Canadian Property Management

F O R B U I L D I N G O W N E R S , A S S E T A N D P R O P E RT Y M A N A G E R S

VOL. 31 NO. 5 • SEPTEMBER 2016

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Confronting Foreseeable and Sudden Hazards

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editor’snote RISK IS A CONSTANT ELEMENT of life. Potential hazards abound – whether from natural forces, the breakdown of human engineered systems or malfeasant intent – sometimes in combination with each other.

At the same time, collective confidence in public safeguards is fundamental for any productive society that depends on networks of people interacting with each other and the broader marketplace. They need assurance that the air is safe to breathe, food is safe to eat, the built environment is structurally sound and that everyone will be accountable for harmful actions.

Regulations, professionalism and oversight lay the groundwork for entrusting that critical infrastructure will function properly as we turn on the tap, travel across the overpass or step onto the elevator. In the case of the built environment, it's risk management through three overlapping levels of compulsory and market-driven quality control: design and construction standards; qualified design, development and inspection input; and ongoing maintenance and vigilance.

These basic tools support response and recovery when rarer or more extraordinary crises unfold, but risk management is also about gauging threat, assigning resources appropriately and choosing mitigation measures that make financial and environmental sense. Notably, the Building Owners and Managers Association (BOMA) of Greater Toronto is exploring those possibilities through its sub-committee on extreme weather adaptation and outreach to its own members, other industries and designated firstresponder agencies. We examine those efforts and some emerging innovations that bolster resilience in this issue.

The intense and immediate horror of some catastrophic events captures wide attention and understandably triggers anxiety and demands for protective actions. On the flipside, the inherent human coping mechanisms of obliviousness and denial can be more problematic with less tangible threats like carbon dioxide or an earthquake expected at some indefinite time that could be generations away. So risk management also calls for public outreach and education.

Fort McMurray's fiery spring definitely falls into the intense and immediate category. Sam Jaishankar and Jim Mandeville report on efforts to help evacuees find temporary homes and get them back in their own. Turning to the least excusable source of risk – human behaviour – we look at best practices for fraud prevention, cybersecurity and Public Safety Canada's counterterrorism apparatus.

On the subject of vigilance, I must draw attention to a lapse of my own. Thank you to the readers who expressed puzzlement about the photo of Saskatoon embedded in last issue's preview of the events planned for BOMEX 2016 in Regina. I apologize to residents of both cities.

Barbara Carss barbc@mediaedge.ca @BarbaraCarss

VOL. 31 NO. 5

Editor-in-Chief Barbara Carss barbc@mediaedge.ca Publisher Sean Foley seanf@mediaedge.ca Contributing Writers

oy Bennett, Mark R Clemmensen, Michelle Ervin, Magnus Hedberg, Sam Jaishankar, Jim Mandeville, James Scott, Drew Spaniel

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contents

Focus: Protection, Mitigation & Recovery 8 Building Self-Sufficiency: Power outage contingencies through energy storage and thermal innovations.

12 Cell Site Risks: Rooftop installations should be properly contained and managed.

14 Fort McMurray Responses: Restoration services and real estate software help ease distressing transitions for evacuees.

17 Extreme Weather Preparedness: Planning, peer networks and resilience measures could help anchor real estate in the storm.

22 Fraud Exposure: Formal, scrutinized procurement processes and whistleblower programs limit opportunities for unscrupulous interlopers.

26 Canada's Terror Watch: Threat level monitoring assesses potential perpetrators' resources and intent.

28 Cybersecurity Considerations: Breaches, hacking and ransomware infections can be stealthy saboteurs of profits, productivity and reputation.

30 Security Communications: Push-to-talk technology turns smartphones and tablets into two-way radios.

Department 4 Editor’s note

6 Canadian Property Management | Part of the REMI Network

ALL NEW LOOK

Coverage that is setting the standard in the Real Estate Management Industry.

Online Exclusives

September 2016

Canada’s apartment market today

GRESB reveals Canadian energy saving prowess

Canada’s apartment market continues to capture the attention of investors craving stability in what has become an uncertain economic backdrop. Notably, Calgary apartment market conditions have softened significantly with vacancy rising and landlords offering inducements, such as free rent, against a backdrop of a slumping economy.

Canadian energy saving prowess is unrivalled in Global Real Estate Sustainability Benchmark (GRESB) results released last week. Canada’s participants collectively surpassed both the North American and global average scores across seven differently weighted management and operational categories.

Technological innovations in condominiums Technology is one of those things that never stops moving, and sometimes it can be daunting to keep up with all the latest advancements out there. If leveraged correctly, though, it can provide great amounts of value to those that take the jump and never look back.

All the Buzz

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BOMA Canada fetes national award winners

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Highlights from the Building Owners and Managers Association (BOMA) of Canada National Awards.

Canada not on track to achieve emissions reduction target of 30 per cent by 2030.

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resilience&riskmanagement

BREAKTHROUGH T EASES RISK MANA Energy and Thermal Innovations Boost Sustainability and Resilience

By Barbara Carss REDUCED RELIANCE on the conventional power grid and mechanical HVAC systems can save money in the best of times and aid survival in the worst. A focus on energy and thermal innovations at the recent Sustainable Built Environment Conference of the Americas in Toronto naturally drifted into resilience and risk management as presenters outlined technologies that can boost the certainty of electricity supply, passively support comfortable indoor environments and eliminate potential points of failure in systems operation.

Energy storage, phase-change materials and carbon dioxide (CO2) refrigerant exemplify the diversity of products that can have bearing on how buildings use

resources, discharge waste and function in both normal and adverse conditions.

The session's three seemingly separate progress reports on the burgeoning technologies pointed to some common themes and collectively offered upbeat news about gains in proficiency, costeffectiveness and market demand.

RESERVE CAPACITY PROMOTES SYSTEM STABILITY Practical ability to capture electricity and keep it in reserve for later use has long been viewed as a breakthrough technology for power providers, consumers, the economy and the environment. Energy storage could reduce pressure on existing generation and transmission capacity, make renewable sources more viable and

8 Canadian Property Management | Part of the REMI Network

limit financial losses related to surplus supply during times of low demand.

Toronto Hydro is one of many prospective beneficiaries investigating technologies that could be both a critical relief valve and a springboard for sustainable growth. The utility serves one of the largest clienteles among North American electricity distributors, with approximately 740,000 customer accounts, and is currently grappling with intensification of its demand load, aging infrastructure and the operational challenges of adding variable loads from renewable sources into the system.

"It [energy storage] offers the potential to manage a number of things. It's an opportunity to improve the flexibility of the system," Jack Simpson, Toronto Hydro's Vice President,

resilience&riskmanagement

TECHNOLOGY AGEMENT Generation, told conference attendees. "We're seeing a huge building boom in the city and, as it continues, it's stressing our system."

A 2014 Toronto planning study reported that more than 45,000 new residents had moved into the city's 17-square-kilometre central district over the previous ten years.

Today's 200,000+ residential population is more than double what was contemplated in 1976 when the Central Area Plan was first adopted. Even with aggressive conservation and demand management (CDM), a steadily growing population can quickly refill the manoeuvring space that energy savings have achieved.

Potential vulnerabilities were highlighted in the summer of 2013 when flooding from a severe storm temporarily knocked out one of

the two transmission hubs feeding electricity to the city's central core. The power stayed on thanks to emergency rerouting through the still operational station, but a nearly 900-megawatt drop in capacity had both Toronto Hydro and Ontario's Independent Electricity System Operator (IESO) asking customers to cut consumption and/or prepare for rotating blackouts.

"The overloading of the system could have caused failure in other connected grids," recalled Bala Gnanam, Director of Sustainable Building Operations and Strategic Partnerships with the Building Owners and Managers Association (BOMA) of Greater Toronto, after the crisis had passed.

Energy storage could augment system capacity during peak demand periods and

help defer the need to invest in expanded transmission capacity, freeing up funds for other priorities. It would also facilitate a consistent flow of renewable sources into the system, avoiding power surges or sags. This will be a priority given the anticipated quadrupling of the city's current 172 megawatts of distributed generation – largely in the form of solar, cogeneration and district energy – over the next four years.

