COMPANIES in Asia Pacific and across the world have become more concerned about cyber attacks and supply chain disruptions affecting their operations rather than the pandemic, as they have learned how to adapt and implement business continuity plans.
According to Allianz Risk Barometer 2022, Covid-19 concerns appear to be tapering off as majority or 80 percent of the respondents claimed they “feel relatively well prepared for a future pandemic.”
The emergence of the Omicron variant showed that the pandemic still remains a threat because it can adversely impact the business sector’s performance in at least the first few months of the year, the report pointed out.
“Many companies are taking advantage of the increased awareness of business interruption, and we have seen more organizations investing in tools and systems to improve transparency of supply chains, work through scenarios and update their business continuity,” said Philip Beblo, global property industry lead for technology, media and telecommunications at Allianz Global Corporate and Specialty (AGCS).
As for cyber risks, the report noted that topmost concern is ransomware attacks, which have been on the rise given the accelerated shift to digitalization and remote working.
Ransomware refers to a malware that encrypts a victim’s information in exchange for ransom. Such can be accidentally downloaded through suspicious links or e-mail attachments.
“Ransomware has become big business for cybercriminals, who have refined their business models and tactics, lowering barriers to entry and making it easier to carry out attacks,” Allianz said.
The price tag for this kind of cyber attack, it noted, is as low as $40 per month subscription. Cryptocurrencies are even used to settle the transactions so they cannot be traced.
Allianz also flagged the “double extortion” tactics in recent years. In addition to the initial encryption of the victim’s data, cybercriminals also threaten to make personal or sensitive data public.
Hackers also now try to encrypt or delete data backups, which makes restoration or recovery even more challenging if not impossible, the report warned.
AGCS Global Head of Cyber Scott Sayce explained that the “commercialization” of cybercrime has made hacking “easier” and cybercriminals can do it now on a “massive scale,” affecting several public and private sectors.
“In the past, a bank robber may have hit one or two banks in a week after many months of preparation. Yet, with a cyber attack, you can target thousands of businesses at once, anywhere in the world, and extract more valuable data than before,” Sayce explained.
Meanwhile, the respondents also cited business interruption as a primary concern for this year, which includes supply chain disruptions.
Allianz explained that the pandemic has revealed the vulnerabilities of the modern supply chains, noting that a plethora of unprecedented events can lead to severe bottlenecks.
“Post-lockdown surges in demand have combined with disruption to production and logistics, as Covid-19 outbreaks in Asia closed factories and caused record levels of congestion at major container ship ports,” the report said.
“For most organizations, the biggest fear is not being able to produce and deliver their products or services,” Beblo said, noting that the delays can be very costly as well for the companies.
According to the study, companies had to shrink or even shut production due to shortage of critical components. Some also had to incur losses from foregone sales due to delivery concerns including constraints on container shipping.
Apart from these, other knock-on effects by the disruption include heightened demand for energy that led to blackouts and factory closures in Asia, it noted.
Citing a report, the recent Covid-19 infections are expected to exacerbate the supply chain constraints until the second half of this year but global demand and supply and shipping capacity shortages are projected to ease beginning July should there be no more unexpected adverse events.
Companies, given the disruptions, are now also more keen on evaluating their business resilience and critical supply chains, Allianz said.
“Awareness has gone beyond risk management departments to become an important issue across the entire company. There is now a desire and willingness among top management to bring greater transparency to supply chains and to work with data to better understand the risks,” AGCS Global Head of Property Risk Consulting Maarten van der Zwaag said.