Risk-Management : Risk Assessment : Business Continuity :
Business Risks 2013: Force Majeure
Business interruptions, natural disasters and fire are the top risks for global companies
One particular concern unites companies around the world: their operations come to a standstill due to force majeure. Business and supply chain interruption, natural disasters and fire and explosion are the key risks faced by companies in 2013, according to a new Allianz survey conducted in 28 countries. Regulatory or market-related changes also represent important business risks. In the United States, industrial companies worry about natural catastrophes and fire and explosion risks while mid-sized enterprises are increasingly concerned about intensified competition from emerging markets.
Concerns about fire risks and intensified competition in the United States
The ‘Age old’ risk of fire moved up on the risk manager’s agenda in 2012. Thomas Varney, Head of Risk Consulting Americas at Allianz Global Corporate & Specialty (AGCS), explains:” Fires are relatively rare, but can cause high property and business interruption claims especially in manufacturing industries. Although we have experience in dealing with this particular risk, its resurgence in this year’s survey shows that companies should not compromise their fire protection systems due to economic pressures. AGCS’s loss statistics speak for themselves: Of seven large industrial property losses exceeding 13 million USD each in 2012, six were caused by fire.”
Additionally US companies’ fourth-biggest concern – particularly among mid-sized enterprises – is intensified competition. The Economic Policy Institute estimates that between 2001 and 2011 2.7 million manufacturing jobs in the US were lost or displaced by trade with China alone.“Due to slow growth in their home markets, American manufacturing and technology companies are forced to look for new revenue sources, for instance by sourcing in emerging markets,” comments Thomas Varney.
The “Allianz Risk Barometer 2013” survey was conducted at the end of 2012 by Allianz Global Corporate & Specialty (AGCS), the Allianz Group’s center for corporate and industrial insurance. The survey gathered opinions from 529 corporate and industrial insurance experts from across the Allianz Group on the most important risks that companies in particular regions and sectors face in 2013.
“Allianz has been a reliable partner to businesses all over the world for many years. We have in-depth knowledge about the risks that businesses face and we also know which issues they may be underestimating,” says Clement B. Booth, Member of the Board of Management of Allianz SE. “Today’s global companies operate in a complex risk landscape that features traditional risks like fire as well as ultra-modern risks such as supply chain interruptions and cyber crime,” notes Axel Theis, CEO of AGCS.
The Allianz experts rate business and supply chain interruptions as the biggest business risk (46 percent of responses). Choosing to run lean global supply chains to reduce costs, many companies lack sufficient alternative suppliers. “The flooding disaster in Thailand showed that business interruption at a key supplier can cause a ripple effect felt across an entire industry,” explains Head of Property Underwriting US Timon Mueller.
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Allianz Global Corporate & Specialty (AGCS) is Allianz SE's dedicated brand for corporate and specialty insurance customers. AGCS provides insurance and risk management support across the whole spectrum of marine, aviation and corporate business, including Energy, Engineering, Financial Lines (incl. D&O), Liability and Property insurance, including International Insurance Programs.
Worldwide, AGCS operates in more than 150 countries through the Allianz Group network and through network partners. It employs more than 3,400 people and provides insurance solutions to more than half of the Fortune Global 500 companies, writing a total of €4.9 billion gross premium worldwide annually (2011).