Australian businesses underestimate the importance of insuring against Asian supply chain interruptions, according to a new report.

This is despite the fact the growth of accumulated risk in highly industrialised areas of Asia poses the greatest threat to their supply chains.

The report by Allianz Global Corporate & Specialty (AGCS) analyses 1800 major business interruption claims from 2010-14.

It says preventable non-natural hazard events accounted for 88% of business interruption events (by value) over the survey period.

AGCS Regional Claims Manager for the Pacific, Joerg Ahrens, says “most Australian and New Zealand businesses are now heavily reliant on global supply chains based in Asia”, yet contingent business interruption remains a largely uninsured risk.

“The greater interconnectivity between businesses is manifesting itself into more complex business interruption exposures that are not often factored into current business continuity plans.”

Corporate Australia’s relatively sanguine approach to business interruption is confirmed in another AGCS report – this year’s Allianz Risk Barometer, based on a global survey of 800 risk managers and risk insurance specialists.

It shows that worldwide, business interruption remains the top risk for the fourth consecutive year. However, in Australia it is ranked second.

The top five for Australia (with the latter two tied for fifth spot) are: market developments (52% of respondents); business interruption and supply chain disruption (41%); macroeconomic developments (33%); cyber incidents (30%); loss of reputation and brand value (26%); natural catastrophes (26%).

The reports can be downloaded here.