Allianz Risk Barometer 2021: Pandemic outbreak overtakes Business Interruption as top business risk in China
- 10th Allianz survey: Pandemic outbreak overtakes Business
interruption as the top risk and Changes in legislation and regulation
jumps seven spots and ties with business interruption to make the top three risks
for businesses in China for 2021 - Globally, Pandemic
outbreak rockets to #2 from #17 and is seen as the main cause of business
interruption in 2021, followed by Cyber incidents. Companies look to de-risk
supply chains and boost business continuity management for extreme events. - In Asia Pacific, the top three risks mirror the Global
rankings although Business interruption
swaps places with Cyber incidents,
which ranks #1 for the second consecutive year. - Market Developments and rising insolvency rates could
also affect supply chains, with large bankruptcies expected in the US, Brazil,
China and core European countries in 2021
SHANHAI, CHINA - Media OutReach - 26 January 2021 - Pandemic outbreak (#1 with 36% responses) rises six
spots to be the top business risk in China, the epicentre of Covid-19, in the 10thAllianz Risk Barometer 2021. Business interruption
drops one position (#2 with 33% responses), reflecting the potential disruption
and loss scenarios companies are facing in the wake of the Covid-19 pandemic,
while Changes in legislation and regulation jumps seven positions to tie
with business interruption (#3 with 33% responses).
The annual survey
on global
business risks from Allianz Global Corporate & Specialty (AGCS)
incorporates the views of 2,769 experts in 92 countries and territories, including
CEOs, risk managers, brokers and insurance experts.
Globally, Business interruption (#1 with 41% responses) and Pandemic outbreak (#2 with 40%) are this year's top business
risks with Cyber incidents (#3 with 40%) ranking a close third, making it
a trio of Covid-19 related risks.
"The Allianz Risk
Barometer 2021 is clearly dominated by the Covid-19 trio of risks. Business
interruption, pandemic and cyber are strongly interlinked, demonstrating the
growing vulnerabilities of our highly globalized and connected world," says
Joachim Müller, CEO of AGCS. "The coronavirus pandemic is a reminder that risk
management and business continuity management need to further evolve in order
to help businesses prepare for, and survive, extreme events. While the pandemic
continues to have a firm grip on countries around the world, we also have to
ready ourselves for more frequent extreme scenarios, such as a global-scale
cloud outage or cyber-attack, natural disasters driven by climate change or
even another disease outbreak."
The Covid-19 crisis
continues to represent an immediate threat to both individual safety and
businesses, reflecting why pandemic outbreak has rocketed 15 positions up to #2
in the global rankings at the expense of other risks. Prior to 2021, it had
never finished higher than #16 in 10 years of the Allianz Risk Barometer, a
clearly underestimated risk. However, in 2021, it's the number one risk in 16
countries and among the three biggest risks across all continents and in 35 out
of the 38 countries which qualify for a top 10 risks analysis. Japan, South
Korea and Ghana are the only exceptions. China is the only country in Asia
Pacific where Pandemic outbreak is not a new risk as it was ranked #7 in 2020.
Top Asia Pacific Risks
Similar to the global results, Cyber incidents (#1 with
41% responses), Pandemic outbreak
(#2 with 39%) and Business
interruption (#3 with 38%) skyrocketed to the top three business risks in
Asia Pacific followed by Natural catastrophes (#4 with 27% ) rounding out the key issues in the region.
As
expected, Changes in legislation and regulation (#5 with 22%) also kept
its place amongst the top five Asia Pacific risks in 2021 for the third
consecutive year. This was largely due to the several elections and change in
leaderships that took place across the region in Singapore, Taiwan, Indonesia,
South Korea and Malaysia, as well as the broader implications on supply chains
as a result of China's trade wars and greater uncertainty brought on by
governments introducing tough lock down measures.
