Top concerns in South Africa
Cyber incidents, business interruption and critical infrastructure blackouts top the three concerns in South Africa, according to the Allianz Risk Barometer 2022.
FAnews spoke to Santho Mohapeloa, Senior Cyber Underwriter and Ronald Dodo-Tabaziva, Head of Property at Allianz about the new risks, challenges and opportunities they believe will present themselves in 2023, and how we, as an industry, can remain resilient.
Key underlying risk themes
“Cyber incidents ranked as top business risk in Nigeria, South Africa, Africa, and Middle East and globally in 2022, according to the eleventh Allianz Risk Barometer. It also ranked second in Ghana, fourth in Morocco and Namibia, fifth in Kenya and seventh in Turkey. The threat of ransomware attacks, data breaches or major IT outages worries companies even more than business and supply chain disruption, natural disasters, or the COVID-19 pandemic, all of which have heavily affected firms in the past year,” said Mohapeloa.
“The African continent is in no way immune to cyber-attacks; relaxed IT security standards and new security vulnerabilities and threats during the pandemic have increased the risk of loss to entities across all sectors of business,” continued Mohapeloa.
Dodo-Tabaziva added that, “business interrupted’ will likely remain the key underlying risk theme for this year. Business Interruption (BI) ranked as the second most concerning risk globally, in South Africa, Africa and the Middle East and Madagascar. However, it ranked first in Ghana, Kenya, Morocco and Namibia.”
“In a year marked by widespread disruption, the extent of vulnerabilities in modern supply chains and production networks is more obvious than ever. According to the survey, the most feared cause of BI is cyber incidents, reflecting the rise in ransomware attacks but also the impact of companies’ growing reliance on digitalisation and the shift to remote working. Natural catastrophes and pandemic outbreaks are the two other important triggers for BI in the view of respondents. Critical infrastructure blackouts entered the top three risks from sixth showing that companies are concerned about the impact of blackouts on their businesses and the economy,” continued Dodo-Tabaziva.
New risks, challenges and opportunities
According to the Allianz Risk Barometer, cyber exposures that concern companies the most over the next year are:
- Increase in ransomware attacks 57%
- Data breaches 57%
- IT vulnerability due to growth in remote working 34%
- Disruption from failure of digital supply chains, cloud technology service platforms 33%
- Cyber-attacks on physical assets 27%
- Increase in business email spoofing attacks 24%
- Technical failure (e.g. accidental computer outage, migration/update issues) 22%
- Increasing threat of litigation after an incident 9%
- Increasing regulatory exposure at home and overseas 7%
- Increase in malicious activity by employees 3%
“However, 80% of businesses believe they are adequately prepared for a future pandemic incident,” said Mohapeloa.
Remaining resilient, as an industry
Building resilience, according to Mohapeloa, is becoming a competitive advantage for companies. “Demand for cyber insurance continues to grow, reflecting increased awareness of exposures associated with digitalisation and remote working. However, a true customer-insurer partnership is needed if the insurance market is to be sustainable and meet the needs of businesses. Blanket exclusions and sub-limits for challenging risks like ransomware can leave businesses without important cover, but insurers are willing to explore alternative solutions to support companies as they take steps to improve their cyber security maturity, as well as address the needs of large companies in high-risk segments.”
Dodo-Tabaziva added that the pandemic and resulting BI and supply chain disruption has been a wake-up call. “Such disruption has raised awareness of the issue at both company and governmental level, triggering reviews of business resilience and critical supply chains. Awareness has gone beyond risk management departments to become an important issue across the entire company. There is now a desire and willingness among top management to bring greater transparency to supply chains and to work with data to better understand the risks.”
“With greater awareness of the risk, there is also a realisation that not all BI risks are easy to insure and to find meaningful capacities. Capacity for large business interruption and contingent business interruption risks is currently limited, especially where there is a lack of transparency. The better the transparency and data, the more meaningful capacity we, as insurers, are able to provide. It is critical to understand the value chain and identify the most important exposures in order to mitigate the risks and create solutions to transfer or reduce the risk,” concluded Dodo-Tabaziva.
Writer’s Thoughts
Cyber incidents, natural catastrophes, pandemic outbreaks, critical infrastructure blackouts… it has been a few years marked by widespread disruption. However, momentum has been building and increasingly businesses see resilience as a competitive advantage. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected]
