Canadian operating risk concern almost doubles as recession, climate and cybersecurity fears loom
- 35% of Canadian business leaders say they operate in a high-risk environment, up from 20% last year
- 12% of business leaders said they are less resilient to risks impacting their business than a year ago, rising to almost a third (32%) for business interruption risks specifically
- 29% of Canadian firms feel unprepared to deal with climate risks and disruptive technologies such as artificial intelligence
Toronto, ON (Nov. 21, 2023) – Beazley, the leading specialty insurer, has published published its first Canada Snapshot report – Risk & Resilience in a Time of Change. The report based on Beazley’s 2023 Risk & Resilience research shows how Canadian business leaders’ perceptions of business risks in areas such as cyber, technology, and ESG are changing rapidly.
As firms across Canada find themselves exposed to an increasingly challenging macroeconomic backdrop driven by high interest rates, 35% of Canadian business leaders say they operate in a high-risk environment, increasing from 20% in 2022. This perception is set to rise to 37% in 2024 as recessionary fears have grown among the G7 country’s leading economists.
New challenges emerge for Canada’s business leaders
In an increasingly uncertain business environment, firms in Canada are grappling with a new set of challenges. Worryingly, nearly a third of business executives (32%) said they are unprepared to deal with business interruption risks, rising to 34% among small businesses (CAN$250,000-999,999).
The research also highlighted how the recent wildfires in Canada have focused minds on the devastating impact of climate change. Boardrooms view the current climate change risk as considerably lower today than it will be in 12 months’ time, rising from 21% citing this as their top risk now to 28% by 2024. This reflects concerns from the Canadian Climate Institute which estimates that the impact from future fires could halve Canada’s projected economic growth in the coming years.1 As business leaders come to terms with the impact of climate change, 29% of boardrooms in Canada said they are unprepared to deal with the risks of climate change now, rising to 39% among medium-sized businesses (CAN$1m-CAN$9.99m).
Two in five Canadian SMEs feel exposed to tech evolution risks
Canadian business leaders are now also turning their attention to cyber and technology risks. With the rapid advancements in technology, business leaders are increasingly focused on the threat posed by disruptive technologies such as artificial intelligence (AI). Beazley’s data shows that the threat of disruptive technologies is set to rise with a quarter of business leaders (25%) in Canada noting that this will be the top risk they face in 2024, up from 21% currently.
Whilst the threat is set to rise, 29% of firms said they are ill-equipped to deal with the challenges presented by new disruptive technologies, increasing to 39% among medium-sized firms (annual revenue CAN$10m – CAN$99.99m). This is concerning as one in five (20%) of Canadian workers are using generative AI to help them do their jobs often enter company specific information into prompts.2
As Canadian businesses continue to find themselves exposed to cyber-attacks, 30% of Canadian boardrooms ranked cyber risks as the top technology threat facing their business in 2023. Yet, 31% of boardrooms said they were unprepared to deal with cyber risks, highlighting the vulnerability of organizations. The research also shows that 34% of Canadian businesses plan to invest in cybersecurity this year.
Kim Podolak, Broker Relations – Canada at Beazley said: “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. 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. Whilst the stakes have been raised for firms, it is clear from the data that boardrooms will need to be agile in responding to these threats as the impact of climate change and technological developments create new challenges that demand a different set of tools.
“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. 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.”
Click here to access the online version of the report.
Notes
1. New York Times, ‘Canada Offers Lesson in the Economic Toll of Climate Change’( July 2023).
2. KPMG report: One in five Canadians using generative artificial intelligence tools (June 2023).
About the Risk & Resilience research
During January and February 2023, Beazley commissioned research company Opinion Matters to survey the opinions of over 2,000 business leaders and insurance buyers of businesses based in the UK, US, Canada and Singapore with international operations. Survey participants were asked about their views on insurers and insurance, as well as on four categories of risk:
- Cyber & Technology – including the threat of disruption, failure to keep pace with changing technology, cyber risk and IP risk.
- Environmental – including climate change and associated catastrophic risks, environmental damage, greenhouse gas emission, pandemic, food insecurity and energy transition risk.
- Business – including supply chain instability, business interruption, boardroom risk, crime, reputational and employer risk and failure to comply with ESG regulations and reporting requirements.
- Geopolitical – including strikes and civil disruption, changes in legislation and regulation, economic uncertainty, inflation and war & terror.
The Canada Snapshot report – Risk & Resilience in a Time of Change focuses on the results of the 500 Canadian business leaders surveyed. Of the firms surveyed, there was an equal split of respondents across company sizes of: US$250,000 – US$1 million, US$1,000,001 – US$10 million, US$10,000,001 – US$100 million, US$100,000,001 – US$1 billion, more than US$1 billion.
With a minimum of 50 respondents per country per industry sector, respondents represented businesses operating in:
- Healthcare & Life Sciences
- Manufacturing, Retail, Wholesale and Food & Beverage
- Commercial Property, Real Estate and Construction
- Hospitality, Entertainment and Leisure (including Gaming)
- Financial Institutions and Professional Services
- Energy and Utilities (including Mining), Marine and Warehousing
- Public Sector and Education
- Tech, Media and Telecoms
- Transportation, Logistics, Cargo and Aviation
Previous editions of the survey were undertaken between January & February 2021, as well during January 2022. Opinion Matters abides by and employs members of the Market Research Society and follows the MRS code of conduct which is based on the ESOMAR principles.
About Beazley
Beazley plc (BEZ.L) is the parent company of specialist insurance businesses with operations in Europe, United States, Canada, Latin America and Asia. Beazley manages seven Lloyd’s syndicates and, in 2022, underwrote gross premiums worldwide of $5,268.7m. All Lloyd’s syndicates are rated A by A.M. Best.
Beazley’s underwriters in the United States focus on writing a range of specialist insurance products. In the admitted market, coverage is provided by Beazley Insurance Company, Inc., an A.M. Best A rated carrier licensed in all 50 states. In the surplus lines market, coverage is provided by the Beazley syndicates at Lloyd’s.
Beazley’s European insurance company, Beazley Insurance dac, is regulated by the Central Bank of Ireland and is A rated by A.M. Best and A+ by Fitch.
Beazley is a market leader in many of its chosen lines, which include professional indemnity, cyber, property, marine, reinsurance, accident and life, and political risks and contingency business.
For more information, please visit www.beazley.com.
SOURCE: Beazley Group