Cyber incidents are now the No. 1 business risk facing corporations, moving to the top of insurer Allianz’s annual list, which also showed climate change reaching its highest ranking.
According to the Allianz Risk Barometer for 2020, 39% of respondents to its ninth annual survey of risk experts identified cyber incidents as their main concern, pushing business interruption events (37%) out of the top spot it had occupied for seven years.
Allianz noted that awareness of cyber threats has grown rapidly in recent years, driven by companies increasing reliance on data and IT systems and a number of high-profile incidents. Seven years ago, cyber ranked 15th with just 6% of responses.
The survey also showed climate change moving up to the No. 7 ranking (17% of responses), joining changes in regulation and legislation (No. 3 with 27% of responses) as the biggest climbers.
“The Allianz Risk Barometer 2020 highlights that cyber risk and climate change are two significant challenges that companies need to watch closely in the new decade,” Joachim Müller, CEO of Allianz Global Corporate & Specialty, said in a news release.
“If corporate boards and risk managers fail to address cyber and climate change risks, this will likely have a critical impact on their companies’ operational performance, financial results and reputation with key stakeholders,” he warned.
In the U.S., cyber risk took the top spot followed by business interruption and natural catastrophes. Allianz noted that a mega data breach, involving more than one million compromised records, now costs on average $42 million, up 8% year on year.
“Incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands,” said Marek Stanislawski, ACGS’ deputy head of cyber.
Allianz said the rise of climate change as a risk reflects the threat that rising seas, drier droughts, fiercer storms, and massive flooding pose to factories and other physical assets as well as transport and energy links that tie supply chains together.
The insurer also noted that climate change lawsuits have been brought against “carbon majors” in 30 countries, with the U.S. leading the way.