The threat of cyber incidents is ranked as the number one concern for UK businesses this year, according to a survey of risk experts by Allianz.
The financial services firm said the potential for hackers to disrupt a large number of companies through common infrastructure dependencies is increasing.
This was demonstrated when computers running the same Microsoft Windows operating system were targeted by criminals last year in a worldwide WannaCry ransomware attack.
Despite this, cyber incidents are ranked as the most underestimated risk for 2018, and are also though to have the potential to cause the greatest long-term damage.
“Every company has been, or will be impacted by cyber risk,” Allianz Global Corporate & Specialty UK CEO, Brian Kirwan, said. “Far from being over-hyped, the threat is under-appreciated and not always well understood.
“With an increase in the demand for cyber risk products, and in the volume of claims, it’s no surprise to see cyber as the top risk again for businesses in the UK.”
The Allianz Risk Barometer 2018, which gathers the views of over 1,900 risk experts from 80 countries, shows that cyber incidents are considered the second biggest threat by businesses globally for this year.
This is significantly higher than in 2013 when it was ranked the fifteenth biggest risk, and is only beaten by ‘business interruption’ as the number one threat to firms worldwide for 2018.
However, cyber incidents are also ranked as the most feared business interruption trigger – highlighting interconnectivity between the top two biggest risks.
“For the first time, business interruption and cyber risk are neck-and-neck in the Allianz Risk Barometer and these risks are increasingly interlinked,” AGCS CEO, Chris Fischer Hirs, said.
“Cyber incidents are now a major cause of business interruption for today’s networked companies whose primary assets are often data, service platforms or their groups of customers and suppliers.”
The research also shows that firms are becoming increasingly concerned about the impact of new technologies, which has moved up from the tenth biggest risk to seventh.
This is considered the second greatest threat to businesses’ long-term future, just behind cyber incidents, with the risk of vulnerability to automated or autonomous machines expected to increase in the future.
“Although there may be fewer smaller losses due to automation and monitoring minimising the human error factor, this may be replaced by the potential for large-scale losses, once an incident happens,” AGCS head of trends, Michael Bruch, said.
“Businesses also have to prepare for new risks and liabilities as responsibilities shift from human to machine, and therefore to the manufacturer or software supplier.
“Assignment and coverage of liability will become much more challenging in future.”
Financial services companies are looking to digital transformation at a greater rate than most vertical market businesses, and are facing an “acute shortage” of skills as a consequence.
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