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10 Modern Business Challenges

Jun 29, 2018

The following shows why we need to plan well these days and be aware of difficult times that could arise so easily.

1. Business Interruption

“This is essentially the loss of ability to trade as a result of property damage. A business might be flooded, or damaged by a fire that destroys a lot of stock. This one was top of mind when the survey was done late last year because it was very soon after a major blackout in South Australia, which knocked out power to the entire state.

2. Market Developments

“The main thing we are talking about here is disruption, such as digital disruption. It is something that is affecting businesses in all industries.”There is also market risk around the fact that there is global uncertainty around economic growth. When you are unsure of the direction that the entire economy is going to take, it makes business planning and strategy development a great deal more difficult and risky.”

3. Cyber Incidents

“Cyber risk can be anything from ransomware – which is becoming increasingly common, and the prices that are being demanded by the attackers are going up – to anything else that will come at you over the internet. It could be people hacking into systems, theft of customer data and privacy breaches, or constant bombardments by denial of service attacks.

4. Changes in Legislation

Legislation is constantly changing and a number of industries have been affected. The changes to the Chain of Responsibility provisions in Heavy Vehicle National Law, expected to commence on the 1st of October, will have a huge impact on a number of parties. Read our Blog regarding the new Chain of Responsibility Legislation here.

5. Macroeconomic Developments

“This is another big topic with risks to businesses coming from all directions. There is uncertainty around economic growth in China, for instance. There’s the Australian dollar, which has been stable for more than 12 months but it was only three or four years ago that it was worth US$1.10 – now it is US73c (as at 29/06/2018). There is the low interest environment.

6. Natural Catastrophes

“Catastrophes are a fairly obvious risk from the insurance point of view. They are always in the list. But the perceived level of risk tends to move around depending on the experience from the preceding year. Last year, for example, was a fairly benign year.

7. Loss of Reputation or Brand Value

“The rise of social media has played a role in the prominence of this risk. With social media and the increased ability to utilise websites such as change.org, which allows people to run petitions against businesses, a great deal of traction can build around a grievance being felt by an individual or a small group.

8. New Technology 

“Risk from new technology involves the issue of digital disruption as well as big data. “Digitisation, growth of the internet and explosion in the use of smartphones have allowed for the creation of platforms such as aggregators and price comparison sites. In other countries, such developments have had a negative impact on profitability.”

9. Human Error

“Think of the types of human error, for want of an alternative description, that we have heard of in connection to recent airline disasters. In some cases, human error can create significant loss. It doesn’t need to be as dramatic as an air disaster.

10. Fire and Explosion

“A lot of the participants in the survey for this list came from the Corporate and Specialty part of our business. When you consider big industrial risks, fire and explosion is one of the very traditional ones, particularly when you’re talking about heavy industry.”

 

This information has been provided by Allianz Australia. 


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