NU Online News Service, Jan. 16, 11:43 a.m.EST

Economic risk is the top concern on business professionals'minds, according to a survey of Allianz Global Corporate &Specialty risk experts, but the same professionals say businessesare underestimating cyber risks.

The AGCS survey of 153 of the company's risk experts wasdesigned to gauge the mood of business clients toward global risks.In the survey, 21 percent of respondents mentioned the economicsituation as one of the top-three risks on the minds of clients.Business interruption was the next most-frequently mentioned risk,cited by 14 percent of respondents, and 9 percent mentioned naturalcatastrophes.

Rounding out the top-10 were legal/regulatory risks,reputational risks, business-inherent risks, political risks,staff-related risks, environmental risks and fire risks.

Cyber risks did not crack the top-10 list, and the ACGSprofessionals say the most underestimated risks relate to IT.“Despite a broad awareness of the increasing risk, only 1 percentof risk experts say that their clients are concerned with cyberrisks,” an analysis of the survey says. “Cyber risks arecharacterized by constant innovation and change and are thereforedifficult to control.”

And the issue with cyber risks extends beyond just IT systems,according to Jose Fidalgo, AGCS risk consultant, liability. “Aftera claim notification we see very often that we are not dealing witha pure system failure but that there was a lack of understandingaround the entire process,” he says in the analysis. “We have tocontinue putting a lot of emphasis on education and know-howtransfer. IT risks are quickly evolving and becoming more complexby the minute.”

Regarding the top-cited risk, the economic situation, MichaelHeise, Allianz group chief economist, says in the analysis, “In thecurrent climate we have all become acutely aware of thepervasiveness of economic risk.”

He adds, “Nervousness and volatility in the financial marketseventually undermine confidence and business activities in the realeconomy, which in turn further unsettles investors and themarkets.”

On business interruption, AGCS experts say vulnerable supplychains should be their clients' highest priority, even though theeconomy is the risk on most of their minds.

Paul Carter, head of property risk consulting at AGCS, explainsin the survey analysis that the increasing trend to source globallyhas reduced costs along the supply chain, but has “significantlyincreased risk of disruption within companies' overall supplychains.”

He notes, “The very flexibility that provides the supply chainwith its cost advantages has also caused its inherentvulnerability.”

For the third most-cited risk, natural catastrophes, AGCS saysconcern among businesses in this area is actually lower thanexpected given the high-profile Asia-Pacific catastrophes in2011. AGCS also says global trends like urbanization andcoastal/flood-plain development increase overall losses fromwindstorms and floods.

Michael Bruch, a risk expert from AGCS Risk Consulting, says,“In today's interconnected world, we cannot see the risk of naturalcatastrophes in isolation, but have to ask ourselves what happenswhen disaster strikes and what kind of knock-on effects this mayhave in other parts of the world.”