The overlooked risk for which your business clients need to plan

In the aftermath of the pandemic, all sights are set on cybersecurity, talent acquisition and economic recession as top business risks, but companies should also focus on preparing for physical threats, says Mark Herrington of the risk intelligence firm OnSolve.

“At a time when the national discourse remains focused on a possible recession, many businesses are taking another look at their P&Ls [profit and loss statements],” Herrington writes in a Harvard Business Review blog. “As they contemplate current budgets and possible future expenses, investment in physical security is likely to come into question.

“But threats to physical assets don’t stop because of an economic downturn. The hurricane approaching your coastal HQ doesn’t care that there’s a recession looming.”

Cybersecurity risk is identified as the Number 1 risk facing global businesses in a 2022 PwC PulseSurvey. Forty per cent of the 722 U.S. executives surveyed in August 2022 cited more frequent and/or broader cyberattacks as a serious risk, with another 38% calling it a moderate risk. Plus, cyber incidents are the new top business concern for Canadian companies in 2023, according to the Allianz Risk Barometer 2023.

But Herrington said an analysis of physical risks around the globe show attention should also be paid to preparing for physical risks to people and to property. “CEOs need to apply the same rigor to physical security as they do to cybersecurity,” Herrington says.

He calls on business leaders to create new risk frameworks and scenario-test crisis response plans within the organization.

For which physical threats should companies be planning their risk strategies? It will depend on the business sector and geographic location, Herrington observes. For example, a meat packing facility along the Atlantic Coast may have hurricanes listed near the top of their risk priorities, while a financial services firm in the B.C. Interior may be more concerned about wildfires.