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SA businesses more scared of cyber threats than fire, natural disasters - survey

Jan 24 2019 18:46

Business interruption is regarded as the top risk among SA companies surveyed for the Allianz Risk Barometer 2019.

The annual corporate risk survey - now in its eighth year - incorporated the views of over 2 400 respondents from 86 countries, including businesses, brokers and industry trade organisations. Risk consultants, underwriters, senior managers and claims experts took part, among others.

According to the survey business interruptions cover everything that can bring a company to a "temporary or prolonged standstill", including a breakdown of core IT systems, product recalls or quality issues, terrorism or political rioting, protests or environmental pollution.

After business interruption, cyber incidents came in at number two for SA companies, followed by changes in legislation and regulation - including land expropriation. Fourth was market developments and fifth new technologies.

South African businesses also indicated that they are more scared of cyber incidents than of fire and natural catastrophes impacting operations.

Political risks and violence, as well as a shortage of skilled employees, were the two business risks that increased most in SA since the previous survey in 2018.

Cyber hassles

Globally, cyber incidents and business interruptions were also identified by businesses as their top two risks. About 37% of businesses surveyed globally singled out these two risks.

Cybercrime now costs an estimated $600bn globally compared to $445bn in 2014, according to the report.

Both cyber and business interruption risks are increasingly interlinked, the report noted, as ransomware attacks and accidental IT outages often result in disruption of operations and services costing millions of rands.

Financial losses

Business interruption is seen as the biggest cause of financial loss for businesses, after the risk of a cyber incident.

"While criminals use more innovative methods to steal data, commit fraud or extort money, there is also a growing cyber threat from nation states and affiliated hacker groups targeting critical infrastructure providers or stealing valuable data or trade secrets from companies," states the report.

"Cyber incidents are increasingly likely to spark litigation, including securities and consumer class actions. Data breaches or IT outages can generate large third-party liabilities as affected customers or shareholders seek to recoup losses from companies."

Bracing for disaster

Globally, natural catastrophes ranked third in this year's top-10 ranking of business risks.

Climate change and a shortage of skilled workers were the risks that increased the most, globally, since the previous survey.

"A skilled workforce — and human capital more generally — has become the scarce resource of the digital economy," commented Ludovic Subran, deputy chief economist of Allianz.

"Competition is fierce between companies to get new recruits with competencies in artificial intelligence, data science, or 'frontier risk management' such as managing cyber or reputational risk, as most of these jobs did not exist 10 years ago."

Globally, companies surveyed are also more worried about changes in legislation and regulation, for instance related to Brexit, trade wars and tariffs.

business  |  sa economy  |  risk
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