• 8^th annualsurvey on top business risks sees record participation of 2,415 experts from 86countries, including Japan
• High lossactivity pushes natural catastrophes to top risk in Japan, overtaking businessinterruption and cyber incidents
• Other risingrisks include market developments, climate change and product recall
• 2019 edition seesshortage of skilled workforce as new entrant in Japan top 10

TOKYO, JAPAN - Media OutReach - February 21, 2019 -Natural catastrophes are the top business risk in Japan for 2019 withcompanies increasingly concerned over increasing economic losses caused bydisasters and climate change. While there was not a single major naturalcatastrophe event comparable in size with 2017 hurricane events, aggregatelosses from multiple smaller and mid-sized events in 2018 have still led toconsiderable losses and are of concern for businesses, according to the eighthannual Allianz Risk Barometer. Published by Allianz Global Corporate& Specialty (AGCS), the 2019 report is based on the insights of 2,415 riskexperts across 86 countries, including Japan.

In Japan, natural catastrophes (49% of responses), is the top risk of 2019,as the country was the most heavily hit by natural catastrophes in the AsiaPacific region, with the top three most expensive events of the year allaffecting Japan. Typhoons Jebi, Trami and Prapiroon caused a combined total of$27.5bn in economic losses and $13.75bn in insured losses[1],with the former being on record as the most expensive typhoon according to theGeneral Insurance Association of Japan (GIAJ). Such losses are unlikely toabate in the near future, as AGCS predicts that 80% of the world's top 10exposed flood locations in 2070 will be in Asian cities, including Tokyo.

While business interruption (BI) (#2 with 46% of responses) fell from itstop spot in 2018, businesses are still concerned over the impact thattraditional industrial risks can have on business. According to AGCS, theaverage BI property insurance claim now totals at €3.1m, more than a third(39%) higher than the corresponding average direct property damage loss of€2.2m, with these figures significantly higher than five years ago.

Rounding up the top three are cyber incidents with 42% of responses.According to AGCS analysis of insurance industry claims over the past fiveyears, the average insured loss from a cyber incident is now in excess of €2m,compared with almost €1.5m from the average claim for a fire / explosionincident.

"Companies need to plan for awide range of disruptive scenarios and triggers, as this is where their bigexposure lies in today's networked society," says Ken Motoda, CEO of AGCS Japan"Disruptive risks can be physical, such as fire or storms, or virtual, such as anIT outage, which can occur through malicious and accidental means. They canstem from their own operations but also from a company's suppliers, customersor IT service providers. Whatever the trigger, the financial loss for companiesfollowing a standstill can be enormous. New risk management solutions, analyticaltools and innovative partnerships can help to better understand and mitigatethe modern myriad of BI risks and prevent losses before they occur."

Besides natural catastrophes, marketdevelopments (#4 with 28% of responses, up from #6 in 2018), climate change (#5 with 19% ofresponses, up from #9 in 2018) and product recall (#6 with 18% ofresponses, up from #9 in 2018) are top risers, while shortage of skilled workforce (#9 with 11% of responses) is thesole new entrant into the Japan top 10.

Global Results : BI threats continue to evolve

Businesses globally picked thesame top 3 risks as Japan, but ranked them differently. Despite falling in ranklocally, BI remains the top threatfor businesses globally and in Asia Pacific for the seventh year running. PotentialBI scenarios are becoming ever more diverse and complex in a globally connectedeconomy, including breakdown of core IT systems, product recalls or qualityissues, terrorism or political rioting or environmental pollution. Both cyberand BI risks are increasingly interlinked as ransomware attacks or accidentalIT outages often result in disruption of operations and services costinghundreds of millions of dollars. Cyberincidents rank as the BI trigger most feared by businesses globally (50% ofresponses), followed by fire (40%) and natural catastrophes (38%). At the sametime, BI is seen as the biggest cause of financial loss for businesses after acyber incident (69% of responses).

"Businesses across AsiaPacific are deeply concerned about the impact of business interruption, whichcan be a consequence of the other top risks in the region, cyber and naturalcatastrophes. The risk of BI is heightened by today's increasinglyinterconnected and global business environment," said Mark Mitchell, RegionalCEO Asia Pacific. "Almost all large property insurance claims include a majorBI element. As manufacturing shifts east and with growing frequency of naturalcatastrophe activity in the region, Asia Pacific is increasingly exposed tothese losses reflecting the importance for companies to adopt a holisticapproach to risk management."

More information on thefindings of the Allianz Risk Barometer 2019, including global results, isavailable here:

• Top10 global business risks
• Executivesummary
• Fullreport
• Video
• AppendixResults for 34 countries
• Selectedinfographics

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