Covid-19 may drive market corrections and insolvencies that could impact financial institutions’ balance sheets, increase exposures for directors and result in litigation.
However, financial institutions are also facing many other risks in the areas of cyber, climate, compliance and corporate culture, according to a report, Financial Services Risk Trends: An Insurer’s Perspective, from Allianz Global Corporate & Specialty (AGCS).
An AGCS analysis of €870 million ($1 billion) of insurance industry claims in the financial sector shows cyber incidents, including crime, is the top cause of loss. Insurers see a rising number of losses from outages or privacy breaches with third-party service providers a potential weak link.
Compliance issues are already one of the biggest drivers of claims and the burden is growing – particularly around economic, social and governance (ESG ) factors and climate change, according to the report.