Top 6 risks facing Canadian businesses in 2020
December 20, 2019 by Jason Contant
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The risk landscape for Canadian businesses continues to evolve rapidly, but that doesn’t mean companies have to be caught unprepared.
These evolving risks include everything from technology and cybersecurity to shifting regulatory considerations, reputational risk, employee liability, data and privacy protection and environmental considerations, Phil Baker, head of specialist insurer Beazley Canada, told Canadian Underwriter Thursday.
“Understanding the risks your business faces is the first step,” Baker said. “It’s then critical to evaluate how best to mitigate and monitor risks, while ensuring you have contingency plans in place, and this includes having the right insurance coverage. This will allow businesses to react more quickly in the event of a crisis. As a global insurer, Beazley has the experience and local expertise to help Canadian businesses of all sizes mitigate the risks 2020 and beyond brings.”
Here are the six risks in more detail:
Evolving risks in a data-driven business era
The explosive growth in big data is cited as being one of the most significant game changers for businesses looking forward. This comes with implications around cybersecurity, data protection and privacy. In 2020, we are likely to see increased focus and investment in technology security, and a continued challenge with businesses competing for talent specializing in this space.
More stringent data protection and privacy regulations
We are likely to see evolving regulatory and compliance requirements around data projection and privacy, Baker said. Subsequent to European Union’s General Data Projection Regulation (GDPR) in May 2018, it has triggered a review of data privacy regulations. Businesses should anticipate the continued evolution of regulations that will impact Canadian businesses.
Third-party liability risks
Not only do businesses need to protect their organization to mitigate risks, but increasingly managing third-party risks will be key. As businesses become more connected, increased sharing of data, systems and technology means they need to evolve their risk processes. For example, 24% of ransomware incidents reported in Q3 were caused by a vendor or managed service provider, Beazley said.
Workplace and employee liability
Increasingly, employees, business partners and stakeholders, consumers and the public are holding individuals and companies accountable to unacceptable behavior or conduct. Businesses and employees must rethink their approach to risk around this evolving liability.
Environmental liability
From plastics to carbon emissions, there is an increased focus on the environmental impact from companies and pressure to demonstrate environmental responsibility. But beyond good environmental stewardship, environmental liability will continue to be a focus area for businesses, including changing weather patterns, pollution considerations, transportation hazards, with a heightened focus on environmental responsibility more generally.
Reputational risks
To survive in a hyper-connected world, businesses need to place high priority on crisis and contingency planning. From cyber breaches, to the #MeToo movement, we have seen negative news amplified through media and social media at record speeds. For businesses and executives, risk management can be used as a tool to create value and competitive advantage. Organizations are expanding their approaches to focus on vigilance, resilience, and risk insurance.
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My thoughts on the top risks for Canadian insurance industry for 2020 are personal lines, and speculative risk. Consumers information/data is being shared out to third-parties and receiving spam/cold calls, and many more; in return for having an account for Facebook, Snapchat, Tik Tok, etc. As well as with speculative risk it can be a chance of loss or gain/profit from either side. But for the companies, third-parties it will be a gain, since it will be new data on their end. Nevertheless, they can expand their horizon on knowing the consumers needs, and wants. The definition of a risk is a chance of loss, or damage of property that is incurred on liability. I agree that this is a true risk as to individuals (consumers, employees, third-parties partners) and companies that has unacceptable behaviour or conduct during a peril. To way to manage risk is to follow the risk management process are identifying and analyzing exposure, formulating options, selecting the best techniques, implementing the risk management plan, and monitoring results and modifying the plan.
The top risk for Canadian insurance industry in 2020 include cyberattacks and data breaches, damage to reputation/brand ,natural disasters and an economy slowdown. In my opinion, they are true risk and can affect the insurance industry growth and due to COVID-19 pandemic every sector of the industry is badly affected.
Risk: It can be defined as the possibility that loss or injury will occur.
There are two types of risk
a) Pure Risk: A situation that can only become a loss.
For example: Destruction of physical property by natural disaster, riot, fire.
b) Speculative Risk: Where the chances of loss or chances of profit are equal
For example: Investing in stock market or real estate.
Risk can be managed by 5 ways which includes:
a) Identify the risk
b) Analyse the risk
c) Evaluate the risk
d) Treat the risk
e)Monitor and review the risk
In my opinion, these are the true risks to the production\industry. Businesses sometimes has to undergo different types of risks . These risks can be minor as well as major too.
The risk refers to the possibility of something bad happening. Risk involves uncertainty about the effects\ implications of an activity with respect to something that humans value ( such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences.
There are different types of risks that are as follows:-
1.Speculative risks- These risks are undertaken through a conscious choice and the are considered a controllable risk.
2.Pure risk- This risk is beyond human control and can result in a loss of it occurs.
There are different methods to prevent risks which are given below:-
1.Identifying and analyzing exposures
2.Formulating options
3.Selecting the best techniques
4.Implementing the best techniques
5.Monitoring results and modifying the plan