January 19, 2022 by Alyssa DiSabatino
Business interruption, cyber incidents, and climate change have been dubbed the Top 3 risks facing Canadian businesses this year, according to a new report.
Although these were Canada’s Top 3 risks, Allianz Global Corporate & Specialty (AGCS)’s Risk Barometer 2022 found the results differed across the globe.
Globally, cyber incidents were considered the most important business risk, with 44% of respondents ranking it first. Business interruption and natural catastrophes came in at second and third.
Last year, business interruption, the COVID-19 pandemic, and cyber incidents peaked as the largest risks for consumers in both Canada and across the globe.
Although it dropped a rank globally, business interruption remains the top concern for Canadian businesses, since the pandemic has exposed the fragility of supply chains. In fact, 45% of global respondents said recent supply chain disruption had a large impact on their sector.
Supply chain issues have been highlighted in 2021, with high-profile incidents like the Suez Canal container ship blockage, says Bernard McNulty, chief agent and head of claims Canada for AGCS. The pandemic has been a major factor.
“So many manufacturing businesses shut down or scaled back operations during COVID to protect their workforce, and that just created that gap in production that businesses have a hard time catching up from,” McNulty says.
Cyber rose to second place for Canadian businesses and first place globally, signalling fears of cyber and ransomware threats. In fact, cyber concerns crossed over as respondents’ most-feared cause of business interruption.
“There have been some very notable cyber incidents, even within our own industry,” McNulty says. “A couple of other insurers have been heavily impacted by cyber breaches, and have done very well to overcome those issues. No sector of our society is immune to cyber threats.”
The total number of ransomware claims received in the first half of 2021 was the same as reported during the whole of 2019, according to AGCS’ analysis.
Increase in ransomware attacks and data breaches tied for respondents’ top cyber concern.
While climate change was at the top of Canadian businesses’ radars this past year — its highest position yet — it peaked at the sixth-highest concern, globally. McNulty attributed Canada’s jump in rank for climate change risk to the many catastrophes that cropped up in the previous year.
“We had a lot of incidents, particularly in Canada this past year. They had started with the forest fires in B.C in the early summer. We had a couple of incidents in Alberta. We had some heavy rains down in Eastern Canada. And then we closed out here with the flooding in B.C.”
Collectively, these Canadian catastrophes resulted in over $2 billion in insured losses in 2021.
“That’s our own backyard, that affects Canadians,” McNulty says. “That affects almost every insurer in Canada… I think that’s what’s highlighted and increased the ranking for this year.”
Concern about the pandemic dropped to fourth spot globally this year, with 22% of global respondents citing it as their top risk. Many businesses mentioned they were confident in their contingency plans and future operations.
“I think people feel like the pandemic is now manageable, even with the variants, and certainly the increased positive cases,” McNulty says. “From a business point of view, businesses have generally figured out a way…to efficiently manage work, social distanc[ing], wearing masks, wearing PPE.”
The majority (80%) of respondents believe they are “adequately” or “well prepared” in their contingency plans and 9% feel “very well prepared.” Only 11% feel “inadequately prepared.”
“I think they think it’s manageable now, and it’s somewhat become the norm, coping with COVID,” McNulty says.
Conducted between October 20 and Nov. 17, 2021, this year’s Risk Barometer survey pre-dates the emergence of the COVID-19 omicron variant.
Feature image by iStock.com/picture