Analysis by specialist insurer Beazley has found a notable surge in Canadian business leaders’ apprehension regarding operational risks amid looming fears related to climate change and cybersecurity.
According to Beazley’s 2023 Risk & Resilience research, 35% of Canadian business leaders say they are currently operating in a high-risk environment, marking a sharp increase from 20% in 2022. Forecasts also suggested that this perception is set to escalate further to 37% by 2024, mirroring mounting concerns about an impending recession among the country’s economists.
“Despite an impressive bounce back from the COVID-19 pandemic, Canadian business leaders find themselves on the frontline against a number of emerging risks and rising threats,” said Kim Podolak, Beazley’s broker relations manager for Canada. “Our data highlights how increasing uncertainty is impacting the decision-making of business leaders as many perceive the threats facing their business to have increased.”
The factors shaping Canadian business leaders’ outlook regarding their operational risks include economic and climate-related concerns.
As noted in the Beazley report, 32% of business executives stated they were unprepared to manage business interruption risks. Among small businesses with annual revenues of $250,000 to $999,999, this figured jumped to 34%.
The recent wildfires in Canada have also brought attention to the impact of climate change.
While only 21% of boardrooms currently view climate change as their top risk, this number is projected to surge to 28% by 2024, according to Beazley.
The report additionally noted that 29% of Canadian boardrooms acknowledged being unprepared to address the risks of climate change – a figure that jumped to 39% among medium-sized businesses with annual revenues between $1 million and $9.99 million.
In tandem with economic and climate change concerns, Canadian businesses have increasingly turned their attention to the risks associated with cyber threats and technological advancements.
The rapid evolution of disruptive technologies like artificial intelligence (AI) were found to be of particular concern to business leaders, with 25% foreseeing it as their top risk in 2024, up from the current 21%.
Furthermore, 29% of firms said they felt unequipped to handle the challenges posed by these technologies, with this figure surging to 39% among medium-sized enterprises.
Beazley’s data also revealed that 20% of Canadian workers rely on generative AI to perform their duties, often inputting company-specific information into prompts.
As for concerns related to cybersecurity, 30% of boardrooms identified cyber risks as their top technology threat in 2023. Additionally, 31% admitted to being unprepared to handle such risks, while 34% said they plan to invest in cybersecurity this year.
“As the world becomes more uncertain, boardrooms are increasingly looking to insurance to support them in mitigating heightened risks and establishing the right protections to future-proof their businesses,” said Podolak. “It is encouraging that a third of firms are now looking not only to insurance but to risk mitigation tactics to bolster their response to new and more sophisticated risks.”
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