"Distributed resources can change the nature of the power flow. Solar is highly variable. It changes rapidly and it can flux rapidly," Simpson explained. "In our view, energy storage is one of the keys for integrating renewables into the system."

Current pilot projects include a global first – a 660-kilowatt system that converts www.REMInetwork.com | September 2016 9

resilience&riskmanagement SOCIAL MEDIA COLUMN

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Four reasons to start marketing with video

By Steven Chester Since the brain processes visuals 60,000 times faster than the time it takes for it to process text, and 65 per cent of the population are visual learners, it’s time to start thinking about video marketing.

Here are four insights that tell you why: • Sixty per cent of traffic on YouTube is search-driven. That means most users aren’t visiting YouTube to see what latest cat video is trending on the homepage. They’re looking for information.

• Native video on Twitter drives 2.5 times more engagement than a standard post.

• Facebook video posts have 135 per cent more engagement than photo posts. Facebook is going toe-to-toe with YouTube. No longer is it effective to post that YouTube video link on your Facebook page – Facebook wants that video content for itself. You can benefit from this battle by posting directly to both platforms.

• Videos on Instagram offer two times more engagement and comments than photo posts. Video views have also grown 350 per cent over an eight-month period on this platform.

So, how do you source content that others want to see? Keep in mind that businesses put too much focus on themselves rather than what their audience wants to hear. What problems can you solve to position your business as a thought leader? Try to answer frequently asked questions by searching community hubs, blogs, LinkedIn Groups and competitor sites.

Steven Chester is the Digital Media Director of MediaEdge Communications. With 15 years’ experience in cross-platform communications, Steven helps companies expand their reach through social media and other digital initiatives. To contact him directly, email gosocial@mediaedge.ca.

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electricity to compressed air and stores it in underwater balloon-like containers deep in Lake Ontario. Conversion to compressed air and back to electricity is a zero-emissions process, while the underwater structure is credited with creating fish habitat. "It's environmentally very benign," Simpson said.

Other pilots, such as a community energy storage (CES) project with funding support from Sustainable Development Technology Canada are testing innovative battery technologies. Such R&D also supports goals to reduce transportation related greenhouse gas emissions.

"The forecast for electrification – electric vehicles, transit – introduces a whole new set of loads into our environment," Simpson said.

"Level 2 or Level 3 chargers [for vehicles] can be a significant load in our system, much more than house loads."

HVAC HOLIDAY WITH OUTAGE CONTINGENCY Ryerson University's Dr. Umberto Berardi sees stress points and overlooked opportunities in Toronto's downtown intensification, which, he contends are often exacerbated in standardized designs and construction methods.

"There is glass going up everywhere.

We are missing a way to add some kind of comfort not relying on HVAC systems," he observed. "A lot of times we have significant solar gain in our skyscrapers when we don't want that, then lose it overnight when it is needed."

His research team has been studying and testing phase-change materials that could enable latent thermal energy storage in new construction and retrofit applications. These are materials – often paraffin wax or salt based – that release stored energy as heating or cooling as they move between liquid and solid state.

When encapsulated in wallboard or used as an aggregate in concrete, they provide passive thermal energy that lessens or eliminates mechanical space heating/cooling requirements – a capability that could be particularly valuable during a prolonged power outage. Developers, designers and specifiers now have access to an increasing number of products with the necessary combination of strength and stability as a construction material, effectiveness within a practical temperature range and a dropping, if not yet low-cost, price point.

"Five to 10 years ago, you couldn't really find a product that was all these things," Berardi noted.

Steven Horwood, Vice President, Sales &

10 Canadian Property Management | Part of the REMI Network

Operations, with Neelands Refrigeration Ltd., similarly acknowledged that a switch to carbon dioxide (CO2) refrigerant is not perceived as a low-capital option. However, he countered that assumption with a list of paybacks investors might reap. As Canada and other nation state members of the Climate & Clean Air Coalition move to introduce a global phase-down of hydrofluorocarbons (HFCs), he set out an environmental, operational and business case for CO2.

"We have a natural refrigerant and it has no phase-out. CO2 is non-toxic and nonflammable," Horwood said. "You eliminate a future refrigerant management issue and you have reduction in risk exposure related to carbon taxes."

CO2 based refrigeration systems date back to the 1800s, but their market share has been negligible for the past 80 to 90 years. A seeming resurgence – Horwood reports approximately 150 installations across Canada – coincides with regulatory actions targeting ozone-depleting and high global warming potential (GWP) substances and rising energy costs. Potential for heat reclamation and free cooling independent of mechanical compressor systems can accelerate the payback, deliver long-term savings and augment system redundancies in response to power failure.

Food retailers have been the predominant adopter of the technology, which addresses a major liability in a sector where it's estimated operators can lose up to 27% of refrigerant charge annually. "This is the nudge that got CO2 moving again," Horwood suggested.

He also cited the example of a multipurpose municipal complex in Dollard-desOrmeaux, Quebec, housing civic offices, a swimming pool and ice rinks, which converted to CO2 refrigeration when it was time to replace an aging ammonia-based ice plant. The new system now provides heating, dehumidification and domestic hot water for the entire facility via heat reclamation.

Meanwhile, CO2's free cooling properties have significantly decreased energy costs for the data centre that requires just 9 kilowatts of electricity to provide 3,500 tons of cooling.

This also eliminates a vulnerability since a breakdown in a cooling system's mechanical compressors could have serious repercussions for the safety of critical equipment and the security of the information it holds.

"The people who run data centres love to reduce their points of failure," Horwood noted. zz

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riskmanagement

AVOIDING CELL SITE LIABILITY Due Diligence Key to Protecting Properties

By Roy Bennett RADIOFREQUENCIES ( R F ) a re silently growing on cell cites. Recent Industry Canada spectrum auctions are freeing up space for carriers, while sites can host more than one car rier sharing infrastr ucture for microwave and radio transmissions.

Across Canada, CISCO projects annual cell data growth of 42% each year to 2020.

For property owners that represents an opportunity for revenue growth, but also a risk of liability.

In particular, the spectre of class action suits for alleged RF-related injuries looms.

Looking at the growing instances of so-called patent trolls filing claims in Canada, property owners may be reasonably wary.

12 Canadian Property Management | Part of the REMI Network

â&#x20AC;&#x153;For RF trolls, filing class actions can be automated; for property owners defending class actions can be expensive and personal," says Ryan Wagner, E d monton m a nager of A nt en na Management Corp. "RF trolls will be looking for substantial settlements. The last thing property owners want are public RF injury claims on their

riskmanagement SAFETY CODE 6 DELINEATES RISK

Health Canada dismissed a range of concerns as unproven and unscientific when it updated its guide for allowable radiation levels from wireless communications last year. However, it slightly adjusted recommended thresholds for human exposure to radiofrequency (RF) electromagnetic energy in some frequency ranges to further guard against the risks of heat-related tissue damage and/or undue nerve stimulation.

The revisions to Safety Code 6 – which Canadian provinces, municipalities and other government agencies, including Industry Canada, have long used as a guidance document for regulating telecommunications towers, microcells and various equipment such as cell phones, Wi-Fi and smart meters that emit electromagnetic energy – were adopted after input from an eight-member expert scientific review panel and public consultation.

The 2015 version of the code calls for what Health Canada typifies as "larger safety margins" based on recent research and 2010 guidelines from the International Commission on Non-Ionizing Radiation Protection (ICNIRP). Designated exposure limits in the previous circa-2009 version of the code were already set above levels scientifically observed to trigger thermal or nerve response.

The Code rejects theories that link electromagnetic energy to various detrimental symptoms and environmental intolerances.

