Health and safety incidents are the leading financial loss drivers for businesses around the world, outstripping the costs of cyber-attacks and IT outages, according to the latest annual BCI 2019 Horizon Scan.
Political change entered the top 10 list of future threats for the first time since 2015, while blockchain and artificial intelligence ranked among top sources of potential disruption in the year ahead for the first time.
The report, published in association with BSI, analyses the risks and threats recognized by 569 organizations worldwide, comparing these against the impact of actual disruptions over the past year. Now in its eighth edition, the 2019 Horizon Scan reveals a significant gap between perceived risks and actual issues from the past 12 months.
According to the report, for the year ahead organizations are most concerned about high-impact events—including cyber-attacks, IT outages, and extreme weather events—despite the fact that other incidents recurred more often and have a cumulatively higher impact.
Health and safety risks is the clearest example of this. The 2019 Horizon Scan totalled up the costs for surveyed organizations which suffered losses of more than seven percent of annual turnover and found that health and safety incidents cost $1.186 billion in 2018. Despite the frequency and cumulative cost of these incidents, organizations continue to perceive their impact as relatively low, ranking them 12th on the list of top risks for 2019.
BSI Chief Executive Howard Kerr said it is easy for leaders to be kept awake at night by high-profile risks such as cyber-attacks, technology disruptions, and IT outages.
“But they must not ignore the smaller, more frequent risks that steadily erode the bottom line,” Kerr added. “Organizations that do not take all threats they face seriously, or develop plans to manage them, are exposing themselves to not only reputational loss but what can become quite severe financial costs. Achieving true organizational resilience means identifying not only the big risks but also the under-rated issues that may just seem ‘business as usual’ and can easily be missed.”
Other key findings from the 2019 Horizon Scan report include:
- Political change is predicted to be one of the top 10 disruptions in the next 12 months. However, the financial aspect of political change seems to be neglected, as threats related to exchange rate volatility and higher cost of borrowing do not appear in the top 10.
- Organizations with business continuity plans in place for more than a year suffer fewer disruptions than their peers—they report lower losses (six percent) than the average (seven percent) from disruptions in the past 12 months.
- Organizations direct a lot of time and attention towards risks that were previously considered “black swans”—events that struck as a surprise, with a high impact on those affected. These events then become a key focus of attention. Risks such as critical infrastructure failure and natural disasters are among the most anticipated disruptions with high risk scores (5.47 and 5.43 respectively).
BCI Chair Tim Janes commented. “For continuity and resilience practitioners the 2019 BCI Horizon Scan report provides an invaluable information resource.
“The findings and analysis provide insights that can inform and confirm planning assumptions and bring fresh ideas to benefit your exercise scenarios and continuity programme.”