Allianz Risk Barometer: Cyber incidents are the top business risks of 2020
THE ALLIANZ Risk Barometer Survey says that 2020 is the year in which business owners will be aware of the gravity of cyber incidents.
Out of the 2,718 responses recorded, 39 percent ranked cyber incidents as the most important business risk in 2020. Cyberattacks are keeping pace with technology, becoming more targeted and sophisticated.
The financial impact of cyber incidents is heavy. Allianz Deputy Global Head of Cyber Marek Stanislawski noted that the cost of cyber incidents is increasing because of “growing complexity, stringent regulation, and the damaging consequences from a loss of data or critical systems”.
Seventy-seven percent of responders listed data breaches as their primary concern, and with good reason.
With laws such as Europe’s GDPR and Singapore’s PDPA, companies cannot afford to take data privacy lightly.
The scope and geographical reach of such privacy laws are widening, and regulators are clamping down hard on offenders: In July 2019, British Airways was slapped with a fine of US$240 million for compromising data of 500,000 of its customers.
IBM also estimated that a mega breach (involving more that one million records) could set a company back by approximately US$42 million.
Stanislawski noted that “more and more events-like leaving a laptop with confidential data on a train – can constitute of a data breach”.
He also mentioned that 50 to 90 percent of breaches could have been avoided as they are caused or abetted by undiscerning employees.
Thus, training and upskilling employees are crucial to mitigate risks.
Companies must invest in employee awareness (how a data breach looks like, and what are the consequences), and also train them to spot suspicious online behavior, reducing the risk of common cyber-attacks such as business email compromise (BEC).
Marek also recommended obtaining cyber insurance.
“Insurance […] helps companies recover if other measures are insufficient. However, it should not replace strategic risk management. Investing in employees, updating and monitoring systems should be at the top of the list. “
The report also noted that AI is the technology that will have the highest risk potential in the next 5 to 10 years.
Allianz Global Head of Liability Risk Consulting Michael Bruch said that while the widespread implementation of AI applications brings many benefits, there is always a flip side.
“Decision transfer and lack of human oversight may result in unforeseen risks or outcomes. Ethical and social concerns related to AI are also becoming more prominent”.
The key takeaway here is that 2020 is the year to take cybersecurity seriously. Business owners must uphold the trust when consumers hand over data, and do all that is required to ensure the data stays safe.
Failing to do so would not only lead to a loss in reputation-with the heavy consequences of a breach, it might very well be the downfall of a business.
Thus, it would be wise to consistently monitor the system security through continuous vulnerability assessments, and then take action to rectify it if need be.