Business interruptions and natural catastrophes are the major risk factors for companies operating in the country in 2020, results of the Allianz Risk Barometer showed.
The survey of more than 2,700 risk management experts from 102 countries and territories, which included 19 executives from the Philippines, listed the most important corporate perils for the next 12 months and beyond.
Forty-two percent of the Philippine respondents listed business interruption, which includes supply chain distribution, as the top business risks in the country. Thirty-seven percent, meanwhile, said that natural disaster such as storms, floods, and earthquakes are the top perils.
Cyber incidents, which include cyber crime, IT failure/outage, data breaches, fines, and penalties, ranked third at 32 percent.
Climate change/increasing volatility of weather as well as fire and explosion were listed as the fourth risk factors in the Philippines, at 26 percent each.
The other risk factors for the country in 2020 included changes in legislation and regulation (e.g., trade wars and sanctions, protectionism, Brexit, Eurozone integration), critical infrastructure blackouts (e.g., disruption of power), health issues (e.g., pandemic outbreaks), and market developments (e.g., volatility, intensified competition, new entrants, M&A, market stagnation, and market fluctuation) –at 11 percent each.
For most businesses around the world, cyber incidents ranked first among all the countries and territories surveyed.
“The costs of a cyber incident are rising across the board, a product of growing complexity, more stringent regulation and the damaging consequences to a business from a loss of data or critical systems,” Marek Stanislawski, deputy global head of Cyber at AGCS, said in the report.
He pointed out that “more and more events — from leaving a laptop with confidential data on a train to losing a customer list — can constitute a data breach.”
“It is estimated that anywhere between 50 percent and 90 percent of breaches are caused or abetted by employees, be it by simple error or by falling victim of phishing or social engineering. Well- trained and vigilant employees can become an extension of a company’s cyber security team and help form a much firmer perimeter around the company’s assets,” Stanislawski said.
Business interruption, meanwhile, used to rank first in the previous years.
“For seven years in a row the impact of business interruption (including supply chain disruption) has ranked as the most important risk for companies in the Allianz Risk Barometer. In 2020, it is finally replaced in top position by cyber incidents, a peril of millions of losses throughout the industry,” the report said.
It likewise noted that “fires and natural catastrophes are the major causes of business interruption losses — which can cost as much as 45 percent more than the corresponding property damage from such incidents” and that “more exotic triggers like digital platforms and supply chains, political risks and environmental factors are also becoming more relevant for businesses.”
