The maritime industry, on its best day, is fraught with risk, as people, machinery and the bulk of world trade regularly traverse some of the most perilous conditions on the planet. According to the 10th Allianz Risk Barometer 2021 for the sector, a trio of Covid-19-linked risks pose the greatest threat to maritime in 2021, but these three are far from alone.
The annual survey on global business risks from AGAllianz Global Corporate & Specialty (AGCS) incorporates the views of 2,769 experts in 92 countries and territories, including CEOs, risk managers, brokers and insurance experts.
According to the 10th Allianz Risk Barometer 2021, the risks to maritime this year include:
- Business interruption (BI) (41% responses)
- Pandemic outbreak (40% responses)
- Cyber incidents (40% responses)
Pandemic outbreak rises to second, place up 15 places
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 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 that qualify for a top 10 risks analysis.
Market developments (#4 with 19%) also climbs up the Allianz Risk Barometer 2021, reflecting the risk of rising insolvency rates following the pandemic. Other risers include macroeconomic developments (#8 with 13%) and political risks and violence (#10 with 11%), which are, in large part, a consequence of the coronavirus outbreak. Fallers in this year’s survey include changes in legislation and regulation (#5 with 19%), natural catastrophes (#6 with 17%), Fire/explosion (#7 with 16%), and climate change (#9 with 13%), all clearly superseded by pandemic concerns.
In the US, BI (46%) topped the list followed by a pandemic outbreak (41%) and cyber incidents (33%).
Prior to the Covid-19 outbreak, BI had already finished at the top of the Allianz Risk Barometer seven times and it returns to the top spot after being replaced by cyber incidents in 2020. The pandemic shows that extreme global-scale BI events are not just theoretical, but a real possibility, causing loss of revenues and disruption to production, operations and supply chains. 59% of respondents highlight the pandemic as the main cause of BI in 2021, followed by Cyber incidents (46%) and Natural catastrophes and Fire and explosion (around 30% each).
The pandemic is adding to the growing list of non-physical damage BI scenarios such as cyber or power blackouts. “The consequences of the pandemic –wider digitalization, more remote working and the growing reliance on technology of businesses and societies– will likely heighten BI risks in coming years,” explains Philip Beblo, expert in AGCS’s global Property underwriting team. “However, traditional physical risks will not disappear and must remain on the risk management agenda. Natural catastrophes, extreme weather or fire remain the main causes of BI for many industries and we continue to see a trend for larger losses over time.”
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%).
Cyber peril intensified
Cyber incidents may have slipped to #3 but they remain a key threat with more respondents than in 2020 and still ranking as a top three risk in many countries, including Brazil, France, Germany, India, Italy, Japan, South Africa, Spain, UK and the US. The acceleration towards greater digitalization and remote working driven by the pandemic is also further intensifying IT vulnerabilities.
At the peak of the first wave of lockdowns in April 2020, the FBI reported a 300% increase in incidents alone, while cybercrime is now estimated to cost the global economy over $1trn, up 50% from two years ago. Already high in frequency, ransomware incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands, as highlighted in the recent AGCS cyber risk trends report.
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