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Allianz Risk Barometer 2017: Regional Analysis

The 2017 Allianz Risk Barometer analyzes responses from a record 55 countries and four regions. Business interruption (inc. supply chain disruption) [BI] remains the top business risk for 2017 in three of the four regions – Americas (43%), Asia Pacific (42%) and Europe (35%). However, there are some significant differences in the risk rankings around the world.

Africa & Middle East

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Political risks and violence is a top three business risk for the first time in the Africa & Middle East region. Photo: iStockPhoto/Jon_Brown

Market (39%) and macroeconomic (37%) developments rank as the top two risks in the Africa & Middle East region. “Nigeria and South Africa continue to face challenges: from low commodity prices, the Chinese slowdown and the tightening of US monetary policy, as well as internal pressures such as inflation, weak domestic demand and socio-political tensions,” says Delphine Maidou, CEO, AGCS Africa.

Businesses are also increasingly focused on the threat of political risks and violence in the region, with this a top three business risk for the first time. Instability in African states such as Burundi, Democratic Republic of Congo, Libya, Somalia and South Sudan is a chief concern as well as the persistent Islamic terrorism of Boko Haram in some parts of Nigeria. Fear of loss of reputation is also rising across the region.

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REGIONAL RISK RISERS Fear over the impact of a cyber incident tops the rankings in South Africa. They are reported to cost the South African economy ZAR6bn ($400m) annually. Macroeconomic developments dominate in Nigeria. Concerns about political risks and violence have soared in Turkey, following a number of deadly terror attacks in 2016, ensuring it becomes the top business risk with a record 92% of responses.

Source: Allianz Global Corporate & Specialty. Figures represent a percentage of all relevant responses. 182 respondents. More than one risk selected.


Americas

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Recent events, such as the wildfires in Fort McMurray, Alberta, have highlighted the issues companies face with business interruption. Photo: Jason Woodhead/ Wikimedia Commons

Across the Americas region, fear of BI, cyber incidents and natural catastrophes are the three major concerns for businesses. “Each of these issues at times may be an unknown or hidden risk exposure, but an exposure that could create potentially both short and long-term consequences to a company’s bottom line,” says Thomas Varney, Regional Manager, Americas, Allianz Risk Consulting. “Understanding of a supply chain exposure requires a partnership between client and carrier.” Fears over macroeconomic developments and the new risk impact of increasing interconnectivity are rising.
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REGIONAL RISK RISERS Concerns over the impact of cyber incidents and changes in legislation, regulation and the government are up year-on-year in the US. BI is the most important risk for businesses in both Brazil and Canada.

Source: Allianz Global Corporate & Specialty. Figures represent a percentage of all relevant responses. 398 respondents. More than one risk selected.


Asia Pacific

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The earthquake (and aftershocks) which struck the Kumamoto prefecture in Japan in April 2016 was the costliest natural catastrophe of the year. Photo: hyolee2/ Wikimedia Commons

Across Asia Pacific market developments (32%) ranks behind BI as the top concern for businesses in 2017, with natural catastrophes ranking third. The region saw the costliest disaster globally of the year in 2016 – the earthquake (and aftershocks) which struck the Kumamoto prefecture in Japan in April. The total economic cost of this event is estimated at $20bn, but just $5bn of this was insured[1].

“Governments are working together to achieve an integrated ASEAN insurance market which will facilitate a wider distribution of risks through cross border solutions and open access to the individual domestic markets,” comments Mark Mitchell, CEO, AGCS Asia. “This will result in safer and more cost-effective provision of insurance which will help pilot critical capacity gaps in respective ASEAN jurisdictions. It will also help reduce the burden on governments, corporates and consumers, as well as strengthen economies’ resilience to catastrophe losses.”

Cyber, fire and new technology-related risks are among the ranking risers year-on-year.
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REGIONAL RISK RISERS BI is the major concern for businesses in Australia and Singapore. Market developments dominate in China. Natural catastrophe exposure ranks top in Hong Kong and Japan.

Source: Allianz Global Corporate & Specialty. Figures represent a percentage of all relevant responses. 141 respondents. More than one risk selected.

[1] Sigma preliminary estimates, Swiss Re


Europe 

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Tributes to the victims of the terrorist attacks in Brussels on March 22, 2016. Political risks and violence, including terrorism, climbs to 7th position in the European rankings. Photo: iStockPhoto/cristi_m


Across Europe, while BI remains the top risk year-on-year, fear of cyber incidents climbs to second position, while political risks and violence climbs to seventh position.

“Cyber-attacks continue to proliferate and hit the headlines,” says Nigel Pearson, Global Head of Fidelity, AGCS. “Looking ahead, the introduction of the General Data Protection Regulation in May 2018 significantly increases the liabilities for companies doing business in Europe or with European citizens.”
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REGIONAL RISK RISERS Impact of cyber incidents is the top concern for businesses in Germany for the first time and in the UK for the second year in a row. Uncertainty over Brexit and the Eurozone is a much bigger risk concern year-on-year in the UK, rising to 5th position following the June 2016 referendum. BI is the new top risk concern in France and is the major concern in Austria, Italy, the Netherlands, Spain and Switzerland. Macroeconomic concerns continue to dominate in Greece. Changes in legislation is the new top risk in Croatia, also ranking 1st in Hungary and Russia. Market developments rank top in Belgium. Impact of a fire and explosion is top in Slovakia.

Source: Allianz Global Corporate & Specialty. Figures represent a percentage of all relevant responses. 516 respondents. More than one risk selected.