Business interruption and supply chain risks caused by flooding and extreme weather patterns top the list of concerns among corporate insurance experts for 2014, according to Allianz.

The third annual Allianz Risk Barometer, which surveyed over 400 corporate insurance experts from 33 countries, highlights the impact of natural catastrophe the subsequent complexity of business risks, particularly for large corporates with international exposures.

2014 will also be a critical year for companies when it comes to dealing with the threat posed by a number of emerging perils explains Axel Theis, CEO of Allianz Global Corporate & Specialty SE (AGCS): “Identifying the impact of interconnectivity between different risks is a top priority for risk managers. Today’s business continuity plans must prepare for an increasing range of risk scenarios which need to reflect the sometimes hidden knock-on effects. For example, a natural catastrophe can result in BI, IT-systems failure and power blackouts, among other perils.”

“The extreme storms and flooding over the past few weeks are unprecedented and something I have not seen in the 20 years I have been in the industry,” said AGCS risk consulting regional manager, Dennis Murphy. “The ramifications are being felt beyond those physically impacted to those that rely on suppliers for parts or services. Events like these, and the polar vortex in the US and Canada highlight two key points. Firstly, businesses need to have robust business continuity plans designed to react to extreme conditions. Secondly companies need to have a strong grasp of their supply chain and have contingence solutions ready. The Allianz Risk Barometer survey results support this with 43% of respondents citing business interruption/supply chain as a primary concern.”

AGCS estimates that BI and supply chain-related losses typically account for 50% to 70% of insured property catastrophe losses, as much as US$26bn a year.

Featuring in the top five risks globally and top three in the UK is market stagnation/decline which has risen as a concern, previously being placed at ninth in the UK. It shows the concerns over sluggish growth in mature markets and slower than expected growth in emerging markets, even though there is increasing evidence that the UK economy is showing signs of growth in 2014.

Carsten Scheffel, CEO of AGCS UK, says: “From a pure insurance perspective, increased trading from a growing economy may mean larger inventories and greater assets at risk – and greater liabilities. It’s essential that businesses match their coverage to their risks as they grow. Economic upturn can mean M&A opportunities, and this can bring a whole new set of challenges. One of the most important is to create a unified risk management strategy across the new company and it’s not unreasonable to budget up to 10% over and above the pure acquisition costs to bring risk management to the right level.”

Emerging risks such as cyber threats are the biggest mover in this year’s Risk Barometer climbing up to rank eight from fifteen, while reputation management moved up to six from ten. These rated highest among businesses in service industries.

Amid rising organised cyber criminality, IT security is not enough. “Even with the best risk management framework, companies will never be 100% safe from glitches in their IT infrastructure, failure of internal processes or external cyber-attacks. Each business needs to decide whether it prefers to carry that risk itself or transfer it by taking out a cyber insurance policy”, says Nigel Pearson, global head of fidelity at AGCS.

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