Top threats to UK business in 2019
Cyber threats and changes in legislation and regulation, including concerns around Brexit are considered the top risks by UK risk experts (joint number one with 48% of responses), according to the Allianz Risk Barometer 2019.
Cyber incidents (37% of responses) are neck-and-neck with business interruption (BI) (37% of responses) as the top business risks globally.
'It's no surprise to see changes in legislation and regulation as the new top risk in the UK, jointly with cyber threats,' said Tracey Hunt, deputy CEO, Allianz Global Corporate & Specialty (AGCS), UK. 'Uncertainty around Brexit along with concerns around a potential increase in the regulatory burden and global trade disputes have made confidence fragile. UK businesses also continue to be occupied by the threat of cyber-attacks. The consequences of a major data beach have never been greater since the EU's General Data Protection Regulation (GDPR) came into force with data breaches potentially now resulting in huge fines.'
Shortages of skilled workers appears in the top 10 UK risks - coming in at number seven - for the first time, with factors such as Brexit uncertainty, changing demographics and a shallow pool of talent in the digital economy contributing to its rise.
Shortage of skilled workforce also appears for the first time among the 10 top business risks globally at 10; as well as in many countries in Central and Eastern Europe, US, Canada and Australia.
In the wake of mega data breaches and privacy scandals, major IT outages and the introduction of tighter data protection rules in the European Union and other countries, cyber risk is now a core concern for global businesses in 2019 and beyond.
According to the Allianz Risk Barometer 2019, cyber incidents (37% of responses) are neck-and-neck with business interruption (BI) as the top business risks globally. Climate change (number eight with 13% of responses) and shortage of skilled workforce (number 10 with nine per cent of responses) are the biggest climbers globally.
At the same time, companies are more worried year-on-year about changes in legislation and regulation (number four with 27% of responses) resulting in impacts such as Brexit, trade wars and tariffs. The annual survey on global business risks from Allianz Global Corporate & Specialty (AGCS) incorporates the views of a record 2,415 experts from 86 countries including CEOs, risk managers, brokers and insurance experts.
BI remains the top threat for businesses worldwide for the seventh year running and is the top risk in countries such as the US, Canada, Germany, Spain, Italy and China. Potential BI scenarios are becoming ever more diverse and complex in a globally connected economy, including breakdown of core IT systems, product recalls or quality issues, terrorism or political rioting or environmental pollution.
Both cyber and BI risks are increasingly interlinked as ransomware attacks or accidental IT outages often result in disruption of operations and services costing hundreds of millions of dollars. Cyber incidents rank as the BI trigger most feared by businesses (50% of responses), followed by fire (40%) and natural catastrophes (38%). At the same time, BI is seen as the biggest cause of financial loss for businesses after a cyber incident (69% of responses).
Cyber crime now costs an estimated $600bn a year. While criminals use more innovative methods to steal data, commit fraud or extort money, there is also a growing cyber threat from nation states and affiliated hacker groups targeting critical infrastructure providers or stealing valuable data or trade secrets from companies. Cyber incidents are increasingly likely to spark litigation, including securities and consumer class actions. Data breaches or IT outages can generate large third-party liabilities as affected customers or shareholders seek to recoup losses from companies.