A trio of Covid-19-related risks heads up the tenth Allianz Risk Barometer 2021, reflecting potential disruption and loss scenarios companies are facing in the wake of the pandemic.
Business interruption and pandemic outbreak are this year’s top business risks with cyber incidents ranking a close third.
The yearly survey on global business risks from Allianz Global Corporate & Specialty (AGCS) incorporates the views of 2 769 experts in 92 countries and territories, including CEOs, risk managers, brokers and insurance experts.
“The Allianz Risk Barometer 2021 is clearly dominated by the Covid-19 trio of risks. Business interruption, pandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities of our highly globalised and connected world.
"The coronavirus pandemic is a reminder that risk management and business continuity management need to further evolve in order to help businesses prepare for, and survive, extreme events. 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,” says AGCS CEO Joachim Müller.
Covid-19 continues to represent an immediate threat to both individual safety and businesses, reflecting why pandemic outbreak has rocketed 15 positions to the second-biggest risk.
Prior to 2021, it had never finished higher than sixteenth position in the ten years of the Allianz Risk Barometer, a clearly underestimated risk.
However, in 2021, it is the number one risk in 16 countries and among the three biggest risks across all continents and in 35 out of the 38 countries which qualify for a top ten risks analysis. Japan, South Korea and Ghana are the only exceptions.
Meanwhile, market developments, ranked fourth this year, also climb up the Allianz Risk Barometer 2021, reflecting the risk of rising insolvency rates following the pandemic.
Political risk and violence (fifth) returns to the top ten of the Allianz Risk Barometer.
According to Euler Hermes, the bulk of insolvencies will come in 2021. The trade credit insurer’s global insolvency index is expected to hit a record high for bankruptcies, up 35% by the end of 2021, with top increases expected in the US, Brazil, China and core European countries.
Further, Covid-19 will likely spark a period of innovation and market disruption, accelerating the adoption of technology, hastening the demise of incumbents and traditional sectors and giving rise to new competitors.
Other risers include macroeconomic developments (ranked eighth) and political risks and violence (ranked tenth) which are, in large part, a consequence of the coronavirus outbreak, too.
TOP BUSINESS RISKS IN SA
The two risks that concern businesses in South Africa the most are cyber incidents at number one for the fifth time since the launch of the survey in the country in 2016.
Business interruption ranked second and pandemic outbreak third.
Changes in legislation and regulation drops from number three to number five and from number three to number four in South Africa year-on-year.
Natural catastrophes falls to number six from number four, reflecting the fact that although aggregated losses from multiple smaller events such as wildfires or tornadoes still led to widespread devastation and considerable insured losses in 2020, it was also the third consecutive year without a single large event, such as Hurricane Harvey in 2017. The risk retains its ninth spot in South Africa.
Climate change falls to number six in South Africa and number nine, globally. However, the need to combat climate change remains as high as ever, given 2020 was the joint hottest year ever recorded.