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Paid Risks emerging for Canadian enterprises, and so are solutions


August 20, 2019   by Urs Uhlmann


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From the breathtaking forests in British Columbia, to the natural resources of the Prairies, to the high-tech sector in Montreal and Toronto, Canada is a vast country with diverse risks. For the insurance industry, Canada represents an array of attractive opportunities, though emerging risks present some challenges to the continued growth of the nation’s mature economy.

Among the top emerging risks facing organizations in Canada are:

Cyber risk. One of the top emerging risks anywhere, including across Canada, is cyber. As businesses and individuals become more connected, exposure to cyber incidents grows — whether due to malicious activity such as hacking or accidents that expose sensitive data or damage equipment. Increasing frequency of data breaches is prompting new data privacy regulations, which makes addressing cyber exposures even more important. The Internet of Things is reshaping many industries, from manufacturing to trade to construction. As a result, organizations that previously never thought they had cyber exposures must think differently.

Financial volatility. The financial crisis of 2007-2008 demonstrated that assets can lose value broadly and when they do, the global financial system suffers. Three of Canada’s banks (Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia) rank in the top 100 companies in the Fortune Global 2000 list. Even though the country’s financial services sector is strong, it is vulnerable to financial volatility. Volatility in the value of traded commodities is a related emerging risk that can have a significant impact on Canada’s industries. For example, sharp swings in prices for metals and minerals can wreak havoc on the balance sheets of mining companies and manufacturers.

Political and trade risks. International trade underpins a major portion of Canada’s resource economy. Canada has the 12th largest export economy in the world. Among its largest exports are mineral fuels, including crude oil; vehicles; machinery; and gems and precious metals. Government policies and tariffs that slow trade can put a serious dent in Canadian growth and productivity.

As risks derived from financial volatility and political and trade uncertainty emerge and evolve in Canada, risk managers are exploring and securing specialized insurance products such as risk consulting, supply chain and political risk and trade credit insurance solutions.

Climate change. Volatility in climatic conditions has numerous ill effects, from shifting weather patterns that alter growing seasons in agriculture to greater frequency and severity of flooding, wildfires and windstorms. The 2016 wildfire at Fort McMurray in Alberta occurred during unusually hot and dry weather — conditions that Canadians will see more of in the future. A less visible effect of climate change may be the stress it places on infrastructure and construction. More than 80% of Canada’s population live in cities, where there are constant demands for infrastructure improvement and development. Severe weather and sea level rise can have a major impact on the people and industries in the maritime provinces.

On one hand, as these and new risks emerge, businesses and individuals may be exposed to potential losses and liabilities. On the other, new risks often provide opportunities for innovation and economic growth. The insurance industry is evolving to maximize use of data and analytics to develop new solutions to help companies prevent, manage and mitigate theses evolving threats.

Urs Uhlmann is CEO and Country Manager for Canada, where he leads the regional business strategy and overall insurance operations at AXA XL. He has extensive experience in commercial insurance and risk management for corporate customers operating in Canada. He is based in Toronto, overseeing offices in Montreal, Calgary and Vancouver, and can be reached at urs.uhlmann@axaxl.com.