The 10 biggest risks for Australian business in 2017

Brisbane lightning
By Chris Sheedy, CA Today

14 March 2017

From cyber attacks to changing legislation, Chris Sheedy looks at the top risks facing Australian businesses this year.

During the week that this story was written, electricity authorities took the extraordinary step of shutting off power to 90,000 homes and businesses in South Australia during a heatwave of over 40 degrees.

The reasoning was that there was insufficient energy being generated to cope with demand. The result was hundreds of thousands of hot and angry South Australians. It highlighted, for the business owners affected by the blackout, one of the many risks they face that are completely out of their control.

Allianz Australia recently released a list of its top 10 risks for Australian businesses in 2017. Nicholas Scofield, General Manager Corporate Affairs at Allianz Australia, talked us through those risks.

1) Business interruption

“This is essentially the loss of ability to trade as a result of property damage. A business might be flooded, or damaged by a fire that destroys a lot of stock. This one was top of mind when the survey was done late last year because it was very soon after a major blackout in South Australia, which knocked out power to the entire state.

“Blackouts are a classic business interruption risk. A business can prepare for electricity outages by utilising technology such as portable diesel generation. But that very much depends on the nature of the business – it would not be a practical or suitable prevention measure for all businesses.”

PREPARING FOR THIS RISK: A good risk management strategy will identify all possible business interruption risks and will outline steps to be taken when one of those becomes a reality.

When you are unsure of the direction that the entire economy is going to take, it makes business planning and strategy development a great deal more difficult and risky.

2) Market developments

“The main thing we are talking about here is disruption, such as digital disruption. It is something that is affecting businesses in all industries.

"There is also market risk around the fact that there is global uncertainty around economic growth. When you are unsure of the direction that the entire economy is going to take, it makes business planning and strategy development a great deal more difficult and risky.”

PREPARING FOR THIS RISK: Many corporates are now supporting start-ups, so that they are part of the disruption, or are developing smaller, more agile and very independent parts of their own organisation to look to the future.

3) Cyber incidents

“Cyber risk can be anything from ransomware - which is becoming increasingly common, and the prices that are being demanded by the attackers are going up - to anything else that will come at you over the internet. It could be people hacking into systems, theft of customer data and privacy breaches, or constant bombardments by denial of service attacks.

“Not all companies have sophisticated systems and capabilities in place to keep hackers out, and sometimes the fault lies with the people in your own organisation.

“Cyber risk is increasing dramatically. The criminals are becoming much better at what they do and they are changing their modus operandi all the time. It is a constant battle to keep abreast of it.”

PREPARING FOR THIS RISK: This should not be considered the responsibility of the IT department, but instead is the responsibility of the entire organisation. The very best and most secure IT solution can be brought undone by a laptop with a weak or non-existent password, accidentally left at an airport.

4) Changes in legislation

“Our own industry is a good example of one that has been affected by changes in legislation. Last year we saw a lot of regulator activity focused on the insurance sector.

"There was a lot of media attention on insurance, for example, particularly around the topic of life insurance. That resulted in a range of ASIC (Australia’s corporate and consumer regulator) inquiries and investigations.

“The Federal Opposition Labor party has been calling for a royal commission into banking and insurance, which the Government has not agreed to. That has created a range of Senate and other inquiries as an alternative.

“So, we have seen a lot of activity around regulation of our industry. This is common for many industries, but it seems to be ramping up and perhaps reaching a peak, with a far greater amount of legislation, regulation, Senate inquiries, ASIC reviews, Productivity Commission inquiries etc. These can present serious risk for any business.”

PREPARING FOR THIS RISK: A specific department or individual within the organisation should have as part of their job description the constant monitoring of potential and upcoming changes in legislation.

Iujiazui financial centre, Shanghai

5) Macroeconomic developments

“This is another big topic with risks to businesses coming from all directions. There is uncertainty around economic growth in China, for instance. There’s the Australian dollar, which has been stable for more than 12 months but it was only three or four years ago that it was worth US$1.10 – now it is US75c. There is the low interest environment.

