THE COSTS OF NOT MANAGING YOUR RISKS

FROM TURNOVER TO TEARDOWN, EXPERTS POINT TO CONSEQUENCES OF NOT GETTING AHEAD OF ISSUES

BY JAMIE ZACHARY

Workforce disruptions, cyber security threats and the impacts of looming environmental, social and governance reporting standards lead the top risks that Canadian businesses are expected to face in 2023.

Yet experts say that’s just the tip of the iceberg, and it’s up to owners to dig deep into all corners of their businesses to assess and treat threats before they become catastrophic.

“As businesses grow and things evolve and we’re in this age of technology where everything moves so quickly, there are risks out there that business owners haven’t even contemplated,” says Wendy Wildeman, Calgary-based vice-president of commercial lines at Acera Insurance, formerly Rogers Insurance.

“And if you choose to put your head in the sand and not examine the potential calamities that can happen, you’re just setting yourself up for disaster.”

Wildeman, who has her Canadian Risk Management (CRM) designation, points to a number of risks that business in Calgary could face – from business interruption and employee crime to data breaches and breakdown of essential equipment.

“Cyber crime is actually the fastest emerging risk that we’ve seen,” she says. “The havoc that it can wreak on a business owner or an individual is devastating. Yet some still people have no concept of it, and it can impact everybody.”

Andrew Barker, Calgary-based managing partner at Iridium Risk Services, singles out various compliance risks as ones he’s seeing more of these days with his clients, which are largely mid-market energy slanted companies, as well as from the industrial, technology and cannabis sectors.

“Pollution liability is a big one, and very topical in Alberta. And just clean-up and remediation, in general,” says Barker, whose company’s roots stretch back to 2005. More recently, it became part of the Navacord network, one of the largest commercial brokers in Canada.

“Also, with the AER (Alberta Energy Regulator) being more aggressive, it’s top of mind for a lot of the directors and officers when we sit down to make sure that, if the worst case does happen, are they protected?”

Barker also points to operational risks as another common one his clients are looking to mitigate.

“They might have a key facility that suffers a catastrophic loss, whether it be a fire or an explosion,” he says. “Or there could be the capital breakdown. Anything that just grinds their operations to a halt.”

The cost of not managing some of these risks?

“It could range from loss of revenue to loss of life,” he says. “We’ve had several claims in our office where clients have admitted that had they not had that insurance policy place, then their companies would have gone under.”

Wildeman highlights the importance of recognizing that not all risks are considered equal.

“Even from one building to another, they’re not equal. If you’re operating out of a fire-resistant building versus a frame building, your risk of fire is much lower,” she says.

“Or it could be a transfer of risk – for example, one company has contracted out its snow removal while the other hasn’t. So, it might be exactly the same building sitting side by side. There’s still going to be some sort of difference in there.”

Barker adds that not all companies look at risk the same way, either.

“Companies that are in the same industry can have very different views on risk,” he says. “We have clients that are extremely risk averse and want to buy as much insurance as they can. Others are very tolerant to risk. They really want to