Cyber risk is the top concern for South African businesses for a third year in the row, according to the Allianz Risk Barometer 2018.
The annual report, released on Monday, surveyed 1 911 risk experts from 80 countries. This is the seventh report released by insurance company Allianz Global Corporate and Specialty.
Of the South African respondents, 38% said cyber incidents remain a top threat for businesses, according to the report.
Business disruptions such as interruptions in the supply chain came in second, with 34% respondents agreeing that it was a concern. About 29% of respondents said changes in legislation and regulation are also among the top concerns.
“South Africa is reported to have the third highest number of cyber crime victims worldwide, losing billions of rand a year to cyber attacks and experiencing more cyber attacks than its African counterparts,” said Nobuhle Nkosi Cyber Insurance Expert at AGCS Africa.
“Although, cyber awareness has significantly increased, particularly among small and medium sized businesses (SMEs), it is more challenging for these enterprises to tackle this issue compared to larger corporations.”
There is a growing awareness among SMEs of cyber risk. Cyber risks are of most concern in sectors such as the entertainment and media, financial services, technology and telecommunications industries.
Cyber risk was also a top threat in surveyed countries in regions such as the Americas, Europe and Asia pacific, according to the report.
“It also ranks as the most underestimated risk and the major long-term peril,” the report read.
“In October last year, more than 30 million South Africans’ personal information was exposed online in what is considered the country’s biggest data breach,” the report warned.
“The potential for so-called ‘cyber hurricane’ events to occur – where hackers disrupt larger numbers of companies by targeting common infrastructure dependencies – will continue to grow in 2018.”
The report shows that cyber risk and business interruption have followed each other closely in the past three years, indicating a strong link between the two risks.
SA businesses are concerned with disruptions possibly stemming from “traditional exposures” like fire, natural disasters and supply chain disruption.
New triggers include digitalisation and inter-connectedness, which don’t necessarily come with physical damage, but rather high financial loss, explained AGCS Africa CEO Thusang Mahlangu.
“Breakdown of core IT systems; terrorism or political violence events; product quality incidents or an unexpected regulatory change can bring businesses to a temporary or prolonged standstill with a devastating effect on revenues.”
Other findings show two new threats on the top-10 list, namely climate change (ranked in eight place) and the loss of reputation or brand value (also ranked eighth).
“These new threats are not surprising, especially given the extreme weather patterns that have resulted in frequent droughts and floods affecting the country,” the report read.