Health and Safety incidents have become the leading financial loss driver for businesses around the globe, with cumulative losses now outstripping the costs of more high-profile disruptions such as cyber attacks and IT outages. Meanwhile, political change has entered the Top Ten list of future threats for the first time since 2015, while Blockchain and Artificial Intelligence are new risks which rank among the foremost sources of potential disruption in the year ahead.
These figures stem from the Business Continuity Institute’s (BCI) 2019 Horizon Scan, published in association with the British Standards Institution (BSI). The report analyses in great detail the risks and threats recognised by 569 organisations worldwide, comparing these against the impact of actual disruptions over the past year.
Now in its eighth edition, the BCI’s Horizon Scan reveals a significant gap between perceived risks and actual issues from the past 12 months.
For the year ahead, organisations are seemingly most concerned about high-impact events, among them cyber attacks, IT outages and extreme weather events, despite the fact that other incidents recurred more often and have a cumulatively higher impact. Some of the threats perceived to be low risk are being underrated when looking towards future resilience.
The clearest example of this is Health and Safety risks. The 2019 Horizon Scan totals the costs for surveyed organisations which suffered losses of more than 7% of annual turnover and finds that Health and Safety incidents cost over $1.186 billion in 2018. Despite the frequency and cumulative cost of these incidents, organisations continue to perceive their impact as relatively low, ranking them twelfth on the list of top risks for 2019.
Howard Kerr, CEO at the BSI, commented: “It’s easy for business 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. Organisations that don’t take all threats they face seriously, or otherwise develop plans to manage them, are exposing themselves to not only reputational loss, but also what can become quite severe financial costs. Achieving true organisational resilience means identifying not only the big risks, but also the under-rated issues that may just seem like ‘business as usual’ and can easily be missed.”
Additional key findings
Other key findings of the 2019 Horizon Scan report include the following:
*Political change is predicted to be one of the Top Ten disruptions in the next 12 months, but the financial aspect of political change seems to be neglected, as threats related to exchange rate volatility and higher cost of borrowing don’t appear in the Top Ten
*Organisations with business continuity plans in place for more than a year suffer fewer disruptions than their peers, reporting lower losses (6%) than the average (7%) from disruptions in the last 12 months
*Organisations direct a great deal of time and attention towards risks that were previously considered ‘black swans’ (ie events that struck as a surprise and exerting 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)
Tim Janes Hon FBCI, chair of the BCI, concluded: “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 exercise scenarios and continuity programmes.”