"Also, we’re in a ‘soft’ insurance cycle in the commercial sector where prices have been falling for several years. These are all big risks, but it doesn’t mean they can’t be prepared for or mitigated.”

PREPARING FOR THIS RISK: These developments are outside your control, but the business can shape its strategy to hedge against many potential threats. Ice cream retailers, for instance, can’t do anything about the fact that sales dive in winter. But the smart ones alter their offerings (they might sell soup in winter, for instance) or seek new markets on the other side of the world.

It is possible to identify most potential natural disasters that could strike in a business’s specific region

6) Natural catastrophes

“Catastrophes are a fairly obvious risk from the insurance point of view. They are always in the list. But the perceived level of risk tends to move around depending on the experience from the preceding year. Last year, for example, was a fairly benign year.

"The year before – 2015 – was a bad year in which there were 11 or 12 major events, none of them were as bad as the very serious events in 2011 and 2012 such the floods in Queensland, the Christchurch earthquake and Cyclone Yasi, but they all really added up.”

PREPARING FOR THIS RISK: It is possible to identify most potential natural disasters that could strike in a business’s specific region. Preparing for them often involves change at the highest level, within the governance framework, such as setting up systems and processes to ensure people are safe and know exactly what to do in the event of an emergency.

7) Loss of reputation or brand value

“The rise of social media has played a role in the prominence of this risk. With social media and the increased ability to utilise websites such as, which allows people to run petitions against businesses, a great deal of traction can build around a grievance being felt by an individual or a small group.

"It can get to the point where it spills over and attracts the attention of traditional media, which can introduce serious PR problems. Going back five or 10 years, these risks were not as great, but now the individual has enormous power to hurt a business’s reputation.”

PREPARING FOR THIS RISK: Hiring a PR firm is a short-term fix. The best preparation to protect against reputational damage is to concentrate on building a great and consistent culture within the business. This means you attract the right people, broadcast the right message and offer a consistent experience across all customer touchpoints.

Most companies are reliant on their IT systems, so errors made in the IT department can cause systems to go down and entire businesses to come to a halt.

8) New technology 

“Risk from new technology involves the issue of digital disruption as well as big data. More specifically, examples of risk include peer-to-peer lending and, in my industry’s case, peer-to-peer insurance.

“Digitisation, growth of the internet and explosion in the use of smartphones have allowed for the creation of platforms such as aggregators and price comparison sites. In other countries, such developments have had a negative impact on profitability.”

PREPARING FOR THIS RISK: As with market developments, the best way to prepare for such disruption is to be part of it. Companies that stand still in today’s fast-changing business environment will likely not exist in the near future.

9) Human error

“Think of the types of human error, for want of an alternative description, that we have heard of in connection to recent airline disasters. In some cases, human error can create significant loss. It doesn’t need to be as dramatic as an air disaster.

"Most companies are reliant on their IT systems, so errors made in the IT department can cause systems to go down and entire businesses to come to a halt. Errors can also cause losses such as fires and explosions in an industrial plant.”

PREPARING FOR THIS RISK: Training, culture, then more training. Get the culture right and you’ll attract the types of people who have the correct level of attention required in your business. Then it’s all about training your people so that the right behaviours become second nature, and constantly nurturing the culture to ensure attention to detail is something staff are always proud of.

10) Fire and explosion

“A lot of the participants in the survey for this list came from the Corporate and Specialty part of our business. When you consider big industrial risks, fire and explosion is one of the very traditional ones, particularly when you’re talking about heavy industry.”

PREPARING FOR THIS RISK: As with several points above, a good mix of training, risk awareness and culture make such events less likely. Then a disaster plan that is well communicated and rehearsed is also essential.

About the author

Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning HeraldVirgin Australia VoyeurThe Australian MagazineGQIn The BlackCadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.


  • Business
  • Australia

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