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Business interruptions, cyber incidents top risks to Singapore firms in 2019: Poll
SINGAPORE firms say business interruptions (BIs) and cyber incidents are the biggest risks they face this year according to a survey by Allianz Global Corporate & Specialty (AGCS).
Of the 200 Singapore respondents to its Allianz Risk Barometer 2019 poll, 43 per cent selected BIs and 42 per cent cite cyber incidents as the top risk, outpacing fire and natural catastrophes. In total, 2,415 respondents from 86 countries were polled. They included CEOs, risk managers, brokers and insurance experts.
BIs include events that can bring businesses to a standstill, such as the breakdown of core IT systems, product recalls or quality issues, terrorism, 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, said AGCS, which is the AllianzGroup’s dedicated corporate and specialty insurance business.
Said Mark Mitchell, AGCS Asia Pacific regional CEO: “Businesses across Asia Pacific are deeply concerned about the impact of business interruption, which can be a consequence of the other top risks in the region, cyber and natural catastrophes. The risk of BI is heightened by today’s increasingly interconnected and global business environment.
“Almost all large property insurance claims include a major BI element and the average BI claim of over US$3 million is almost 40 per cent higher than an average direct property loss. As manufacturing shifts east and with growing frequency of natural catastrophe activity in the region, Asia Pacific is increasingly exposed to these losses reflecting the importance for companies to adopt a holistic approach to risk management.”
During such events, companies may be unable to provide products and services or customers might stay away, leading to negative effects on revenue.
An example AGCS cited was the four weekends of “yellow-vest” protests in France at the end of 2018, where retailers lost about US$1.1 billion.
Cyber incidents encompass cyber crime, data breaches, fines and penalties. According to AGCS, the global average insured loss from a cyber incident is now just over US$2.3 million compared with almost US$1.7 million from a fire/explosion incident, while “losses from major events can be in the hundreds of millions or higher”.
“Cyber risk has been a major risk for a number of years, but as with any new risk it has struggled with awareness,” said Marek Stanislawski, deputy global head of cyber, AGCS. “We have now reached a point where cyber is as equally concerning for companies as their major traditional exposures.”
Notable incidents within Asia-Pacific include the hack of Hong Kong airline Cathay Pacific which led to the personal data of 9.4 million people being compromised. Taiwan Semiconductor Manufacturing Company, a key supplier of Apple, also lost a day of production after a virus infected machinery at plants in Taiwan.
The report notes cyber crime now costs an estimated US$600 billion a year globally, up from US$445 billion in 2014.
The insurer also said that increasingly, cyber incidents are bringing their own BI losses. Globally, respondents rank cyber as the BI trigger they fear most, given many companies’ primary assets can often be data, service platforms or groups of customers or suppliers.
Other risks cited by Singapore companies include natural catastrophes, new technologies and climate change.
New technologies include the impact of increasing interconnectivity, nanotechnology, artificial intelligence, 3D printing, autonomous vehicles and blockchain.
As for climate change, it took fifth spot in its first appearance on the Singapore list.
Source: https://www.businesstimes.com.sg/government-economy/business-interruptions-cyber-incidents-top-risks-to-singapore-firms-in-2019-poll