Cybersecurity, logistics interruptions and resilience, and environmental issues dominate two key reports released last week.
The World Economic Forum's Global Risk Report and Allianz Global Corporate & Specialty SE's Risk Barometer 2022 also note the interconnectedness of risks and the continuing influence on other perils of the COVID-19 pandemic, which itself still ranks one of the top exposures.
The Risk Barometer, with different survey 2,650 risk management professionals, including Allianz customers and staff, from 89 countries, pegged cyber incidents, business interruption, and natural catastrophes because the most important global business risks for 2022. Global warming placed sixth, its highest rank ever, rising three positions from the 2022 barometer.
Cyber reclaimed the very best spot after slipping to second last year, noted Rani Christie, regional head of distribution, North America, in Alpharetta, Georgia, for AGCS.
“Ransomware attacks, data breaches and information technology outages are at unprecedented levels. We've seen a trend over the last couple of years similar to a commercialization of cybercriminal activity,” Mr. Christie said.
Risk managers are building resilience to contend with cyber criminals facing a much lower barrier to entry when it comes to technical skills and financing, and who have a global reach, he said.
The WEF's Global Risk Report identified heightened supply chain and cyber risks among top near-term challenges, as climate and environmental issues dominated the long view. The report is based on the organization's Global Risks Perception Survey, using 959 responses from professionals across eight regions in technology, economics and other fields.
Risk factors often bear upon each other, as events such as the pandemic led to changes, such as working from home, that in turn heightened cyber exposures, said Colleen Zitt, chief risk officer at Zurich The united states in Schaumburg, Illinois.
“The digital transformation and working from home certainly has attracted bad cyber actors and eventually increased the danger to companies and businesses,” she said. “Last year's report discussed COVID overshadowing a lot of the risk landscape. This year, it hasn't gone away, highlighted because when COVID-19 is pushing and causing things like a knock-on effect.”
“The remote work place we have been set for the last few years, that's obviously created vulnerability,” Mr. Christie said.
The pandemic has acted similar to a stress test for business systems such as supply chains, highlighting weaknesses.
“We started to see in which the limits of our logistics and the resiliency were,” said Reid Sawyer, head from the emerging risks group and U.S. cyber consulting practice in Chicago for Marsh LLC.
The interconnectedness of the risks complicates addressing exposures, Mr. Sawyer said. “How would you stress test for pandemic, even environment, because all of these things intersect with supply chains at some point.”
Business interruption, the second greatest threat according to Allianz's Risk Barometer, can have an effect on supply chains, Mr. Christie said, again showing the way the perils impact each other. “The ripple effect of business interruption is massive,” he said.
Environmental concerns dominated the WEF Global Risk Report's long-term view, with “climate action failure,” “extreme weather events” and “biodiversity loss” ranking as the top three most severe risks over a 10-year horizon. “It's clear that a transition is needed from non-renewable fuels,” Ms. Zitt said.
Mr. Sawyer said climate change poses a few of the same comprehensive risk and exposure challenges as COVID-19. “How do we consider systemic risk? It is the same system dynamics that are now being tested in ways they weren't in the last Ten to fifteen years,” he explained.
