SA’s power crisis a major risk for companies
Infrastructure blackouts, cybercrimes and business interruptions were identified as top risks.
SA’s power crisis has been identified among the top risks for companies in the latest Allianz Risk Barometer. Image: iStock
South Africa’s power cuts have been identified as a major risk for companies looking to invest in the country.
The Allianz Risk Barometer report released on Tuesday unveiled the top concerns for businesses globally.
The survey by 3,069 risk management experts from 92 countries revealed infrastructure blackouts, cyber crimes and business interruptions as SA’s top risks for businesses.
Meanwhile, the fear of power disruptions has emerged as a top risk for the second year in a row. However, on a global scale, cyber incidents topped the list.
Cyber incidents have been identified as the number one global risk, ranking as a major concern for companies in various industries including financial services, consumers as well as the government.
“Cyber is the cause of business interruption that companies fear most, while security resilience is their most concerning environmental, social, and governance (ESG) risk issue,” according to the report.
Global Head of Risk Advisory Services at Allianz Commercial, Michael Bruch is not surprised.
“Businesses and the wider economy are now reliant on digital services and infrastructure for both critical and everyday services,” he said.
“Almost everything is now linked to technology. But once you are connected, it opens the door to hackers to steal data or threaten disruption for extortion,” he added.
The report reveals that cyber attacks are likely to increase rapidly in 2024.
The threat of AI
The rise of artificial intelligence (AI) has been hailed as a notable stride in technology, simplifying traditional methods while revolutionising some industries.
Unfortunately, AI has fallen into the hands of cyber criminals who’ve misused it to commit internet crimes.
“Hackers are beginning to use artificial intelligence (AI)-powered language models to increase the speed and scope of ransomware attacks, as well as create new malware and produce highly convincing phishing emails and deep fakes,” the report suggested.
Business interruption has been ranked as the second major global risk.
Head of Risk Consulting at Allianz Commercial, Marianna Grammatika explained that business interruption remained a notable risk due to companies’ reliance on supply chains for critical products and services.
“It is the extent of the disruption that becomes the focus point. Some sectors of industry operate with supply chains that have extensive geographic footprints,” she said.
Meanwhile, Allianz Commercial Business Interruption Group Leader Alberto Barani believes the prominence of business interruptions reflects the volatile environment companies currently operate in.
“We live in a very interconnected world. Despite efforts to improve resilience, the need for efficiency means many companies still run with low levels of stock and just-in-time manufacturing, which results in little margin for errors or disruption,” he said.