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Pressing need to fortify operational processes
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Macroeconomics exert influence on industry
Cynthia Ezekwe
Cyber security threats are the top risk that the hospitality, leisure and tourism sectors face in 2024, according to the Allianz Risk Barometer, an annual survey of key business risks across industries.
Drawing upon insights from over 3,069 industry professionals in 92 countries, the report highlights the increasing vulnerability of these interconnected sectors to cyber threats such as ransomware attacks, data breaches, and IT disruptions.
According to the Allianz Risk Barometer, cyber incidents have dethroned business interruption as the primary risk facing the hospitality, leisure, and tourism sector, with 36 percent of respondents expressing concern. This marks the first time cyber incidents have taken the top spot. Notably, the rapid escalation of ransomware attacks has resulted in a 50 percent surge in insurance claims activity compared to the previous year, highlighting the severity of this ever-growing threat.
The report pointed out that cybercriminals are employing increasingly sophisticated tactics to target not only IT systems but also physical supply chains, perpetually devising novel methods to extort money from businesses. In light of this alarming trend, the report stressed the critical importance of early detection and response capabilities for companies seeking to protect their operations.
“Cyber criminals are exploring ways to use new technologies such as generative artificial intelligence (AI) to automate and accelerate attacks, creating more effective malware and phishing. The growing number of incidents caused by poor cyber security, in mobile devices in particular, a shortage of millions of cyber security professionals, and the threat facing smaller companies because of their reliance on IT outsourcing are also expected to drive cyber activity in 2024,“ explains Santho Mohapeloa, cyber insurance expert, Allianz Commercial.
Recognising the pivotal role of early detection in mitigating the impact of cyber threats, the report underscored the potential of artificial intelligence-supported detection tools to bolster incident identification capabilities. It warned that failure to invest in effective early detection measures may expose companies to protracted unplanned downtime, inflated costs, and severe consequences for customers, revenue, and reputation.
While cyber incidents emerge as the leading risk, business interruption, changes in legislation and regulation, macroeconomic developments, and natural catastrophes jointly ranked as the second most pressing concerns, each garnering 22 percent of responses. This underlines the multifaceted challenges businesses face in today’s complex risk landscape, emphasising the need for a comprehensive approach to risk management that transcends the realm of cybersecurity.
The Allianz Risk Barometer report reveals a significant shift in the ranking of risks faced by the hospitality, leisure, and tourism industry, with business interruption now occupying the second position. According to the report, cyber incidents have emerged as the primary driver of business interruption, supplanting the previously dominant threats of natural catastrophes and fire.
The report also draws attention to the close proximity of machinery/equipment breakdown or failure as a potential source of disruption.
Allianz, drawing from the insights presented in its risk assessment report, highlighted several crucial risk management priorities for companies in 2024. These priorities highlight the importance of fortifying business continuity management strategies, identifying potential supply chain constraints, and cultivating alternative supplier relationships.
Furthermore, the report shed light on the significant impact of changes in legislation and regulatory risks, encompassing increased compliance costs, uncertainty, competitive disadvantages, effects on tourism demand, reputational damage, operational interruptions, and wider economic ramifications.
Against this backdrop, Allianz urged companies within the hospitality, leisure, and tourism sector to proactively understand and address regulatory risks, as doing so is essential to achieving long-term success and ensuring the sustainability of their business models.
The Allianz Risk Barometer underscores the profound influence that macroeconomic developments can exert on the hospitality, tourism, and leisure industry. As the report indicates, fluctuations in consumer spending, changes in exchange rates affecting international travel demand, inflationary pressures impacting operating costs, and economic downturns leading to reduced travel budgets and discretionary spending all pose significant risks to the industry.
Emphasising the interconnectedness of risks in today’s networked world, Allianz Commercial underscored the pressing need for businesses in the hospitality, leisure, and tourism industries to fortify their operational processes. It noted that by adopting robust and resilient measures, companies can safeguard their supply chains and ensure business continuity in the face of escalating challenges, such as cyber incidents, business interruptions, changes in legislation and regulation, macroeconomic developments, and natural catastrophes.
Allianz also asserted that regular Business Continuity Planning (BCP) reviews are indispensable for organisations seeking to maintain their competitive edge. Moreover, the corporate insurer advocated for a comprehensive cyber protection strategy that encompasses routine backups, data segmentation, cutting-edge end-point detection, and multi-factor authentication.
Reiterating the crucial role of resilience and adaptability in the face of modern risks, Allianz Commercial urged businesses to adopt a comprehensive risk management strategy. The corporate insurer advised that businesses must remain agile and proactive in their approach to risk management, as the threat landscape continues to evolve at an unprecedented pace.