"At present, there is no scientific basis for the occurrence of acute, chronic and/or cumulative adverse health risks from RF field exposure at levels below the limits outlined in Safety Code 6," it states. "The hypotheses of other proposed adverse health effects occurring at levels below the exposure limits outlined in Safety Code 6 suffer from a lack of evidence of causality, biological plausibility and reproducibility and do not provide a credible foundation for making science-based recommendations for limiting human exposure to low-intensity RF fields."

Nevertheless, Health Canada's expert scientific review panel suggested there could be other appropriate mechanisms outside Safety Code 6 to explore phenomena labelled as idiopathic environmental intolerance attributed to electromagnetic fields (IEI-EMF) or electromagnetic hypersensitivity.

"During the public consultation, the Panel heard from numerous individuals who felt they are sensitive to low levels of RF energy in the environment from a variety of sources," it recounted in its report. "This Panel feels strongly that these individuals need compassion and assistance in overcoming their symptoms."

– REMI Network

Property owners need to consider who is liable for an RF injury claim and whether they can demonstrate they've taken steps to ensure safety. Cell carriers will have insurance, but it may not cover RF injury claims, costs or settlements. Property owners should obtain an annual certificate from the service provider’s insurer confirming they are a “named insured” and RF injury coverage has not been waived.

Property owners should check their own property insurance for RF coverage, and verify insurance coverage, WCB registration and required certifications for all on-site workers. They should also check annually to ensure there have been no changes to coverage.

Almost every lease is unique in its specifications for RF safety and liability.

Photo courtesy of Antenna Management Corp.

properties. Everyone gets nervous.

Properties values may be reduced.”

Owners may not know the RF power radiating from their properties. If a site fails to comply with Health Canada guidelines, known as Safety Code 6, it could become a point of interest with prospective filers of class action suits.

“The responsibility for RF safety is likely to involve the property owner,” Wagner advises.

Through Safety Code 6, Canada has established some of the world's most stringent restrictions on exposure to radiofrequencies. Notably, the allowable exposure level for the general public is five times less than for trained workers, certified to handle RF-emitting equipment. It's important for property owners to be aware of these requirements and perform due diligence.

Under Safety Code 6, the "general public" covers everyone lacking RF certification.

Even if rooftop access is locked and controlled, building staff, contractors and anyone who could potentially enter a cell site area must be made aware of the risks.

Health effects can occur within one metre of an antenna and in a much larger area surrounding a dish.

Property owners should keep logs of certification, licenses, insurance and WCB registration of workers given rooftop access.

Signage, fencing and Safety Code 6 warnings must be posted on the site.

Sites can host multiple cell carriers with multiple upgrades. Some carriers share the same antennas (transceivers) magnifying RF emissions. Under their public telecom operating licenses, cell carriers are usually required to provide a certified Safety Code 6 report, but Industry Canada has administered this largely through the honour system.

Situations can become problematic for owners if they cannot account for who is working on their rooftops or what work is being done. Leases typically define areas for operations but not numbers of licensed antennas or total RF power, which creates risks of running afoul of Safety Code 6 and opens up opportunities for suit-seekers.

There is no public repository for safety reports and often limited means to chart if a site has been or is in compliance. Claims may hinge on whether the site has been certified RF-safe. Cell carriers often use software to estimate RF safety, but direct on-site measurements by a qualified RF engineer are rarely conducted. At certain RF levels, Health Canada also requires visits to sites so it's important that this occur.

Some leases have property owners indemnifying the cell carriers for legal actions and claims. Owners are advised to get legal reviews of their leases on each renewal as sites and rules change.

“The best protection for property owners is proving that the site always meets Safety Code 6 specifications. Obtaining regular updates on antenna additions, increased power and Safety Code 6 levels are critical,” Wagner maintains. “Keeping a safe site is prudent. Be sure reports are properly credentialed. Without proactive Safety Code 6 management, it might be difficult to defend an RF injury claim.” zz Roy Bennett is President of Antenna Management Corp. For more information, see the website at www.antennamgt.com. www.REMInetwork.com | September 2016 13

DATA INFORMS CRISIS RESPONSE Resettlement Support for Fort McMurray Evacuees

By Sam Jaishankar REAL ESTATE SOFTWARE technology can be instrumental in crisis response, as seen in last spring's mammoth forest fire in Fort McMurray, Alberta.

Software's combination of critical data points and detailed contact information somewhat helped to ease the dislocation of the city's residents after more than 80,000 of them were forced to flee on May 3, 2016.

The Alberta government and Edmonton's social housing provider, Capital Region Housing Corporation, sought resources to help re-house an influx of evacuees – turning to software developers, Yardi Canada, which already operated a landlordtenant matching site. In 72 hours, the company had developed an emergency housing register with the efforts of a global work team in its various sites in Canada, the United States, India and Romania.

The Fort McMurray Fire Displacement online portal went live on Monday, May 16.

By that afternoon, more than 2,500 units were listed for rent by fast-acting local

property owners, some offering reduced deposits or temporary free rent.

Ultimately the site received more than 35,000 unique visitors, connecting thousands with information about rental listings in their time of need. Around 2,000 of those visitors took action online to secure a new home.

“The ability to help was made possible by our technology, and that’s a special way to make an impact,” says Peter Altobelli, Vice President and General Manager of Yardi Canada.

The infrastructure provided by real estate technology creates multiple crisis-response opportunities for property managers. Cloudbased solutions make it possible to tap into critical data anytime, anywhere, from any mobile device. Availability and mobility are significant assets for building operators, who may need to work at unusual times and in strange situations during an emergency, and they can be a great comfort to building occupants as well.

14 Canadian Property Management | Part of the REMI Network

Here are four ways real estate tech can help everyone feel a little safer in chaotic times: • Provide mobile accessibility. Resident portals offer account access on-the-go giving occupants a secure way to update information, check balances and communicate with building management.

• Take advantage of bulk email. Send an

alert to all residents in an instant with the communication technology available in many property management software solutions.

• Use digital bulletin boards. Keep

community bulletin boards active throughout the year to create a reliable point of reference for important property information. This may mean creating a website page or resident portals, or streaming information to a screen in the management office or building lobby.

response&recovery AIR QUALITY ACTION

By Jim Mandeville Restoration companies have been at the forefront of efforts to restore and rebuild Fort McMurray after the wildfires. They also played a key role in on-the-ground communications, providing a firsthand perspective of what to expect upon re-entry, and how to sufficiently prepare.

Noxious smoke and requirements for air quality restoration were among the first challenges faced. Initially, restoration companies deployed personnel and essential resources – such as air scrubbers (negative air machines) – to the area, targeting areas where first responders were active and areas where temporary accommodations for emergency personnel were located.

Access to mobile technology and strong telecommunications infrastructure in Fort McMurray ensured a seamless two-way flow of communication between restoration professionals and their residential and commercial clients. The Fort McMurray damage Map app, launched by the Government of Alberta, allowed evacuated residents to view satellite images of affected communities, helping them assess damage and mentally prepare for their return.

For commercial building managers, CCTVs and Wi-Fi-controlled building management systems enabled remote monitoring and control of building operations from a safe distance. This allowed building managers to assess and quickly act to change the operations of their facilities, resulting in a reduction of damage to their facilities.

In the aftermath of the fires, restoration companies turned their attention towards restoration of critical commercial infrastructure such as hospitals, grocery stores and banks to lay the groundwork for resident re-entry. Working in tandem with commercial property managers, restoration companies helped to restore basic services in Fort McMurray in time for the government of Alberta’s proposed June re-entry.

Restoration efforts in Fort McMurray are a testament to cooperative strength between first responders, government bodies, restoration professionals and insurers.

Jim Mandeville is Senior Project Manager, large loss North America, at FirstOnSite Restoration. For more information, see the website at www.firstonsite.ca. The preceding item is reprinted from www.REMInetwork.com.

LESSONS LEARNED FLOW THROUGH TO RECOVERY

• Promote renters' insurance. Offer residents

valuable protection through integrated insurance plans that make it possible to offer affordable renters' insurance with easy enrollment. Master policy coverage provides the simplest and most affordable way for residents to fulfill an insurance requirement.

