The Allianz Risk Barometer 2018 report reveals that cyber incidents remain a top threat with 38% of responses for a third year in a row for South African businesses.
Business interruption (BI) ranked second at 34%, and changes in legislation and regulation is in third place at 29%. This is up from fifth place in 2017, as policy uncertainty and sluggishness in the market has had a negative impact on business confidence over the past year.
These are the key findings of the seventh Allianz Risk Barometer, which is published annually by Allianz Global Corporate & Specialty (AGCS). The 2018 report is based on the insight of 1,911 risk experts from 80 countries.
The report revealed two new business threats that have emerged in South Africa as part of the top 10 list, namely climate change/ increasing volatility of weatherand loss of reputation or brand value, both at 16%.
These new threats are not surprising, especially given the extreme weather patterns that have resulted in frequent droughts and floods affecting the country, said Allianz.
Market developments as a threat has slightly declined to fourth place at 23% from third in 2017 regardless of prevailing political uncertainly and a difficult business environment.
Fires and explosions and new technologies – tied in in sixth place – are both at 19% proving this is still a concern as South Africa was plagued with incidents of large fires at Durban Harbour, Braampark and Knysna. Macroeconomic developments (13% of responses) slid seven places to 10th on the list.
The report noted that cyber incidents through events such as WannaCry and Petya ransomware attacks brought significant financial losses to a large number of businesses.
South African businesses were not left unscathed, it said. In October last year, more than 30 million South Africans’ personal information was exposed online in what is considered country’s biggest data breach.
The potential for so-called “cyber hurricane” events to occur, where hackers disrupt larger numbers of companies by targeting common infrastructure dependencies, will continue to grow in 2018.
“South Africa is reported to have the third highest number of cybercrime victims worldwide, losing billions of rands a year to cyber attacks and experiencing more cyber attacks than its African counterparts.
“Although cyber awareness has significantly increased, particularly among small and medium sized businesses, it is more challenging for these enterprises to tackle this issue compared to larger corporations,” said Nobuhle Nkosi, cyber insurance expert at AGCS Africa.
Allianz Risk Barometer results showed that awareness of the cyber threat is soaring among small- and medium-sized businesses, with a significant jump from sixth to second for small companies and from third to first for medium-sized companies.
With regard to sector exposure, cyber incidents rank top in the Entertainment & Media, Financial Services, Technology and Telecommunications industries.