Allianz’s Risk Barometer 2018 has been released itsannual survey of risk experts from 80 countries. Thehighest-ranking threats to corporations are contained in thereport, which spans the globe and offers insight from 1,911respondents on what various nations believe to be the greatestareas of concern.

For the first time, the No. 1 risk this year in the U.S. (with45% of the vote) is cyber incidents (moving up from No. 2 from lastyear), with business interruption also considered the largest lossdriver after a cyber incident. (See the full list in the graphic onthe next page of this story.)

Cyber risk modeler Cyence, which partners with Allianz Global Corporate & Specialty,estimates that the average cost impact of a cloud outage lastingmore than 12 hours for companies in the financial, healthcare andretail sectors could total $850 million in North America and $700million in Europe.

Recent events such as the WannaCry and Petya ransomware attacks brought significantfinancial losses to a large number of businesses. Others, such asMirai, the largest-ever distributed denial ofservice (DDoS) attack on major internet platforms and services inEurope and North America, at the end of 2016, demonstrate theinterconnectedness of risks and shared reliance on common Internetinfrastructure and service providers.

Business interruption (including supply chain disruption) movedto No. 2 (with 39%), and natural catastrophes a close third (38% ofthe vote). BI (see chart below) ranks as the most important riskglobally for the sixth year in a row. Companies face an increasingnumber of scenarios, ranging from traditional exposures, such asfire, natural disasters and supply chain disruption, to newtriggers stemming from digitalization and interconnectedness thattypically come without physical damage, but with high financialloss.

Additionally, recently identified security flaws in computer chips in nearlyevery modern device reveal the cyber vulnerability of modernsocieties. The potential for so-called “cyber hurricane” events tooccur, in which hackers disrupt larger numbers of companies bytargeting common infrastructure dependencies, will continue to growin 2018.

In what will surely come as good news to brokers, the AllianzRisk Barometer results illustrate that awareness of the cyberthreat is soaring among small- and medium-sized businesses, with a significantjump from No. 6 to No. 2 for small companies and from No. 3 to No.1 for medium-sized companies.

With regard to sector exposure, cyber incidents rank tops in theEntertainment & Media, Financial Services, Technology andTelecommunications industries.

A new entry to the U.S. Top 10: climate change, an interestingaddition since — unfortunately — that term has becomepolitically loaded despite hard evidence that Earth is becoming increasingly warmer.

Thomas Varney, regional manager for Allianz Risk Consulting andone of the top minds behind the report, noted that with arecord-breaking $135 billion in insured losses from nat cats alonein 2017, natural catastrophes returned to the top three businessrisks globally this year. As industries become leaner and moreconnected, natural catastrophes can disrupt a large variety ofsectors that might not seem directly affected at first glancearound the world.

Another risk showing up in the top 10 (at least globally, not inthe U.S.), was power blackouts. Austria, Germany and Nigeria namedthis topic as a significant risk. A reliable power supply is thebackbone of our societies and economies, and it’s systemicallyinterlinked to other top risks such as natural catastrophes,climate change and cyber attacks.

Further there’s great concern that cyber attacks could bringdown the power supply of nearly an entire country, as described ina Lloyd's scenario published in 2015. That researchestimates the economic and insurance impacts of a severe, yetplausible, cyber attack against the U.S. power grid.

Varey says that at the end of the day, brokers have to bevigilant about the risks faced by their clients, and maintain anongoing dialogue. “Due diligence is needed to help businessesunderstand their exposures so that coverage gaps can be closed. Theconcerns of the client must be discussed with the carrier and thebroker as the business evolves,” he told me. “It’s not aone-and-done conversation. I understand my exposures today, buttomorrow there’ll be another.”