It helps protect property at no cost to property managers, and coverage is automated so neither management nor residents need to worry about lapses or renewals.

Planning and preparation are essential, whether called upon to respond to flood, fire or other calamities.

“The fire caught everyone off guard, and emphasized the need for emergency planning,” affirms Lynn Biggs, executive director of the Alberta Residential Landlord Association. zz Samyukta Jaishankar is Regional Marketing Executive with Yardi Canada. For more information, see the website at www.yardi.com.

Ken Williamson and Carl Pedersen made a memorable business trip earlier this year. The two investment services executives based in Colliers International's Edmonton office found themselves in Fort McMurray on May 3 and were among the thousands fleeing along Highway 63 later that evening.

"It went from being a calm, spectacularly beautiful day at 10 in the morning to becoming a real crisis two hours later to, by mid-afternoon, being out of control," Williamson recalled from the safety of his office the next day. "We saw areas that were devastated and burning in front of us."

Approximately, 2,000 single-family homes were destroyed, but the bulk of the city's commercial, industrial and multi-residential rental real estate survived the fire. This includes approximately 3 million square feet of industrial space and a million square feet of commercial properties that Williamson estimates is worth about $2 billion.

High and climbing rental housing vacancies prior to the fire now provide some needed options. "The fact that it is there for them is a big benefit for displaced people," Williamson suggested on the day after the evacuation.

As a service centre to Alberta's oil sands, Fort McMurray gained 40,000 residents within its urban boundary during the first 15 years of the 21st century. Rapid growth with the almost doubling of its population pushed residential districts nearer to the surrounding boreal forest.

"The configuration of the town does not make it easy to adapt to the inherent risk of wild fire," observes Alexander Hay, an engineer specializing in security and protection of critical infrastructure, who has been advising the Building Owners and Managers Association (BOMA) of Toronto on how the commercial real estate industry could better plan, prepare contingencies and collaborate to improve resiliency to extreme events.

He suggests there will be many lessons to be learned.

"The insurers will be extremely keen to find out what happened and how it happened," Hay advises. "To do that, you have to unpick the systemic issues. You're not recovering to where you were before; you're recovering to a higher standard."

– REMI Network www.REMInetwork.com | September 2016 15

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STORMPROOFING STRATEGIES Reputation for Resilience Could Have Business Advantages

By Barbara Carss

COMMERCIAL REAL ESTATE operators have a steadily accumulating inventory of lessons learned from extreme weather events, providing both motivation and insight to prepare for more climate volatility in the future. In Toronto, industry insiders are now pondering how to stormproof business continuity, while brainstorming about the potential business spinoffs of a reputation for resilience.

The Building Owners and Managers Association (BOMA) of Greater Toronto is tackling the issue through a special subcommittee and a discussion paper, Commercial Property Resilience to Climate Change. Along with BOMA Canada and other stakeholders, it has also been active in several educational forums exploring various angles of climate change adaptation.

The discussion paper begins with the premise that a building's key purpose is to

enable occupants' business operations, and then sets the scope for considering the factors â&#x20AC;&#x201C; within the building, the affected region and the broader supply chain â&#x20AC;&#x201C; that could influence how those businesses engage with their markets. This is much the same analytical framework that strategists around the globe use to predict and prepare for the social and economic fallout from cataclysmic events.

"If we think holistically about the consequences of an event, we actually get a better understanding of how to be resilient," Alexander Hay, the discussion paper's author, advised attendees at a BOMA Toronto seminar last fall.

Also serving as chair of BOMA Toronto's sub-committee on extreme weather adaptation and resiliency, Hay brings recognized expertise as an engineer and consultant specializing in security and

protection of critical infrastructure. His treatise outlines the underlying concepts of operational resilience and resilience planning, also mapping out scenarios for disruption and recovery of building functions and the various pressures that are likely to come into play.

"This paper is intended to stimulate an informed discussion on how BOMA members should make their properties future ready in a changing world," Hay writes. "There is a lot to consider and perhaps befitting such a complex subject some of the concepts are not the easiest to digest at first reading."

SUSTAINABILITY OVERLAP Theory complements a perhaps more intuitive consensus among building owners/ managers that guidance tools, operational contingencies and peer networks will be www.REMInetwork.com | September 2016 17

resilience&riskmanagement increasingly critical to respond to weatherrelated crises. The discussion paper is part of an initiative to define best practices for resilience that can be aligned with BOMA BEST's performance assessment and continuous improvement model.

BOMA Toronto's seminar exploring the relationship between building performance and climate change similarly focused on best practices. In keeping with the BOMA BEST agenda, some adaptation measures could first and foremost be seen as investment in sustainability and energy efficiency.

As Hay noted, Passive House prescriptions for a heating demand load no greater than 15 kilowatt-hours per square metre also effectively insulate building occupants when there is no heat at all – making prolonged power outages more tolerable or, in the worst case scenario, survivable.

"We can introduce an awful lot of resiliency measures and save money in the process," he asserted. "We can realize real savings in engineering, real savings in recovery, and increase assurance of survival and continuity."

Other expenditures – such as keeping a stockpile of sandbags easily at hand – fall into the low-cost/no-cost category.

"Many of these are what I'd call 'do anyway' things because they have other benefits," concurred David Macleod, Senior Environmental Specialist with the City of Toronto's environment and energy division.

OBLIGATIONS AND PARTNERSHIPS "Nobody disputes the fact that the severity and frequency of events are increasing," said Bala Gnanam, BOMA Toronto's Director of Sustainable Building Operations and Strategic Partnerships. "When it comes to commercial real estate, our number one obligation is to make sure we serve our tenants. In extreme weather events, business continuity is a top need and priority."

Eroding tolerance for business disruption translates into ever briefer grace periods for landlords before the expected full return of services and conditions required for tenant operations. "From the increasing trend in nuisance claims associated with climate change, it is anticipated that where there exists the perception or possibility that a property owner impeded an organization's recovery, compensation will be demanded from the property owner," BOMA's discussion paper maintains.

Partnerships could position buildings to better respond. For example, emergency backup power has traditionally been viewed

as a contingency that enables off-the-grid self-sufficiency, but required replenishments of fuel supply could be problematic during a lengthier outage due to transportation obstacles or because the fuel itself is requisitioned for higher-priority needs such as health care facilities. Alternatively, the discussion paper outlines a cluster approach to stretch resources.

"If the standby power provision for each operation is rated to provide up to 20% more than needed, each partner can share with the other in event of a standby failure," it states. "This is more effective if each standby power source has a diversity of fuel supply."

Municipal strategists are seeking to coordinate citywide responses to extreme weather in much the same way, with various essential sectors – such as utilities, food systems and buildings – playing a role.

Obviously, buildings can and do provide literal shelter from the storm, and privately owned buildings could augment public space serving as emergency dormitories, cafeterias or warming/cooling centres.

However, high-rise buildings quickly become uninhabitable without power for water pumps and elevators, which can further strain the city's emergency response services.

Macleod emphasized the importance of identifying vulnerabilities and being prepared. "What I would like to propose is that BOMA is going to be the group that would be leading the buildings," he said.

CENTRE OF EXCELLENCE Toronto's many natural advantages – with an elevation well above sea level, a location outside the path of hurricanes and Lake Ontario's abundant water supply and moderating effect on temperatures – already position it to attract and retain investors who see it as a stable location on an increasingly risky continent. Macleod next envisions a proactive approach to resilience and adaptation that could create professional opportunities in insurance, engineering, construction and landscape architecture.

"In order to be resilient, we need to have people to work in the resiliency sector," he reasoned. "If Toronto can be recognized as a resilient place to locate, we can also be a centre of excellence for people who do these things."

Presumably this burgeoning resiliency sector would also need office space. zz The preceding article is reprinted from the REMI Network. See www.REMInetwork.com.

18 Canadian Property Management | Part of the REMI Network

RESILIENCE ON U.S. INDUSTRY AGENDA A coalition of 40 industry associations in the United States is calling for heightened capability to foresee, endure and recover from adverse events. Released in the spring of 2016, an updated Building Industry Statement on Resilience promises to promote research, education, advocacy, response resources and planning to help the built environment and its residents better withstand natural and humantriggered disasters.

