Biggest business risks of 2014 revealed
Business interruption and supply chain risk followed by changes in legislation and regulation are the two highest business risks facing Australian companies, according to the Allianz Risk Barometer Survey 2014.
Loss of reputation and brand value (e.g. from social media) came in at number three; cybercrime, IT failures and espionage ranked as the fourth highest risk and natural catastrophes at number five.
Regulatory risk ranked higher in Australia than in any of the other more than 30 countries surveyed.
Commenting on the Australian results, Niran Peiris, MD of Allianz Australia, said: “The survey highlights the increasing complexity of business risks, including a combination of new technological, economic and regulatory risks, potentially creating a systemic threat for businesses. It is notable that regulatory risk features so prominently in the Australian context, ranking second in 2014 compared to only eighth last year.”
Peiris suggested that regulation had become a heightened concern because of increased regulatory proactivity by financial regulators and policymakers following the GFC and various investment-related financial collapses over recent years.
Globally, business interruption and supply chain risks, natural catastrophes and fire/explosion are the top three risk that are the principal risks that continue to occupy the attention of global companies at the start of 2014.
The report found that the global risk landscape is becoming increasingly complex due to growing interdependency of different industries and processes. This, combined with the fact that inadequate internal processes are often the main factor behind companies suffering a crisis, means there is an increasing need for deployment of holistic, state-of-the art risk management and mitigation strategies.
The 2014 Risk Barometer also highlights that businesses are more concerned about cyber and reputational risks than ever before. According to Allianz experts, the most heightened risk awareness in 2014 is around cyber and loss of reputation issues. Cyber is the biggest mover in this year’s Risk Barometer climbing up to rank eight from 15, while reputation moved up to six from 10.