The growing impact of new technologies, the occurrence of cyber incidents as well as business interruptions are some of the top key concerns for the businesses in the financial services industry.
According to the Allianz Risk Barometer 2018, 51% of 1 911 risk experts surveyed in 80 countries indicated that cyber incidents, which include cyber crime, IT failure as well as data breaches, are their number one top concern while 42% found that business interruptions were the second-highest concern and 15% viewed the impact of new technologies, such as increasing interconnectivity, nanotechnology, artificial intelligence, 3D printing and drones, as the third-highest risk.
"Cyber incidents continues an upward trajectory to the most important business risk, compared to five years ago when it ranked 15th. So-called 'cyber hurricane' events, where hackers disrupt large numbers of companies through common Internet infrastructure dependencies, are increasing," stated Emy Donavan, Global Head of Cyber at AGCS.
"Every company has been or will be impacted by cyber risk. It is not over-hyped. If anything it is under-appreciated because the threats are not always well understood. Over 50% of Risk Barometer responses rank cyber as the risk most underestimated by businesses. There are now multiple cyber threats to a company's digital presence."
Locally, Allianz Global Corporate and Specialty surveyed 58 respondents to conclude that the leading risk concern is business interruption as a result of cyber crime, IT failure and data breaches. Thirty-eight percent of the surveyed agreed to place business interruption as a primary concern, market developments in second place (23%) as well as impact of new technologies as a growing risk.
"Business disruptions, which arose as a result of cyber incidents, are a major concern in the South African financial services sector. Online banking rose in tandem with cyber attacks on their networks.
"These attacks which can take the form of unauthorised access or presentation of malicious software on a company's system may lead to a significant loss of data, and the unavailability or control of IT systems," stated the report.
"Unlike the retail and manufacturing firms that are heavily burdened by business interruption from supply chain disruption, business interruption is a new threat to financial service providers. The risk from new technologies is also new to the sector with less impact anticipated," it adds.
By comparison, the Nigerian sector does not view cyber incidents and the impact of introduction of new technologies as top-tier risk concerns, instead citing violence, theft and fraud as the leading concerns.
"Cyber incidents feature prominently in South Africa and Morocco. This is not surprising, as both countries have strong insurance market. We need to remember though that cyber incidents aren't just caused by hackers. Technical failure or malicious or innocent employee action are also often to blame. Whatever the cause, reputational damage is irrevocably linked," noted Nobuhle Nkosi, Head of Financial Lines at AGCS Africa.
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