"Aging infrastructure and disasters result in unacceptable losses of life and property, straining our nation's ability to respond in a timely and efficient manner. We further recognize that contemporary planning, building materials and design, construction and operational techniques can make our communities more resilient to these threats," the statement expounds.

"Disasters are expensive to respond to, but much of the destruction can be prevented with cost-effective mitigation features and advanced planning," it continues. "Our practices must continue to change, and we commit ourselves to the creation of new practices in order to break the cycle of destruction and rebuilding. Together, our organizations are committed to build a more resilient future."

With the American Institute of Architects and the National Institute of Building Sciences serving as the prime instigators, other founding members include ASHRAE, the Building Owners and Managers Association (BOMA), the Urban Land Institute and the U.S. Green Building Council. All told, signatories to the Statement on Resilience represent nearly 1.7 million professionals working in real estate, development, design and building technology fields.

Code development, highperforming buildings, climate datainformed design standards, existing building retrofits, financial incentives for resilience and business continuity in the built environment have been identified as priorities.

For more information, see www.nibs.org/ news/288649/Resilience-BuildingCoalition-Releases-Progress-Report-.htm

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2016

The Building Owners and Managers Association (BOMA) of Canada is proud to announce the winners of its prestigious 2016 National Awards presented September 22, 2016 in Regina, Saskatchewan. The Awards Gala was celebrated in conjunction with the association’s national conference and exhibition BOMEX® 2016 hosted by BOMA Regina.

UNDER 100,000 SQ. FT.

100,000 - 249,999 SQ. FT.

3115 HARVESTER ROAD

155 UNIVERSITY AVENUE

Owned by: Sun Life Canadian Real Estate Fund

2016

3115 Harvester Road, Burlington, ON

Managed by: Bentall Kennedy (Canada) LP

Owned by: Great-West Life Assurance Company & London Life Insurance Company

155 University Avenue, Toronto, ON

Managed by: GWL Realty Advisors Inc.

CORPORATE FACILITY

HISTORICAL BUILDING

AIR TERMINAL BUILDING

TRIFFO HALL

Owned by: Edmonton Airports

1000 Airport Road, Edmonton, AB

Managed by: Edmonton Airports

Managed by: University of Alberta

MULTI UNIT RESIDENTIAL BUILDING

LIGHT INDUSTRIAL LONDON LIFE RAM CENTRE

Owned by: University of Alberta

11316-89 Avenue, Edmonton, AB

670 Sovereign Road, London, ON

CARRÉ QUEEN MARY

5150-5165 Chemin Queen Mary, Montreal, QC

2016 Owned by: London Life Insurance Company

Managed by: GWL Realty Advisors Inc./London Life Insurance Company

ABOVE & BEYOND PALADIN SECURITY GROUP LTD.

Owned by: FCHT Holdings (Quebec) Corporation Inc.

Managed by: First Capital Realty Management Services LP

CUSTOMER SERVICE 150-11634-142 Street, Edmonton, AB

OXFORD PROPERTIES GROUP

1 University Avenue, Toronto, ON

2016

www.bomacanada.ca

This year’s entrants represent the exceptional efforts made by those whose leadership and initiative are the benchmark for the industry. Winners of the 2016 BOMA Canada National Awards may be eligible to compete in the BOMA International TOBY Awards presented at the BOMA International Conference and Expo® June 29, 2017 in Nashville, Tennessee.

Congratulations to our 2016 winners!

250,000 - 499,999 SQ. FT. 311/321 6th Avenue SW, Calgary, AB

INTACT PLACE

Owned by: bcIMC Realty Corporation

550/570 Matheson Blvd. E. & 5655 Kennedy Road, Mississauga, ON

KENNEDY MATHESON INDUSTRIAL COMPLEX

Owned by: 3883281 Canada Inc.

Managed by: Menkes Property Management Services Ltd.

OFFICE BUILDING 25 YORK STREET

Owned by: Menkes Union Tower Inc.

500,000 - 1 MILLION SQ. FT.

OVER 1 MILLION SQ. FT.

LONDON CITY CENTRE

TORONTODOMINION CENTRE

275 Dundas Street & 380 Wellington Street, London, ON

Owned by: Dream Office REIT

Managed by: Bentall Kennedy (Canada) LP

INDUSTRIAL OFFICE BUILDING

WINNERS GAGNANTS

Managed by: Dream Office Management Corporation

Owned by: Cadillac Fairview Corporation Ltd. & OPB (TDC) Inc.

MEDICAL OFFICE BUILDING

RETAIL BUILDING

EAST CALGARY HEALTH CENTRE

CF TORONTO EATON CENTRE

Owned by: Beacon Hill Apartments Ltd.

4715 8 Ave SE, Calgary, AB

Managed by: Bentall Kennedy (Canada) LP

Owned by: The Cadillac Fairview Corporation Ltd.

TD Bank Tower (66 Wellington Street W), TD North Tower (77 King Street W), TD West Tower (100 Wellington Street W), TD South Tower (79 Wellington Street W), Ernst & Young Tower (222 Bay Street & 95 Wellington Street W)

Managed by: The Cadillac Fairview Corporation Limited

220 Yonge Street, Toronto, ON

Managed by: The Cadillac Fairview Corporation Ltd.

RETAIL BUILDING 25 York Street, Toronto, ON

Managed by: Menkes Property Management Services Ltd.

ROCKLAND CENTRE

Owned by: FPI Cominar

2305, Chemin Rockland, Ville Mont-Royal, QC

Managed by: FPI Cominar

INNOVATION TRIOVEST REALTY ADVISORS INC. & REFINED RISK

40 University Ave, Toronto, ON

2016

Vyetta Sunderland Scholarship Award 2016

PHILIP JAGO

CONSTANCE DAVIS

Ottawa, ON

PROPERTY MANAGER STRATEGIC GROUP

Calgary, AB

riskmanagement

FRAUD RISKS CAN ARISE IN PROCURE

Bid-rigging and Conspiracy Inquiry Involves GTA Condos

By Michelle Ervin Earlier this year, the Competition Board applied to the courts for 142 production orders for records in relation to allegations of bid-rigging and conspiracy in the supply of condominium refurbishment services in the Greater Toronto Area. CondoBusiness Editor, Michelle Ervin, provides some context for the Competition Board's inquiry and outlines potential lessons to be learned for property managers and condominium boards of directors to help ensure best practices in procurement – Editor.

FOR SOME, the production orders issued in May were their first introduction to the Competition Bureau. As its name suggests, the independent agency administers and enforces the Competition Act, federal legislation with civil and criminal provisions that make bidrigging and conspiracy offences that carry possible fines and prison terms.

Bid-rigging is when, in response to a call for bids or tenders, two or more parties agree, unbeknownst to the organization

issuing the call, that one or more of them will withdraw or withhold a bid, or make submissions based on an arrangement with competing bidders. Conspiracy deals with an agreement between competitors to fix the price or restrict the supply of a product or services, or to allocate customers or markets.

Considering the seriousness of the associated penalties, competition lawyers Steve Szentesi and Mark Warner recom mended that condom inium

22 Canadian Property Management | Part of the REMI Network

corporations responding to production orders evaluate their exposure to liability.

“Before you produce anything to the bureau, you assess what you’re holding and whether there’s a potential risk that you’ve violated the Competition Act yourself,” said Szentesi. “And if that’s the case, you may want to assess strategies to reduce risk – maybe it’s the immunity program; maybe it’s negotiating with the bureau; maybe it’s merely explaining irregularities.”

The process is time-sensitive, as there are benefits to approaching the bureau first to cooperate in its investigations – which sometimes expand beyond their original targets – if a party finds it possesses incriminating evidence.

