Your Canadian clients’ top business risks in 2024
Canada’s top three business risks show companies are widely, and primarily, worried about disruption to their operations, according to the Allianz Risk Barometer 2024.
Over half (57%) of respondents in Canada said business interruption was their number one risk, followed by cyber incidents in second place (46%), and natural catastrophes in third place (43%), according to the firm’s corporate risk survey.
Comparatively, cyber incidents rank first globally (36%), followed by business interruption (31%), and natural catastrophes (26%), according to results from 3,069 global respondents across 92 countries.
The mirrored nature of these results might be due, in part, to the increased global awareness of many Canadian risk managers, explained Bernard McNulty, chief agent in Canada for Allianz Commercial.
“We saw significant [global] shipping issues in 2023, specifically with respect to the Panama Canal,” he said. “A lot of things that were typically imported into Canada were delayed or couldn’t get to Canada at all.”
The most common actions businesses take to de-risk their supply chains are developing alternative suppliers, improving business continuity management, and identifying and remediating supply chain bottlenecks, the Allianz Risk Barometer results show.
But closer to home, while many Canadian customers might’ve sought ways to reduce their exposure to delays, their methods didn’t always prove feasible, McNulty explained.
“Post-COVID and during COVID, we saw some Canadian companies looking at what they could produce locally to avoid these contingent issues,” he said, and “it just wasn’t cost effective.
“They just could not produce those components at the price point that they can in, say China, or someplace else, to manufacture a competitively priced product.”
Growth-spurred risk
And as commercial businesses grow or procure new machinery or technology, their operations become more elaborate.
This might explain why companies are feeling the risk of disruption more heavily. “When you do have a loss, those losses are incredibly complex and take a long time and a lot of resources to restore them,” McNulty said.
When it comes to cyber or natural catastrophe risk, the concern also appears to stem from the potential for disruption.
“Every sector in Canada is vulnerable,” said McNulty on cybercrime risk. “It’s a constant race to protect facilities.”
And while commercial businesses tend to be resilient to severe weather events, their employees’ personal property remains vulnerable. It might explain why NatCats rank as the third top business risk, McNulty explained.
Year-over-year, Canada’s top three risks have changed only slightly. In 2023, cyber incidents (35%), the skilled workforce shortage (33%) and climate change (29%) were deemed the top risks.
While the skilled workforce shortage ranks in the top five for Canada, it’s movement down from third place might be due, in part, to the extra spending companies have done on employee sourcing and hiring. But, “in terms of a concern, I don’t think it’s going to go away dramatically,” he said.
Interestingly, 2024’s top risks mirror the 2022 results, with business interruption, cyber incidents, and natural catastrophes, ranked in that order, as the largest risks facing Canadian businesses.
Feature image by iStock.com/champpixs
