – can lead to a snowball effect,” he says.
“Business continuity planning is key and should be part of any company’s procurement and supplier selection process. Yet, to ensure appropriate mitigation measures can be implemented, it is no longer sufficient to know your ‘critical’ suppliers; you also need to have a grasp of how they manage their own supply chain exposures.”
Of all the regions, Asia Pacific ranked cyber crime and IT failures most seriously, a view bolstered by the fact that the exposures of Australian businesses to IT risks will substantially increase when significant amendments to the Privacy Act come into effect in March.
AGCS Head of Fidelity Nigel Pearson says the rise of cyber crime means IT security is not enough and boards must take a strong interest in setting and updating comprehensive information and network security procedures.
“Still, even with the best risk management framework, companies will never be 100% safe from glitches in their IT-infrastructure, failure of internal processes or external cyber-attacks that result in network interruption or data loss,” he says.
“Each business needs to decide whether it can afford to carry that risk itself or transfer it by taking out a cyber-insurance policy.”