A leading industry risk barometer has revealed the top risks for businesses world-wide and an expert breaks down what it means for brokers and their clients in Australia.
Business interruption (BI) continues to lead the ranking of global corporate risks for the fifth year in a row according to the sixth annual Allianz Risk Barometer, which surveys over 1,200 risk managers and corporate insurance experts from more than 50 countries.
“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO of Allianz Global Corporate & Specialty SE. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite. A range of new risks are emerging which require re-thinking of current monitoring and risk management tools.”
“In Australia, BI is a concern because it is all too often a poorly understood exposure that has the potential to be very damaging to client’s business if it is not insured correctly,” says James Stack, Head of Market Management of Allianz Global Corporate & Specialty – Pacific.
“Damage to a tangible asset such as a building is relatively easy to understand and insure appropriately, but loss of income arising from damage to that asset brings an added level of complexity that makes it inherently harder to comprehend and quantify. Brokers, Insurers and Clients need to get to grips with how much of their business would be lost from an event and how the loss of any one site would impact the business more generally. Combine this with factors such as calculating the correct sum insured and calculating the correct indemnity period for any potential interruption and it can result in a lot of work to get it insured correctly. ”
In Australia, companies are persistently targeted by a broad range of malicious cyber activities, risking the profitability, competitiveness and reputation of their business, states Stack.