Cyber incidents have topped Allianz Group's annual ranking of global business risks for the first time in 2020.
Of the 2,718 risk management specialists the insurer surveyed to compile the Allianz Risk Barometer report, 39% considered cyber to be the biggest risk, up from 37% a year ago, when cyberrisk ranked second to business interruption. Business interruption dropped to second for this year.
Cyber incidents were in the top spot in France and the U.K. for the second straight year, and moved to number one in South Africa, Spain and the U.S. Cyber also entered the top three risks in China for 2020.
Allianz said awareness of the cyber threat had "grown rapidly" in recent years, driven by companies' increasing reliance on technology systems and a number of high-profile breaches.
The average cost of dealing with data breaches of more than one million records increased 8% year over year to $42 million, while the average cost of tackling breaches including more than 50 million records has jumped 11% to $388 million, Allianz said, citing a 2019 report by IBM Security and research firm Ponemon Institute.
The report also noted that ransomware attacks are becoming more damaging as they increasingly target large companies with "sophisticated attacks and hefty extortion demands." A typical demand five years ago would be tens of thousands of dollars, but today it can be in the millions, according to the report.
Allianz added that although industrial and manufacturing companies are being targeted more often, losses tend to be highest at law firms, consultants and architects, because technology systems "are their life blood."
Cyberattacks are also becoming a theme for mergers and acquisitions. Allianz's report noted that the data breach suffered by hotel group Marriott in 2018 was traced to a 2014 incident at Starwood. Marriott acquired Starwood in 2016.
"Considering potential cyber vulnerabilities and exposures needs to become a higher priority for businesses conducting M&A," Allianz said.
The risks that rose fastest in the list were changes in legislation, which ranked third, and climate change, which ranked seventh. Allianz said that underscored increasing concerns about the trade war between China and the U.S., Brexit and global warming.