Nearly 40 pct of businesses say cyber incidents are biggest concern in 2020
Nearly 40 percent of businesses said that they find cybercrime, IT failure, and data breaches as the most concerning business risks in 2020, according to a new study by Allianz, a European multinational financial services company.
The report noted that this is a dramatic rise over the course of the last seven years, when cyber risk ranked just 15th with 6 percent of businesses naming it their number one risk for the year.
“The costs of a cyber-incident are rising across the board, a product of growing complexity, more stringent regulation and the damaging consequences to a business from a loss of data or critical systems,” said Marek Stanislawski, deputy global head of cyber at Allianz Global Corporate & Specialty (AGCS).
Data breaches are the main cause of cyber incidents, the report said, and the costs to a business can be extensive. A mega-breach, defined as a breach involving more than one million records, costs $42 million on average, an 8 percent increase year-on-year.
Meanwhile, the cost for businesses to comply with data protection and privacy regulation, along with associated fines for non-compliance, has risen significantly. In 2019, a UK regulator handed out two $130 million fines in one month alone. The General Data Protection Regulation (GDPR) act coming into force in Europe in 2018 is likely going to cause a further rise in fines, the report added.
“In particular, the cost of large data breaches continues to increase, as data protection and privacy regulation widen in scope,” added Stanislawski.
Business interruption was named the second biggest concern for 2020, at 37 percent, dropping from first place for the first time in seven years. Although it has fallen as a main concern, the report noted that larger more complex business interruption events, such as fires, natural catastrophes, and civil unrest, have continued to take up a larger portion of overall interruption events.
“Political business interruption risk is often underestimated,” said Raymond Hogendoorn, global head of property and engineering claims at AGCS. “Ten years ago, protests in somewhere like Chile may have gone largely unnoticed by global businesses, but today the impact of such events is all too apparent.”