Corruption in Nigeria could cost up to 37% of GDP by 2030 if it’s not dealt with immediately, Allianz Global Corporate & Specialty (AGCS) has warned.

AGCS is the Allianz centre of expertise for global business insurance and large corporate and specialty risks with a worldwide network in more than 160 countries.

Key findings contained in its 6th annual ‘Allianz Risk Barometer’ released on Wednesday, also show that companies are increasingly worry about the struggling economy, corruption, volatility and political risks and violence.

Other growing concerns are digital dilemmas arising from new technologies and cyber risks (#5), as well as government policies which do not enable businesses to thrive, said the report based on a survey conducted among risk experts from 55 countries.

In Nigeria, Allianz Global Corporate & Specialty (AGCS) Africa worked with the Association of Enterprise Risk Management Professionals Nigeria (ERM), Risk Managers Society of Nigeria (RIMSON) and Risk Managers Association of Nigeria (RIMAN).

“The Allianz Risk Barometer 2017 is a worthy compass, telescope and guide which Risk Managers, Investors, Professionals, Governments, Policy Makers and Corporate Entities should not ignore in strategic decisions in 2017,” said president of RIMSON Engineer Jacob Odeonsun.

Nigerian risk managers sighted tough macroeconomic conditions and market volatility as their top two risks. “Nigeria faces macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of US monetary policy and also suffers their own internal pressures such as inflation, weak domestic demand and socio-political tensions. The country’s growth is held back by weaker macroeconomic environment, the struggling financial sector, underdeveloped infrastructure, insufficient health and education ,” said Delphine Maïdou, CEO AGCS Africa during a press conference in Lagos where the report was presented.

To mitigate volatility risks and anticipate any sudden changes of rules that could impact markets, Maïdou said that companies in Nigeria will need to invest more resources into better monitoring politics and policy-making around the world in 2017.

According to trade credit insurer, Euler Hermes, a subsidiary of Allianz SE, since 2014, there have been 600 to 700 new trade barriers introduced globally every year.

Corruption was ranked fourth indicating that it is still a concern in the country. Corruption in Nigeria could cost up to 37% of GDP by 2030 if it’s not dealt with immediately.

“This cost is estimated to be nearly $2,000 per person by 2030. Corruption is ranked second as one of the most problematic factors for doing business in Nigeria in the Global Competitiveness Report.   A significant reduction in corruption will boost current per capita income and improve the lives of many in Nigeria.

Political risks and violence is still a major challenge largely due to terrorism and kidnap for ransom (KNR),” the CEO highlighted.

She added that the overall risk for Nigeria in 2017 is high on crime, terrorism, conflict, political violence and kidnap.

“The resurgence of violence in the Niger Delta is expected to continue into 2017. Militant groups are likely to continue high-profile attacks on oil and gas infrastructure to press the federal government into meeting its demands, which include greater autonomy for the region and a greater share of the oil wealth, which may be untenable considering Nigeria’s current fiscal woes. Greater military action risks increasing anti-government sentiment.

“Kidnapping, primarily for the purposes of financial gain, will remain a complex and multifaceted security threat in Nigeria in 2017. The country was one of the world’s top five worst kidnapping-affected countries and the region’s kidnapping capital.

However ongoing state military offensives over the past 18 months have led to the relative containment of Islamic State (IS) affiliate, Boko Haram, in north eastern Nigeria. According to available information, Boko Haram conducted no successful abductions of foreign nationals within the country in 2016. However the group is extending its operations into Chad and Cameroon and this could lead to an increase in KRE activity.

Globally, business interruption (BI) continues to lead the ranking for the fifth year in a row, primarily because it can lead to significant income losses, but also because multiple new triggers are emerging, especially non-physical damage or intangible perils, such as cyber incidents, and disruption caused by political violence, strikes and terror attacks. This trend is driven, in part, by the rise of the “Internet of Things” (IoT) and the ever-greater interconnectivity of machines, companies and their supply chains which can easily multiply losses in case of an incident. Companies are also facing potential financial losses with the changing political landscape leading to fears of increasing protectionism and anti-globalization.

“Companies worldwide are bracing for a year of uncertainty,” says Chris Fischer Hirs, CEO AGCS SE. “Unpredictable changes in the legal, geopolitical and market environment around the world are constant items on the agenda of risk managers and the C-suite. A range of new risks are emerging beyond the perennial perils of fire and natural catastrophes which require re-thinking of current monitoring and risk management tools.”

At the same time, increasing reliance on technology and automation is transforming, and disrupting, companies across all industry sectors. While digitalization is bringing companies new opportunities, it is also shifting the nature of corporate assets from mostly physical to increasingly intangible, bearing new hazards, above all cyber risks (30% of responses). Companies ranked cyber threats a close #3 globally, climbing to #2 across the Americas and Europe and the top risk in Germany, the Netherlands, South Africa and the UK. At the same time, it is the top concern globally for businesses in the information and telecommunications technology and the retail/wholesale sectors.

“Cyber incidents is ranked #5 in Nigeria with the most common threats being from hackers, disgruntled employees, negligence and competitors,” said Nobuhle Nkosi, head of Financial Lines AGCS Africa. “This is doubled-edged sword to the country as Africa has a particular role in embracing and responding to new technologies compared to mature markets while speeding up cyber security and personal data protection legislations.”

The threat now goes far beyond hacking and privacy and data breaches, although new data protection regulations will exacerbate the fall-out from these for businesses.

“Time is running out for businesses to prepare for the implementation of the new General Data Protection Regulation across Europe in 2018 – although the cost of compliance will be high, the penalties of not doing so could be even higher. Meanwhile, increasing interconnectivity and sophistication of cyber-attacks poses not only a huge direct risk for companies but also indirectly via exposed critical infrastructures such as IT, water or power supply”, the insurance firm said.

Then there is the threat posed by technical failure or human error, which can lead to long-lasting and widespread BI exposures. In the digitalized production or Industry 4.0 environment, a failure to submit or interpret data correctly could stop production.

Businesses need to think about data as an asset and what prevents it from being used. Results also show that smaller companies may be under estimating cyber risk: in this category (revenues <€250 million), cyber ranks only #6. However, the impact of a serious incident could be much more damaging for such firms.