The impact of the coronavirus on Canadian SMEs

The impact of the coronavirus on Canadian SMEs | Insurance Business

The impact of the coronavirus on Canadian SMEs

Since the World Health Organization (WHO) declared the novel coronavirus (2019-nCoV) a global health emergency on January 30, individuals and organizations both abroad and in Canada are being forced to consider the consequences in the case of a prolonged crisis.

When it comes to insurance; travel, life and business are all expected to take a hit. While larger corporations have already begun to pivot in anticipation of business interruptions, it’s critical that small- to medium-sized enterprises (SMEs) are aware of how this outbreak could affect them as well.

A break in the supply chain

Wuhan is where one of 10 Canadian trade offices in China is located. This means many Canadian businesses touch this region in their supply chain. As a large transportation hub, Wuhan holds the largest inland port in China where many goods—especially those in the automotive, steel, aviation, equipment manufacturing, biotechnology, clothing and food sectors—must pass through prior to being exported to Canada.

A break in this chain is where interruptions can occur for Canadian SMEs. If their suppliers or suppliers of their suppliers get products from this region, product delivery delays could result. The risk of a potential compromise in quality assurance could also be an immediate consequence of current travel restrictions to the region.

Don’t be on the hook

“Most business owners assume they are covered for business interruptions. However, I can’t emphasize enough the importance of reading the fine print, and getting familiar with the specific triggers for the business interruption coverage you have,” says Mark Wyatt, regional director for Global Specialty Lines at RSA Canada. “That’s why a strong continuity plan is critical. A comprehensive and updated plan will help ensure you’re not on the hook for any potential loss of revenue resulting from work stoppage due to illness.”

Reduce your risk

There are ways to mitigate the risks arising from a widespread outbreak. Here are four measures that you can implement for your business now:

1. Evaluate your suppliers

“Take a look at your suppliers - and their suppliers in turn. There’s a ladder up effect when it comes to kinks in the supply chain,” says Wyatt.

For instance, is your business exposed to parts of the world that could cause interruptions? If so, have a conversation with your supplier about their own contingency plans to meet delivery requirements. Having a back-up option is critical in order to safeguard you in case of an incident.

2. Check in with your customers

Are there key customers that would reduce the demand for your product if they were shut down temporarily? A customer’s contingency plan is just as important, so it’s critical to connect with them to see how they would handle any disruptions to their business.

3. Be proactive

After your supply chain review is complete, make an effort to proactively contact your key customers and suppliers to advise them of any impact you expect to your business. Even if you don’t anticipate any impact to your business, let your customers and suppliers know – no news is not good news.

4. Look after the wellbeing of your employees

Prevention is the best approach. “As a business owner, you already know how big of a role your employees play, so it’s important to look after their wellbeing alongside the company’s operations. The best way to do this is through prevention,” adds Wyatt.

Implement all government of Canada travel advisories and restrictions and check in with employees to see if they or any household or family members have travelled to the affected areas recently. For anyone with direct or indirect exposure, ensure you have a work from home protocol for a 14-day period. Post signage around the workplace outlining proper handwashing and other hygiene practices in washrooms in the workplace.

Have questions on business interruption insurance? Get in touch with your regional sales manager.