The globalization of today’s economy means that businesses aremore interconnected than ever, creating a greater risk of businessinterruption, supply chain disruption, and exposures that canquickly multiply.

According to UNCTAD, over thelast 50 years the number of multinational companies has grownexponentially from 7,000 to almost 104,000, and could reach morethan 140,000 by 2020.

The Allianz Risk Barometer 2015 surveyed more than 500 riskmanagers and corporate insurance experts in 47 countries toidentify the primary challenges facing businesses this year. Somerisks such as political upheaval, cybercrime and businessinterruption were viewed as a greater risk, while naturalcatastrophes, technological innovation and market stagnation wereviewed as having less of an impact.

Here is a look at the top 5 business risks for 2015 asidentified by the Allianz Risk Barometer.

1. Business interruption and supply chain risks(46%)

Business interruption (BI) and impacts to the supply chaincontinued to lead the list of major concerns for businesses for thethird year in a row. With so many businesses interconnected on aglobal scale, the impact of an event in one part of the world canhave negative repercussions halfway around the globe.

“The growing interdependency of many industries and processesmeans businesses are now exposed to an increasing number ofdisruptive scenarios. Negative effects can quickly multiply. Onerisk can lead to several others. Natural catastrophes or cyberattacks can cause business interruption not only for one company,but to whole sectors or critical infrastructure,” says ChrisFischer Hirs, CEO of AllianzGlobal Corporate & SpecialtySE (AGCS). “Risk managementmust reflect this new reality. Identifying the impact of anyinterconnectivity early can mitigate or help prevent lossesoccurring. It is also essential to foster cross-functionalcollaboration within companies to tackle modern risks.”

The top risks leading to supply chain disruptions are: naturalcatastrophes, the political environment in a country, andglobalization, particularly for specialty suppliers. The majorcauses of business interruption that concern companies the mostinclude: fire/explosion, natural catastrophes, and a servicedelivery failure by a supplier.

2. Natural catastrophes (30%)

Despite a relatively quiet year in terms of catastrophes, companies arestill acutely aware of the impact Mother Nature can have on theirbalance sheets.

“The lessons of the Bangkok floods and Japan tsunami haveresulted in growing awareness from businesses of the knock-oneffect from BI and supply chain management,” explains MarkMitchell, regional CEO, Asia, AGCS. “Companies now have a greaterunderstanding of the need to monitor risk aggregations, not justgeographically, but also in business interruption exposures.”

3. Fire/explosion (27%)

An analysis by AGCS found that fire is the number two cause ofbusiness loss overall, with business interruption causing moredamage than the actual fire itself.

In 2013, fire impacted eight of the 20 largest non-naturalcatastrophes, resulting in almost $4 billion in insured losses.

4. Changes in legislation and regulation(18%)

For the financial sector, the number one risk involved changesin legislation and regulations.

The risk jumped nine positions from 2013 and has the secondlargest impact on supply chain disruptions (53%) after naturalcatastrophes. There is also concern that the lower oil prices willimpact the budgets of countries deriving most of their income fromoil revenues.

5. Cybercrime (17%)

Concern about the risks associated with cybercrime rosesignificantly, jumping 10 positions from 2013, when it rankednumber 15. Cybercrime brings with it concerns about economicimpacts, loss of reputation, as well as business interruptionissues. And while companies are far more aware of the cyber risks,according to 73% of the responses, they are still underestimatingits impact.

For businesses, the main cost of a cyber attack involves theimpact to their reputation and the resulting financial damages, aswell as the loss of customer business. The breaches at Sony,Target, Staples and Home Depot demonstrated the damage that can becaused to corporate reputations. Seventy-one percent of customersindicated they would leave an organization following a data breachaccording to the Edelman Privacy Risk Index.

Allianz also found that companies are still underestimating therisks from a cyber attack and fail to take the necessaryprecautions due to budget constraints or a failure to analyze theirvulnerabilities.

Purchasing better hardware, implementing stronger internalprocesses, and improving training and awareness among employeeswere identified as the primary solutions to the problem.

The study also identified the primary risks for the next fiveyears, which were:

• Cyber risks (37%)
• Political/social upheaval and war (21%)
• Natural catastrophes (19%)
• Terrorism (15%)
• Business interruption and supply chain risks (11%)

Long-term risks (5-10 years) were identified as:

• Climate change (19%)
• Natural catastrophes (19%)
• Political/social upheaval and war (18%)
• Technological innovation (17%)
• Cyber risks (15%)

“Weather is becoming more volatile and less predictable at atime when cities and populations are growing in areas exposed tonatural catastrophes,” said Michael Bruch, head of emerging trends,AGCS.

Technological innovations such as 3D printing and nanotechnologywill bring new risks, which must be managed through a collaborativeapproach.