“In an industry where people work closely, they can come to see each other as

riskmanagement

INDUSTRY ASSOCIATION MEMBERSHIP AIDS IN VETTING OF CREDENTIALS

By Mark Clemmensen

EMENT natural allies,” said Warner. “Sometimes their interests diverge in the course of an investigation, and you don’t really know what the other side’s doing – you don’t really know if there’s a supplier who has been involved in something along the chain and has gone in and admitted it – so it’s important to understand your risks in relation to the various other parties.”

While evaluating risk may be the most pressing matter for condominium corporations scrambling to comply with the production order, there’s also the question of whether those corporations might be victims of bid-rigging and conspiracy.

Unless and until they get an answer, news of the inquiry serves as an impetus for all condominium corporations to review their procurement processes.

STEPS BEFORE TENDER Simon Brown, Executive Vice President of ArcBlue Consulting and a member of the Supply Chain Management Association, said he believes there are five steps all organizations should take as they put contracts out to tender.

Specification writing demands familiarity with all aspects of the construction process, which can be a challenge. Bouncing from one project to the next and coordinating with numerous project managers, architects, engineers, building owners and product suppliers may not leave time for properly vetting each and every contractor involved in a given project. This being the case, whenever possible, industry professionals are called on for reinforcement through quality assurance requirements.

It is the responsibility of any consultant contracted to design any structure for a private or public client, to ensure specifications are written in such a manner as to allow for multiple bidders. These specifications must also ensure clients are receiving the best value for their money.

Quality assurance (QA) demands much more attention than it typically receives. The absence of proper quality assurance standards creates vulnerabilities that could be disastrous.

Putting a project out to tender in the open marketplace without proper QA requirements leaves the bidding process wide open to any bidder willing to submit a price – meaning the work could go to less-than-competent or fly-by-night contractors.

Specifiers rely on various procedures to avoid such project pitfalls. For example, there is often an expectation that product manufacturers will have lists of contractors who are certified to install the given product.

This is not a foolproof method, though, as the product supplier may not actually have a certification training program and/or suggested installers may not actually be certified.

Similarly, a call for project references should confirm whether the installer has done similar work in the past, but prospective clients still take the risk that favourable reviews represent only a minority of opinions.

Vetting contractors through reputable industry organizations that have positioned themselves as industry watchdogs, like the Ontario Industrial Roofing Contractors Association (OIRCA), for example, gives more assurance that contractors meet rigorous expectations for professionalism. In order to gain membership status, contractors will have to prove their qualifications. This can also involve regular performance audits and processes for disciplining or expelling members who fall out of good standing.

Writing specifications to pre-qualify contractors on public projects can be generally challenging. Ontario’s procurement policy (the Broader Public Sector Procurement Directive) compels vendors to provide evidence of their qualifications.

An association membership can be a valuable credential in that process. When public funding is required, contractor scrutiny should be exhaustive.

Mark Clemmensen, RSW, B.Arch Sc., LEED AP is a Specifications Writer with AECOM Canada Ltd. The preceding article is adapted from Ontario Roofing News, Summer 2016. For more information, see the website at www.ontarioroofing.com

www.REMInetwork.com | September 2016 23

riskmanagement First, the organization needs to confirm that the service it wants to obtain will, in fact, provide the desired solution. For example, Brown said, if a condominium has a leaking roof, the corporation should determine the root cause of the problem to avoid repeatedly patching holes if the real culprit is a pest infestation.

Next, with the correct specifications in hand, the organization can conduct the process, which involves establishing what the outcome should look like, including whether low cost or top quality is a priority for a particular project.

After the organization sets its expectations, it can let proponents clarify the scope of the job as well as requirements and standards.

Then, the corporation can compare the potential contractors based on the information it has received, whether face to face, through an e-auction or request for proposals (RFP).

As a final step, organizations should close out the process by providing feedback to the unsuccessful proponents.

“One of the things that tends to happen is, we find a contractor that we really like and keep going back to them, and that doesn’t make them a bad comparison, but it makes it very diff icult to demonst rate that the process was fair and there was nothing else going on,” Brown explained. “So

that conclusion process would help us encourage others to participate.”

A common pitfall is when organizations fail to follow a process for work that starts out minor but becomes major, which is why Brown suggested scaling these standards to t he ci rcumst a nces, whet her t he condominium corporation comprises six or 600 units. What circumstances ought to trigger a competitive process depends on both the availability of suppliers – how many experts are qualified to complete the work – and the size of the contract in relation to the corporation’s overall expenses.

To ensure the process is truly competitive, he suggests the corporation should consider inviting players from outside its immediate market to bid on work when possible. In the event that bid-rigging is occurring, and the same three to five contractors consistently respond to the corporation’s call for tenders, one newcomer can upset the dynamics – although anti-competitive practices tend to be difficult to uncover in real time.

“It’s easy to see once someone proves corruption and forensic diagnostics are applied to the financials of the different organizations,” said Brown. “It’s a challenge to see when you’re looking at bids.”

WHISTLEBLOWER PROGRAMS RECOMMENDED Of course, the best-case scenario would be to prevent bid-rigging and conspiracy from

occurring. The next-best option would be to detect fraud as soon as possible.

That’s why David Malamed, a Forensic Accounting Partner with Grant Thornton’s specialist advisory services practice, advised all companies that work on construction projects should have whistleblower programs in place. It’s th rough whistleblowers that roughly half of these schemes come to light.

“A common example is: There are three main contractors, each contractor would have a conversation with each other, saying, ‘This is the time for me to win, so I’m going to be the most competitive,’ and you can almost do a round robin,” said Malamed.

He attributed the pervasiveness of construction fraud, as described in a 2013 Grant Thornton white paper on the subject, to a lack of consistently applied policies and procedures. Condominium corporations also have a role to play in adhering to and documenting procedures each step of the way.

For example, said Malamed, if he was reviewing how a snow-clearing contract was awarded, he would expect to find a file with information on the cor poration’s requirements, such as amount of salt, time of service and years of experience. He would also expect that file to contain information on how the RFP was issued, who sat on the bid-review committee and a report card-

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riskmanagement style evaluation cross-referencing the corporation’s requirements with each competitor’s qualifications.

Proper procedure would dictate that more than one person sat on the bid-review committee, and that none of its members had a vested interest – business or personal – in the decision. As a measure of internal control, the forensic accounting partner further recommended having an individual who did not sit on the bid-review committee follow up to confirm that the successful proponent was in fact used for the work.

There are a number of red flags for bidrigging. One is the hiring of unsuccessful proponents as subcontractors. Another is related parties and common ownership, where companies appear to be independent but either have familial or other connections to each other or to an individual within the condominium community. Plus, there are unusual bidding patterns.

“If the maximum price is going to be $250,000 and people’s bids are coming in at $249,000 – and that $250,000 cap was not stated – I’d be interested to know how they came so close to that number,” Malamed offered by way of example. Since recovery through the courts may be cost-prohibitive, he advised that condominium corporations should have fidelity insurance, which covers an organization for losses stemming from the dishonest acts of a specified person.

INVESTIGATION OUTCOMES The Competition Act gives victims the right to sue for the recovery of damages attributed to bid-rigging. Such actions, which can be expensive and time-consuming, typically, although not necessarily, follow criminal convictions, which themselves can be timeconsuming to obtain, said Szentesi.

Competition Bureau investigations alone can run anywhere from two to upwards of five years. If the independent law enforcement agency finds evidence that the Competition Act has been contravened, its enforcement actions will eventually be made public.

In 2016 to date, the bureau has announced an $18,000 fine for a Quebec company for participating in a sewer services cartel; a $140,000 fine for a Quebec company and its president for participating in a residential construction bid-rigging scheme; as well as a $13-million fine for a Japanese auto parts company for participating in a bid-rigging conspiracy.

Warner commented that Canada’s class-action bar, which is entrepreneurial and well-funded, will likely follow the bureau’s latest investigation with interest.

Specifically, those firms will be watching to see if a number of condominium corporations was victimized at the hands of a large company.

But, he added, “I have been involved in

cases where the bureau says it’s investigating and it goes nowhere.”

