Business interruption concerns remain the biggest worry for companies in the automotive manufacturing sector, with 68% of respondents to global corporate insurer Allianz’s ‘Risk Barometer 2022’ report singling out the issue as their top threat for the year ahead.

Cybersecurity incidents rank second, with 53% of respondents being worried, while 31% were concerned about the consequences of a natural catastrophe event.

The eleventh edition of the Allianz Risk Barometer, conducted at the end of 2021 and published in January, features the insights of 2 650 experts in 89 countries and territories, including CEOs, risk managers, brokers and insurance practitioners. The number of participants from the automotive manufacturing sector worldwide totalled 144.

Allianz Global Corporate & Specialty (AGCS) South Africa CEO Thusang Mahlangu says 2021 presented unprecedented levels of business interruption caused by various triggers and that this year promises only a gradual easing of the situation. “Building resilience against the many causes of business interruption is, therefore, increasingly becoming a competitive advantage for companies.”

For example, one of the largest business interruption losses the insurance industry has faced in recent times was triggered by a fire at a Japanese semiconductor plant, which exacerbated chip demand and supply chain disruption in the automotive and electronics industries in particular.

“At AGCS, we are seeing a growing willingness from top management to bring more transparency to supply chains and rethink previous supply strategies as a result of the recent operational and supply chain disruptions.

“Companies are investing in tools and working with data to better understand risks, build inventories and buffers and redundancies in supply chains, and create better business continuity and contingency plans,” he explains.

The automotive manufacturing industry is also rapidly digitalising and with this progress comes the prospect of increasing vulnerability to cyberattacks, reflected in cyber incidents ranking as the second most important risk.

In most cases, financial motivation, such as extorting ransoms, is the reason for the attacks.

Vulnerabilities can be exploited, for example, to capture personal data or research and development data, with industrial espionage being a significant problem in the automotive industry.

Further, attacks on suppliers can result in lengthy production delays.

At the same time, Allianz reports that there is also the potential for direct attacks on vehicles themselves in future. In this regard, the firm points out that security experts have already succeeded in unlocking car doors or triggering alarm systems through remote access.

Allianz reports that the third risk of natural catastrophe also ranks as one of the top ten risks in Namibia and Morocco.

Flooding events and other weather events have reinforced the message to the automotive industry, and other sectors, that secondary hazards such as floods, heavy rain, thunderstorms and tornados are increasing in frequency and severity, and that companies need to become more weatherproof.

“Previous once-in-a century events may occur more frequently in the future, even in regions that were considered ‘safe’ in the past. Car manufacturers must also react to these new possibilities,” says Mahlangu.

Twenty-six per cent of respondents to the ‘Allianz Risk Barometer 2022’ report say fire and explosions are a major risk, while 18% cite defective product and recall issues as another major issue.