By Rosemary Iwunze
The Nigerian insurance industry will likely face increased risks associated with the COVID-19 pandemic and cyber threats in 2021. This is one of the highlights of the annual survey on global business risks from Allianz Global Corporate & Specialty (AGCS) tagged, “Allianz Risk Barometer 2021”.
Among other things the survey cited pandemic outbreak and cyber threats as the first and second top risks which concern most businesses in Nigeria.
Other major risks cited by the survey include macroeconomic developments (third) followed by business interruption in the fourth position.
The report stated: “59 percent of respondents highlighted the pandemic as the main cause of Business Interruption, BI, in 2021, followed by cyber incidents with 46 percent.
For Africa, the report stated: “The top risks which concern businesses the most in Africa are pandemic outbreak, business interruption and cyber incidents. The three risks also feature prominently in South Africa, Nigeria, Ghana, Kenya, Senegal, Ivory Coast, Morocco and Cameroon.
“The pandemic shows that extreme global-scale BI events are not just theoretical, but a real possibility, causing loss of revenues and disruption to production, operations and supply chains. The pandemic is adding to the growing list of non-physical damage BI scenarios such as cyber or power blackouts.”
Speaking on the issue, Philip Beblo, expert in AGCS’s global Property underwriting team said: “The consequences of the pandemic – wider digitalization, more remote working and the growing reliance on technology of businesses and societies – will likely heighten BI risks in coming years. However, traditional physical risks will not disappear and must remain on the risk management agenda. Natural catastrophes, extreme weather or fire remain the main causes of BI for many industries and we continue to see a trend for larger losses over time.”
The report, however, stated that: “In response to heightened BI vulnerabilities, many companies are aiming to build more resilient operations and to de-risk their supply chains.
“According to Allianz Risk Barometer respondents, improving business continuity management is the main action companies are taking, followed by developing alternative or multiple suppliers, investing in digital supply chains and improved supplier selection and auditing.
“Socioeconomic consequences of the pandemic will bring more insolvencies and likely fuel further civil unrest in 2021.”
Joachim Müller, Chief Executive Officer of AGCS said: “Business interruption, pandemic and cyber are strongly interlinked, demonstrating the growing vulnerabilities of our highly globalized and connected world.
“The coronavirus pandemic is a reminder that risk management and business continuity management need to further evolve in order to help businesses prepare for, and survive, extreme events.
“While the pandemic continues to have a firm grip on countries around the world, we also have to ready ourselves for more frequent extreme scenarios, such as a global-scale cloud outage or cyber-attack, natural disasters driven by climate change or even another disease outbreak.”
According to the report, Covid-19 will likely spark a period of innovation and market disruption, accelerating the adoption of technology, hastening the demise of incumbents and traditional sectors and giving rise to new competitors.