Me a nwh i le, a s c o n d o m i n iu m corporations await further news in the bureau’s inquiry, Ontario’s Ministry of Government and Consumer Services is drafting the regulations that will crystallize the specifics of Condominium Act reforms passed last year. Changes to the consumerprotection legislation include a new provision for following a procurement process for certain contracts.

The regulations are expected to set out a requirement for sealed bids, but the full details are not yet known. For now, the onus is on the individual condominium corporation to set its own contract-tendering standards, such as adopting safeguards to protect itself from becoming a victim of fraud.

“There’s no magic bullet to make sure that doesn’t happen,” said Szentesi, “but between knowledge of bid-rigging, common strategies to violate the law and how to strengthen tender and bid processes, there’s a lot that boards and other procurement agencies can do to reduce the risk that they’re getting gamed or they’re subject to illegal bidding.” zz Michelle Ervin is Editor of the REMI Network publication, CondoBusiness. The preceding article is reprinted from www.REMInetwork.com.

and in restoring order afterward.

riskmanagement

CANADA GAUGES TERRORISM RISKS Intention, Capability and Opportunity Weighed in Threat Assessment “CANADA IS FUNDAMENTALLY a safe and peaceful nation, but we are not naive about the security issues that dominate the world’s attention," Minister of Public Safety and Emergency Preparedness Ralph Goodale observes in his introduction to a recently released national report on terrorist threats. The following excerpt explains how the national threat level is determined and monitored, and outlines some issues of public concern that Canada's counterterrorism experts are tracking – Editor.

26 Canadian Property Management | Part of the REMI Network

riskmanagement

THE NATIONAL TERRORISM Threat Level for Canada is used to ensure a consistent understanding across the government of the general terrorism threat to Canada. The threat level serves as a tool for government officials, including those in law enforcement agencies, to ident i f y r isk s a nd vulnerabilities from threats and, in turn, determine appropriate responses to prevent or mitigate a violent act of terrorism.

As of August 2016, the National Terrorism Threat Level for Canada was medium, meaning a violent act of terrorism could occur in Canada. This is midway in the five-point scale, which ranges from very low, when a terrorist incident is considered highly unlikely, to critical, when the threat is considered highly likely and could occur imminently.

The Integrated Terrorism Assessment Centre (ITAC) is an independent, expert federal body responsible for assessing terrorism threats to Canada. ITAC constantly examines the terrorism threat environment, relying on information and intel l igence f rom Ca nad ia n a nd international security partners. ITAC provides objective, exper t recommendations about the threat level.

Responsibility for approving the threat level rests with the Director of CSIS. The threat level is determined by several factors. These include past trends and current intelligence on the known intentions and capabilities of terrorist entities and the opportunities they have to conduct attacks. Both quantitative and qualitative analyses are used.

I n for mat ion use d to determine threat levels may often be incomplete.

Regardless of the threat level, a violent act of terrorism may occur with little or no warning.

Canada’s threat levels do not require specif ic responses from the public.

Rather, threat levels help law enforcement and government agencies and private sector stakeholders to identify risks and vulnerabilities from threats a nd , i n t u r n , d et er m i ne

appropriate responses to prevent or mitigate a violent act of terrorism.

An important factor in determining the threat level is intention – whether a terrorist entity has a specific intention to target Canada, Canadians or Canadian interests. Some entities may have no specific interest in Canada, while others may aspire to attack, and still others may have a specific intention to attack.

The capability of a terrorist entity is a second important factor. Variables used to assess capability include an entity’s known abilities and its access to training or weapons. Some entities may aspire to attack Canadians but have no capability to do so, while others have the capability but no intention to attack.

A terrorist entity with the intention and capability to attack Canada still requires the opportunity to do so. Geography, logistical hurdles or counterterrorism efforts may limit opportunities. Some entities may have the opportunity to attack, but lack the intention or capability.

TECHNOLOGY & CHEMICAL AGENTS Digital technologies and electronic communications have transformed Canadian society and facilitated online commerce and trade, among other benefits. Advances in technology have also help e d t o s e cu r e C a n a d a’s information technology systems and networks. T h is in tur n en ha nces cybersecurity, privacy and public safety.

However, terrorists use these same technologies and communications platforms to spread propaganda and facilitate activities such as recruitment, fundraising and planning attacks. For exa mple, Da esh le a der sh ip uses online communications in its general calls for action, and Syr ia-based members are actively providing online guidance and direction to would-be attackers in the West.

Technology has increased the speed and ease with which plots can move from conception to execution. Instead of needing lengthy planning and travel for face-to-face meetings, terrorists from around the world can quickly share and ref i ne at t ack pla ns on l i ne. T he decentralization of attack planning has made it harder for security agencies to detect plots in time to stop them.

The growing use of encryption was brought to public attention during investigations into recent terrorist attacks outside Canada. Encryption technology helps protect the privacy of Canadians but also creates new ba r r iers in law en forcement a nd national security investigations. The Government intends to work with C a n a d i a n s , i n d u s t r y, o t h e r k ey stakeholders and the international community to address these privacy and security concerns.

In Iraq and Syria, Daesh has adapted chemical agents – specifically chlorine and a crude form of indigenouslyproduced mustard gas – for use in weapons. It has used chemical weapons against both Iraqi Security Forces and Kurdish fighters on several occasions since September 2014. In part, this has occurred because the territorial gains of Daesh have given the organization access to expertise, materials and a permissive operating environment.

In 2015, Daesh also made propaganda statements calling for attacks against the West. Several times it referred to using improvised explosives, poisons and commercially available toxic industrial chemicals.

INCIDENT DATABASE Terrorism is a complex problem involving many fluid elements, including the per petrators and their tactics. In December 2013, TSAS developed the Canadian Incident Database (CIDB).

The database is available to the public and describes terrorism and violent extremism events with a Canadian connection.

The database includes incidents outside Canada involving Canadian perpetrators, targets or victims. The database covers more than 1,800 terrorism and violent extremism events between 1960 and 2015. It provides unclassified information that can be used to identify patterns and trends. This will help improve the understanding of terrorism and extremist violence relating to Canada. zz The complete text of The 2016 Public Report on the Terrorist Threat to Canada can be found on the government of Canada's website at www.publicsafety.gc.ca. www.REMInetwork.com | September 2016 27

riskmanagement

INFORMATION SECURITY Cyber-Adversaries Launch Barrage of Breaches

By James Scott and Drew Spaniel CYBERSECURITY is a fundamental component of the overall security of every organization in possession of valuable information. Due to the plague of APTs (advanced persistent threats), malware, ransomware and other malicious initiatives by invisible adversaries, few C-level executive positions are as critical as the Chief Information Security Officer (CISO).

As a result of the constant barrage of breaches over the past five years, a growing number of organizations have created this role within their organizational structure.

CISOs have the difficult position of finding the harmony between not impeding business operations, while implementing risk informed security strategies that protect the important information assets and accesses of their organization.

Though cybersecurity implementation times are decreasing due to virtual infrastructure and simultaneous systems, some solutions can take days to months to implement. The process may be longer when the acquisition process is included.

CISOs need the foresight to implement solutions before problems arise. The pressure on CISOs mainly derives from relentless cyber-adversaries, from an overabundance of information and vendor solutions, and from communication difficulties within the organization.

According to a CB Insights report, between 2010 and 2015, investors funded approximately 1,200 private cybersecurity start-ups with more than USD $7.3 billion.

Aside from a rapid increase in venture funds, the vendor market has bloated due to the availability and affordability of cloud architecture. This allowed for cybersecurity start-ups that promised to solve every problem imaginable or that created new problems to solve.

Vendor attempts to offer silver bullet solutions undermine the community at large and can poison the vendor-customer relationship. The culture promoting these

inadequate solutions distracts CISOs, technical personnel and solution developers from the risks and threats in the threat landscape, and it distracts them from designing the right solutions to address the market needs. Reliable vendor solutions solve an actual market problem instead of a hypothetical or market derived problem.

DEVICE DILEMMAS The CISO must be cognizant of emerging technologies, the roles they could play in the organization and the threats that they introduce into the operating environment.

