Canadian businesses view risk much differently in the wake of the COVID-19 pandemic, and are increasingly focused on risk management and business continuity plans (BCPs), Aviva’s report finds.
In fact, nearly 58% of businesses said their BCPs worked well during the pandemic but will require updates.
“There was a small percentage [12%] of businesses who reported that their business continuity plan is not really past the pandemic stress chapter,” Susan Penwarden, chief technical underwriter at Aviva, tells Canadian Underwriter. “They need to revisit it, and it didn’t serve them well during that period we’ve been going through.”
Seventy-two per cent of large businesses (revenues greater than $250 million) plan to make changes to their insurance coverage in the next year. However, one-fifth of corporate businesses expect their risk management activities to remain unchanged, and 45% of micro-businesses (revenues less than $2.5 million) also have no plans to change their risk management tactics.
Noting the interconnectedness of all risks, the report observed a shift of focus away from traditional perils caused by the pandemic. “Public health events – particularly COVID-19 – seem to have shifted focus away from more traditional risks like storms, flooding, hail and fire/explosions,” it reads.
Key insights show that 45% of businesses report negative impacts from the COVID-19 pandemic and public health events while 47% report positive impacts. Only 8% report it had no impact on their business.
Further, realty (40%), business and professional services (36%), manufacturing (31%) and retail (31%) ranked cybersecurity as of great concern to them. Large businesses rank cybersecurity a higher risk (47%) than public health events (38%), showing the growing threat of cyber incidents on business operations.
Penwarden notes certain sectors are impacted more heavily than others, depending upon the individual risk.
“The availability of skilled labour, for example, was a bit more sectoral in terms of what was the top risk. Construction came out particularly focused on this one. That risk has been going on for a couple of years. The number of open positions has increased almost 47% over the last two years for that particular sector.”
Thirty-one per cent of hospitality businesses noted labour shortages are a serious risk. “Many were forced to make career changes when restaurants and travel-related businesses were shut down,” the report reads.
The report shows concern for employee and customer health and well-being is ranked most highly among realty (60%), business and professional services (51%) and retail (49%).
Notably, 27% of businesses see business interruption and supply chain disruption as major threats moving forward.
While this is the first iteration of Aviva’s Risk Insights Report, Penwarden says Aviva hopes the report will bring risk awareness to the forefront of businesses continuity plans.
“We really hope to create as much dialogue between ourselves and as many business customers out there as [we] possibly can, so that we can pilot these things for them and get them thinking,” she says. “Our intention is to create that dialogue and create some data points and give businesses a chance to look at what other businesses in their sector or their size are concerned about; what their top priorities are, in terms of risk.
“Most businesses plan to focus more on risk management-types of activities over the next five years. “[The report] can be an inspiration and help them to get going, and how they need to think about risk as they move forward.”