The global financial services industry will face 4 main risks, according to a new report released by Allianz Global Corporate & Specialty (AGCS) titled “Financial Services Risk Trends: An Insurer’s Perspective”. The insurer discusses cyber incidents due to dependence on technology, the Covid-19 pandemic, legislative and regulatory developments, and environmental, social and governance (ESG) issues.
Allianz indicates, in fact, that financial institutions and their administrators operate in a rapidly changing world, marked by new and emerging risks, generated by their cyber exposure, due to their dependence on technology, the tightening of regulations and the Covid-19 crisis. “The financial services sector is going through a period of heightened risk,” observes Paul Schiavone, global director of industrial solutions for financial institutions at AGCS, quoted in a press release published on May 10, 2021 by Allianz. According to the official, the pandemic has triggered one of the biggest shocks the world economy has ever seen, resulting in unprecedented economic and fiscal stimulus, and unprecedented public debt.
“Despite an improving economic outlook, there are still many uncertainties. The volatility of the economy and the markets remains a threat for the future, and the sector must also pay more attention to so-called non-financial risks “, adds Paul Schiavone who invites the sector to” ensure its cyber-resilience , the management of its suppliers and its supply chains, but also the impact of climate change and other environmental, social and governance (ESG) issues ”.
Most costly claims
According to AGCS which, in its report, also highlights the main causes of claims noted by insurers in financial institutions, “cyber incidents already give rise to the most costly claims”. Insurers, the company says, are seeing an increase in technology-related claims, including lawsuits against administrators for high-profile data breaches.
“The recent loss experience, aggravated by the uncertainty associated with Covid-19, has contributed to a reshuffle of the financial institutions insurance market, with an adjustment in rates and a refocus on risk selection by insurers. And interest in alternative risk transfer, in addition to traditional insurance, is growing, ”says Allianz.