Many organizations still have not addressed the threats posed to them by user-owned and operated mobile devices.

For example, the advent of BYOD (bring your own device) meant that organizations were more efficient because employee devices were more mobile and more current, but it also meant that they were more vulnerable to internal and external threats to the network. It is difficult for native IT and security teams to detect and manage all of the potential mobile devices because personnel feel disenfranchised by their attempts.

In some organizations, key leaders, such as the executive board are the main violators of BYOD policy. Adopting a vendor solution to BYOD introduces an objective and efficient option for the CISO because it is devoid of internal organizational bias and because it maintains accountability.

Similarly, the Internet of Things (IoT) poses a threat to every organization.

Monitoring or preventing the communication between mobile and native devices can consume a significant amount of the CISO' and security team's attention. Vendor solutions that secure IoT devices and that securely monitor or regulate communication to those devices can improve the organization.

Ultimately, the organization needs to prevent the loss of data due to internal and external threats. Data loss prevention (DLP) services are implemented to prevent the

28 Canadian Property Management | Part of the REMI Network

extraction of confidential information, to ensure the appropriate reporting in the event of an incident, and to appropriately monitor the infrastructure and associated people for attempts against the system.

Small organizations that lack an information security team and massive organizations where the team struggles to monitor all personnel are best served by adopting a vendor DLP solution. The DLP solution should be in addition to data encryption solutions that are used to protect sensitive and mission critical data. The CISO must ensure that the solution adequately addresses all attack vectors.

To ensure the integrity of systems owned or operated by the organization, the CISO may promote application and system testing solutions. These services, such as penetration testing, help to identify vulnerabilities in the organizational infrastructure before adversaries breach the system.

The services can also be used to detect and remove attackersâ&#x20AC;&#x2122; footholds on the network.

Vendor services range in their sophistication, regularity and cost. CISOs should select solutions that meet the needs of the organization, seeking confirmation of reliability and confidentiality.

CLOUD SOLUTIONS Cloud computing enables an organization to reduce costs by virtualizing physical devices and eliminating redundant positions. Often Chief Information Officers (CIOs) and executive boards are in favour of these external solutions due to the perceived efficiency and savings. The CISO must ensure that cloud architecture and virtual tools are adopted according to the security needs of the organization, from reliable vendors.

Vendors should be held accountable with comprehensive service level agreements.

Appropriate security measures should be in place on the vendor side and their operations should be transparent to the organization.

riskmanagement CISOs value dashboards and tools that allow them to monitor vendor operations and the safety of the organization’s data in the cloud. However, these tools can lead to information overload if the monitoring criteria are not properly chosen. Dashboards must be regularly reconfigured as the organization’s values change or as the organization grows.

The CISO should base the choice of a cloud security solution on the capabilities of the entire security platform and its interactions with other services instead of on the efficiency of a single security feature. Long-term decisions can be made by researching how quickly new features are sent to market and how much those features disrupt the market.

Cloud solutions should be compliant with the constraints of the organization and be securely available on-demand.

When possible, cloud services and cloud security solutions should be automatically or easily configurable to the needs of the organization. Feasible solutions must be able to be integrated into existing infrastructure and they should depend on an accessible or open API (application programming interface).

CALCULATING ROI The return on investment (ROI) of security solutions can be equated to the fiscal component of the impact that the organization would assume if an adversary exploited the vulnerability that the solution addresses. The CISO could begin to calculate the ROI by averaging the paid ransom demands or downtime costs (if the system was restored from backup) as well as the reputational harm caused by a ransomware attack according to the publicity, charity and other costs assumed to repair the organization’s reputation. If the attack has an impact on turnover or talent acquisition rates, then those associated costs may also be considered. Any fines, breach notification costs and other expenditures should be included. Other factors may be considered, depending on the sector and the organization.

The risk assessment should also have predicted the likelihood of each cascading impact. The probability of the impact should be multiplied by each associated outcome.

For example, if an attack has a 10% likelihood in resulting in $10 million in reputational harm, then the product would be $1 million.

The CISO should then take the aggregate of the probable potential impacts and multiply it by the probability that the

organization will suffer an attack that the solution could prevent, within the lifetime of the solution. This number is the assumed cost that the organization faces if it does not adopt a solution.

If the aggregate cost of the solution is equal to or lesser than the assumed impact, then the organization should adopt the solution because it has a positive or net zero ROI. Some organizations may even adopt negative ROI solutions if they are cautious, value public good more than the profit line, or if they expect aggressive changes in the threat landscape.

According to the Economist Intelligence Unit, proactive CISO-led strategies can cut the success rate of cyber-breaches by more than 50%, hacking successes by 60% and ransomware infections by 47%. A well informed CISO can improve the engagement of the C-Suite and improve the cyber posture of the organization. zz James Scott is Senior Fellow and Drew Spaniel is a Researcher with the Institute for Critical Infrastructure Technology. The preceding article is excerpted from their paper, CISO Solution Fatigue, Overcoming the Challenges of Cybersecurity Solution Overload. For more information, see the website at http://icitech.org.

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www.REMInetwork.com | September 2016 29

security

SMARTPHONES REPLACE WALKIE-TALKIES Cloud-based Options for Communication Networks

By Magnus Hedberg PROFESSIONAL AND coordinated criminal operations across disciplines and geographical borders are driving demand for advanced security services.

This calls for more intense surveillance and security and a resulting global security market estimated at USD $86 billion. Europol's Serious and Organized Crime Assessment Report cites “growing complexity of attacks” for the upward spike in costs.

This occurs as the security industry finds itself in a consolidation phase, adapting new technologies with a strong focus on digital services and Security as a Service (SaaS).

Intense competition in the industry is also squeezing profits, forcing security companies to focus on more logistically efficient solutions, cost savings and smarter and safer interactions between security staff.

Interconnection between guards on patrol and security control centres is an important factor for safe and efficient security monitoring, particularly in large areas such as shopping malls, hotels, airports, event venues, logistics centres, etc. Most security staff around the world still uses traditional two-way radios (walkie-talkies) with a momentary button to switch from voice reception mode to transmit mode.

However, building radio networks, programming and providing two-way radios is complicated, time-consuming and incompatible with the industry's low margins.

Smaller security companies may struggle with the rapid evolution of technology, which makes investment in capital-intensive systems a more uncertain exercise.

Push-to-talk (PTT) over cellular phones offers a potential cost-effective alternative.

The service enables subscribers to use their phones as walkie-talkies with unlimited range over existing mobile networks.

The cloud-based solution allows secure communication directly through the users’ smartphones and tablets/laptops. It uses existing mobile networks, delivering clearer sound than walkie-talkies.

An administrator can easily control the number of users, PTT groups (known as channels when using walkie-talkies) and user access. Cloud-based PTT services can be rolled out to companies in hours, and can be easily integrated with existing communication radio systems via technology-based smartphones. Offering flexibility to control who receives panic alarms and the routing of voice communication, PTT reaches across borders, globally and also to users at sea and in aircrafts.

30 Canadian Property Management | Part of the REMI Network

PTT provides companies with opportunities to share information and resources in cost-effective ways. For example, an integrated panic alarm can replace separate personal alarms for staff members.

Text-based com munication via smartphones adds further traceability and clarity to PTT. Automated machine-tomachine (M2M) communications is also gaining popularity as a supplement to PTT – for example, the airline industry employs it for status updates on boarding and refuelling completed in aircraft turnarounds. Security staff can use status messages when they arrive at a destination, enter a specific area, complete a task, etc. to provide a real-time progress report for their team and the dispatch at the security control centre.

Beyond security, instant group communications can be effective in industries such as aviation, construction/infrastructure, energy and retail. The cost-efficient, scalable and flexible approach makes sense whenever people need to be linked together on a project site or from several diverse locations. zz Magnus Hedberg is CEO of GroupTalk, a provider of enterprise push-to-talk (PTT) group voice communications services. For more information, see the website at www.grouptalk.com.

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