Business interruption – a continuing threat with new causes
After seven years at the top of the ranking, the risk of business interruption drops to the second position in Allianz risk barometer.
Nevertheless, the risk of larger and more complex losses due to business interruption continues to be high.
Causes become more and more diverse and range from fire, explosion or natural catastrophes to disruptions in digital supply chains or even political violence.
„ Digital supply chains and platforms today allow for full transparency and traceability of goods but a fire at a data center, a technical glitch or a hack could bring large BI losses for multiple companies that all rely and share the same system and which cannot switch back to manual processes, ", says Raymond Hogendoorn, Global Head of Property and Engineers Claims at AGCS.
Companies are also increasingly exposed to the direct or indirect impact of riots, civil unrest or terrorist attacks. Last year has seen civil unrest escalate in Hong Kong, Chile, Bolivia, Columbia and France, resulting in property damage, business interruption and loss of income both for local and multinational companies, as shops closed for months, customers and tourists could not benefit from services or employees could not access their workplace due to safety concerns.
Legal and regulatory changes rank third in the risk barometer, climbing one position since 2019. Customs tariffs, sanctions, Brexit and protectionism were cited as key concerns. About 1,300 new trade barriers were implemented in 2019 alone. The USA-China trade dispute has brought the US average customs tariffs close to levels last recorded in the '70s.
„Trade policy is becoming just another political tool for many different policy ends, such as economic diplomacy, geopolitical influence or environmental policy. This activism is not restricted to the US: it has spread to Japan and South Korea, India and the EU”, explains Ludovic Subran, Chief Economist of Allianz.”
New regulatory challenges in the next decade will focus on environmental impact, pollution decrease and climate change.
„EU sustainability regulation is nothing less than a game changer. The impact on corporates will be as wide-ranging as that of the new rules on accounting and data protection were in the past”, says Ludovic Subran