Business interruption remains the biggest risk for companies in China, for the third consecutive year, as civil unrest creating new causes of disruption and loss of income, according to the Alliance Risk Barometer 2020.
The annual survey on global business risks from Allianz Global Corporate & Specialty (AGCS) incorporates the views of a record 2,718 experts in over 100 countries including CEOs, risk managers, brokers and insurance experts.
Among respondents from China, 30 percent ranks BI as the most important business risk. Causes are becoming ever more diverse, ranging from fire, explosion or natural catastrophes to digital supply chains or even political violence.
Escalating civil unrest in Hong Kong has resulted in property damage, BI and general loss of income for both local and multinational companies as shops closed for months, customers and tourists stayed away or employees couldn’t access their workplace due to safety concerns. The consequence is a business interruption without physical losses but high financial ones.Natural catastrophes remains at No. 2 (26% of responses) while cyber incidents and market developments tied at the third spot (24% of responses.)
“(Cyber) incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands,” said Marek Stanislawski, deputy global head of cyber at AGCS.
“Five years ago, a typical ransomware demand would have been in the tens of thousands of dollars. Now they can be in the millions,” Stanislawski said.
Extortion demands are just one part of the picture. Companies can suffer major BI losses due to the unavailability of critical data, systems or technology, either through a technical glitch or cyber-attack.
Patrick Zeng, AGCS CEO in Hong Kong & Greater China, added that with China locked in an ongoing trade war with the US that does not look to be fully resolved fully any time soon, risk managers in the country are concerned about the impact it will have on BI as the unpredictable nature of tariff announcements have made it difficult to plan accurately for the future.
“Higher volatility from the US-China trade conflict will keep the dollar strong,” said Zeng. “The renminbi should depreciate further. A more fragmented world also means volatile commodity prices, currencies and capital flows for emerging markets.”