Allianz Risk Barometer 2022: Cyber perils outrank Covid-19 and broken supply chains as top global business risk


Johannesburg/London/Munich/New York/Paris/Sao Paulo/Singapore, January 18, 2022
Cyber perils are the biggest concern for companies globally in 2022, according to the Allianz
Risk Barometer . The threat of ransomware attacks, data breaches or major IT outages
worries companies even more than business and supply chain disruption, natural disasters
or the Covid-19 pandemic, all of which have heavily affected firms in the past year.

Cyber incidents tops the Allianz Risk Barometer for only the second time in the survey’s
history (44% of responses), Business interruption drops to a close second (42%) and
Natural catastrophes ranks third (25%), up from sixth in 2021. Climate change climbs to its
highest-ever ranking of sixth (17%, up from ninth), while Pandemic outbreak drops to fourth
(22%). The annual survey from Allianz Global Corporate & Specialty (AGCS) incorporates the views of 2,650 experts in 89 countries and territories, including CEOs, risk managers, brokers and insurance experts. View the full global and country risk rankings .

“’Business interrupted’ will likely remain the key underlying risk theme in 2022,” AGCS CEO
Joachim Mueller summarizes. “For most companies the biggest fear is not being able to
produce their products or deliver their services. 2021 has seen unprecedented levels of
disruption, caused by various triggers, and this year only promises a gradual easing of the
situation. Crippling cyber-attacks, the supply chain impact from many climate change-related
weather events, as well as pandemic-related manufacturing problems and transport
bottlenecks have caused major disruption in the past year and remain the core concerns for
companies in 2022. Building resilience against the many causes of business interruption is
increasingly becoming a competitive advantage for companies.”

Ransomware drives cyber concerns while awareness of BI vulnerabilities grows
Cyber incidents ranks as a top three peril in most countries surveyed. The main driver is the
recent surge in ransomware attacks , which are confirmed as the top cyber threat for the year ahead by survey respondents (57%). Recent attacks have shown worrying trends such as ‘double extortion’ tactics combining the encryption of systems with data breaches; exploiting software vulnerabilities which potentially affect thousands of companies (for example, Log4J , Kaseya ) or targeting physical critical infrastructure ( the Colonial pipeline in the US ). Cyber security also ranks as companies’ major environmental social governance (ESG) concern with respondents acknowledging the need to build resilience and plan for future outages or face the growing consequences from regulators, investors and other stakeholders.

“Ransomware has become a big business for cyber criminals, who are refining their tactics,
lowering the barriers to entry for as little as a $40 subscription and little technological
knowledge. The commercialization of cyber crime makes it easier to exploit vulnerabilities on
a massive scale. We will see more attacks against technology supply chains and critical
infrastructure,” explains Scott Sayce, Global Head of Cyber at AGCS.

Business interruption (BI) ranks as the second most concerning risk. In a year marked by
widespread disruption, the extent of vulnerabilities in modern supply chains and production
networks is more obvious than ever. According to the survey, the most feared cause of BI is
cyber incidents; reflecting the rise in ransomware attacks but also the impact of companies’
growing reliance on digitalization and the shift to remote working. Natural catastrophes and
pandemic are the two other important triggers for BI in the view of respondents.

In the past year post-lockdown surges in demand have combined with disruption to
production and logistics, as Covid-19 outbreaks in Asia closed factories and caused record
congestion levels in container shipping ports. Pandemic-related delays compounded other
supply chain issues, such as the Suez Canal blockage or the global shortage of
semiconductors after plant closures in Taiwan, Japan and Texas from weather events and

“The pandemic has exposed the extent of interconnectivity in modern supply chains and how
multiple unrelated events can come together to create widespread disruption. For the first
time the resilience of supply chains has been tested to breaking point on a global scale,”
says Philip Beblo, Property Industry Lead, Technology, Media and Telecoms, at AGCS.
According to the Euler Hermes Global Trade Report , the Covid-19 pandemic will likely drive
high levels of supply chain disruption into the second half of 2022, although mismatches in
global demand and supply and container shipping capacity are predicted to ease.

Awareness of BI risks is becoming an important strategic issue across entire companies.
“There is a growing willingness among top management to bring more transparency to
supply chains with organizations investing in tools and working with data to better understand the risks and create inventories, redundancies and contingency plans for business continuity,” says Maarten van der Zwaag, Global Head of Property Risk Consulting at AGCS. Pandemic preparations improve. Next up – making businesses more weatherproof

Pandemic outbreak remains a major concern for companies but drops from second to
fourth position (although the survey predated the emergence of the Omicron variant). While
the Covid-19 crisis continues to overshadow the economic outlook in many industries,
encouragingly, businesses do feel they have adapted well.

The majority of respondents (80%) think they are adequately or well-prepared for a future incident. Improving business ontinuity management is the main action companies are taking to make them more resilient.

The rise of Natural catastrophes and Climate change to third and sixth position respectively is telling, with both upwards trends closely related. Recent years have shown the frequency and severity of weather events are increasing due to global warming.

For 2021, global insured catastrophe losses were well in excess of $100bn – the fourth highest year on record. Hurricane Ida in the US may have been the costliest event, but more than half of the losses came from so-called secondary perils such as floods, heavy rain,
thunderstorms, tornados and even winter freezes, which can often be local but increasingly
costly events.

Examples included Winter Storm Uri in Texas, the low-pressure weather system Bernd, which triggered catastrophic flooding in Germany and Benelux countries, the heavy flooding in Zhengzhou, China, and heatwaves and bushfires in Canada and California.

Allianz Risk Barometer respondents are most concerned about climate-change related
weather events causing damage to corporate property (57%), followed by BI and supply
chain impact (41%). However, they are also worried about managing the transition of their
businesses to a low-carbon economy (36%), fulfilling complex regulation and reporting
requirements and avoiding potential litigation risks for not adequately taking action to
address climate change (34%).

“The pressure on businesses to act on climate change has increased noticeably over the
past year, with a growing focus on net-zero contributions,” observes Line Hestvik, Group
Sustainability Officer at Allianz. “There is a clear trend towards reducing greenhouse gas
emissions in operations or exploring business opportunities for climate-friendly technologies
and sustainable products. Many companies are building up dedicated competencies around
climate risk mitigation, bringing together both risk management and sustainability experts.”
Businesses also have to become more weatherproof against extreme events such as
hurricanes or flooding. “Previous once-in-a-century-events may well occur more frequently in future and also in regions which were considered ‘safe’ in the past. Both buildings and
business continuity planning need to become more robust in response,” says van der Zwaag.
Other risers and fallers in this year’s Allianz Risk Barometer:
- Shortage of skilled workforce (13%) is a new entry in the top 10 risks at number
nine. Attracting and retaining workers has rarely been more challenging.
Respondents rank this as a top five risk in the engineering, construction , real estate,
public service and healthcare sectors, and as the top risk for transportation.
- Changes in legislation and regulation remains fifth (19%). Prominent regulatory
initiatives on companies’ radars in 2022 include anti-competitive practices targeting
big tech, as well as sustainability initiatives with the EU taxonomy scheme.
- Fire and explosion (17%) is a perennial risk for companies, ranking seventh as in
last year’s survey, while Market developments (15%) falls from fourth to eighth year-
on-year and Macroeconomic developments (11%) falls from eighth to 10th.