Allianz’s Michael Bruch warns that risks are so closely linked and threats amplified that risk managers must revise their strategies
Allianz has advised risk managers to adapt their mitigation approaches to better deal with the interconnected nature of risks.
Following the publication of its Risk Barometer 2014, Allianz Risk Consulting head of research and development Michael Bruch (pictured) said that individual risks are so closely linked that the threats are amplified.
Speaking to StrategicRISK, he warned: “The real critical finding from the report is the interconnectivity between one risk and another. The best example of this interconnectivity is the top rated risks – business interruption and supply chain is heavily linked to the second and third placed risks [fire, explosion].
“The interconnected nature of the most threatening risks magnifies the potential impacts of each risk. A risk to one single company can have a large impact on an entire industry.”
He added: “The best advice for risk managers is that they must think in interlinked scenarios to find the right approach.”
Allianz surveyed 405 consultants, underwriters, senior managers and claims experts worldwide, and found that business interruption and supply chain, natural catastrophes, fire and explosion were respectively ranked as the top three risks for businesses in Europe.
Market stagnation or decline (4); changes in legislation and regulation (5); intensified competition (6); loss of reputation, brand value (7); theft, fraud, corruption (8); cyber crime, IT failures, espionage (9 ); quality deficiencies, serial defects (10), make up the top 10 risks.
Loss of reputation, brand value (6) and cyber crime, IT failures, espionage (9) were new entries into Allianz’s third annual risk barometer.