Cyber incidents retained the top spot for the fifth year running, demonstrating that cyber security incidents pose a very real and enduring threat to organisations of all sizes, across all industries.
This was illustrated in November 2019 when the Labour Party reportedly faced two cyber-attacks on its digital platforms within days. It seems that growing awareness of the risk is prompting an increase in the number of medium and large businesses taking out cyber insurance – up 63% for medium businesses and 45% for large businesses.
It’s hardly surprising that changes in legislation/ regulation was nearly at the top of the list, with the lead up to Brexit on 31 January raising questions around trade deals, immigration and employment regulation, to name a few. Whilst the UK has now formally exited the EU, the transition period will see ongoing political discussions and negotiations around UK-EU trade deals, and businesses that sell to and buy from the EU will need to prepare contingency plans for possible outcomes.
A related topic is Business Interruption with concerns around international supply chains and skills shortages following Brexit. A recent report advised that the number of skilled workers from overseas applying to enter the UK’s private sector has fallen 9% since the EU Referendum, with the technology sector the hardest hit. However disruption can also be triggered by cyber incidents, disease outbreaks (such as the coronavirus epidemic) and natural catastrophes. Existing concerns around climate change will likely not be helped by the recent flooding associated with Storms Ciara and Dennis, with predictions that these could bring insurance claims of up to £425m.
Market developments remained high on the list in fourth place; perhaps unsurprisingly given the major distortions experienced by the UK economy in the run up to the original 29 March 2019 Brexit deadline. Imports sank to their lowest levels in more than a year, business investment fell and some industries (such as the construction industry) reported a decline in new work due to intensified competition. It will be interesting to see whether this result changes as the UK navigates the transition period.
Fires and explosions continues to be an area of concern falling only one place to eighth position. Fire remains one of the most expensive property insurance claims with £1.3bn paid out to customers in 2018. Following the findings and 53 recommendations from the Hackitt Report, a new regulatory reform to manage construction risks is expected in 2021-2022 followed by a transition period.
6 HIS Markit/Cips UK construction PMI