Commenting
on the Asia Pacific results Mark Mitchell, AGCS APAC Managing Director, said:
"The Pandemic has demonstrated just how vulnerable the world and businesses
have become to unpredictable multi-country events and this has forever changed
the risk landscape for clients and society more generally. The COVID-19
pandemic has not only changed our society, but has also fundamentally changed
the way businesses operate, especially the acceleration towards greater
digitalisation driven by more companies working remotely. Our hope is that
businesses and clients can learn from their experiences in 2020 and make sure
they have in place measures which will reduce the impact of similar events in
the future."
Top China Risks
In China, it's no surprise that Pandemic outbreak topped the list as
China was the epicentre of Covid-19 where the virus was first detected at the
end of 2019. Business interruption
is a close second as individual companies and even entire sectors suffered
large business interruption events during the nationwide lockdown as a result
of the pandemic and it's the largest catastrophic event to hit a modern,
globalised and interconnected economy.
In response to heightened BI vulnerabilities, many companies are aiming
to build more resilient operations and to de-risk their supply chains.
According to Allianz Risk Barometer respondents, improving business continuity
management is the main action companies are taking (62%), followed by
developing alternative or multiple suppliers (45%), investing in digital supply
chains (32%) and improved supplier selection and auditing (31%). According to
AGCS experts, many companies found their plans where quickly overwhelmed by the
pace of the pandemic. Business continuity planning needs to become more
holistic, cross-functional, and dynamic, monitor and measure emerging or
extreme loss scenarios, be constantly updated and tested and embedded into an
organization's strategy.
Changes in legislation and regulation jumps seven positions to tie with business interruption as trade
wars and tariffs intensify amidst growing economic sanctions and protectionism. In the last two years, the proportion
of Chinese exports to the US subjected to additional tariffs has soared from a
nearly insignificant share to over 70%. And the share of US exports to China
subject to tariffs has skyrocketed, from 2% in February 2018 to more than 50%
two years later.
Market developments ranks fourth
in both the China (29%) and Global (19%) rankings reflecting the risk of rising
insolvency rates following the pandemic worldwide. According to Euler Hermes, a trade credit
insurance subsidiary of the Allianz Group, there are two clusters of countries, those
that will see a stronger rise in insolvencies in 2020, and those that will see
a delayed surge in 2021. The bulk of insolvencies will come in 2021 as Euler Hermes' global insolvency index is expected to hit a record high for
bankruptcies, up 35% by the end of 2021, with top increases expected in the US,
(up 57% by 2021, compared to 2019), Brazil (up
45%), China (up 40%) and core European countries such as the UK (up 43%), Spain
(up 41%), Italy (up 27%), Belgium (up 26%) and France (up 25%).
Most Asia Pacific
countries are in the first group (China, Japan, South Korea, Taiwan, Hong Kong
and New Zealand, with India as key exception) mainly because they were the
first to be impacted by the Covid-19 outbreak. The earlier economic recovery of
the region will help limit the rise in insolvencies for 2020, but the stricter
and/or longer lockdown measures will also cap the recovery and keep
companies under pressure up to 2021, when the region will see another rise in
insolvencies. China tops the list and it is followed by Singapore (+39%), Hong
Kong (+23%), Japan (+13%) and Australia (+11%).
Patrick Zeng, CEO
of Hong Kong & Greater China & Regional Director of Distribution for
AGCS said: "The silver lining to the pandemic and the economic challenges that
follow is that it will likely spark a period of innovation and market
disruption. We anticipate the accelerating adoption of technology, hastening
the demise of incumbents and traditional sectors, giving rise and opportunities
to new companies and the way business is done. As a leading partner in risk
management we look forward to strengthening our business relationships and
facilitating this transformation."
More information on the findings of the
Allianz Risk Barometer 2021 is available here:
- Top
10 global business risks - Full
report - Individual
country and industry sector results - Watch
a short film about the top 10 risks for 2021
About Allianz Global Corporate & Specialty SE
Allianz Global Corporate & Specialty (AGCS) SE is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 10 dedicated lines of business.
Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are not only the world's largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film productions. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.
Worldwide, AGCS operates with its own teams in 31 countries and through the Allianz Group network and partners in over 200 countries and territories, employing over 4,450 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2019, AGCS generated a total of 9.1 billion gross premium globally.
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@AGCS_Insurance
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