"The hackers from the 1980s are a thing of the past"

16 million stolen e-mail addresses and passwords in Germany, 40 million credit cards hacked in the US, 100 million in South Korea – and that is just recently. The "Allianz Risk Barometer" declares hacker attacks, IT problems and the loss of reputation as one of the big new challenges of business risks. Business interruption and natural catastrophes continue to top the list based on a survey by Allianz risk experts. Why this is so is explained by three different experts from Allianz Global Corporate & Specialty (AGCS), the industrial insurer of Allianz.
 

Cyber risks are the newcomers in the Top Fifteen risks for businesses. Shouldn't we assume that a competent IT department is able to control hacker attacks?
 

José Fidalgo (Head of Risk Consulting Liability Germany, AGCS): It would be nice if we could merely talk about hackers. But the image we have of hackers is still too much influenced by movies such as "War Games" from the 1980s. It's not about a youngster sitting at his gaming computer who accidentally finds himself inside some company or the Pentagon. We are dealing with organized criminals who are perfectly coordinated and highly professional in their dubious activities. Moreover, third-party attacks such as these only comprise one third of the risks. Additional risks are borne by a company's own infrastructure, which is further at risk to careless employees or colleagues who have not received sufficient training in IT security.
 

"One quarter of a company's value is pure reputation!"
 

Meanwhile risks and losses concerned with reputation are also on the list of the biggest risks. How can you insure the reputation of a company?
 

Michael Bruch, Head of R&D Risk Consulting, AGCS: The reputation of a company on average makes up one quarter of a company's value. The leverage effect on the prices which a company can demand for its products on the market plays a role here, just as the direct impact a loss of reputation has on the share price does. Insurance alone does not suffice here. As a further measure, the company must sensitize management to reputational risks in its own structural and operational arrangements. How a company handles environmental, social and governance (ESG) aspects has a large influence on the reputation of a company. These issues need to be addressed at the highest management level.
 

The supply chain continues to take up the center of the stage when business risks are investigated. Why does this topic remain so important?
 

Paul Carter (Global Head of Risk Consulting, AGCS): Every manufacturer focuses on constantly supplying production with new raw materials. The supply chain is dependent on a huge number of factors. These range from supplier problems due to natural catastrophes, IT problems or unrest in individual countries. An error on the part of a supplier which is critical to operations is sufficient to cripple in-house production. Minor breakdowns can put a significant spanner in the works. Here, just as in cases of natural catastrophes: Adequate planning for possible business interruptions is the name of the game.

Michael Bruch: "How a company handles environmental, social and governance (ESG) aspects has a large influence on the reputation of a company. "
Michael Bruch: "How a company handles environmental, social and governance (ESG) aspects has a large influence on the reputation of a company. "

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

Bettina Sattler
AGCS SE
Phone +49.89.3800-14303
Send e-mail