Business interruption (BI), including supply chain disruption, is this year’s Number 1 risk for Canadian companies, says Allianz’s 2025 Risk Barometer.
And Canada’s not alone. Globally, the insurer notes BI is also the top risk in the Asia Pacific region generally, and by country in Austria, China, Hong Kong, Indonesia, Malaysia, Mexico, Netherlands, Philippines, Singapore, South Korea and Sweden.
Overall, business interruption ranks second for companies worldwide, meaning it’s appeared among the top two risks over the past 10 years. Companies most fear business interruptions driven by cyber incidents and natural catastrophes, followed by fire, machinery breakdown and supplier failure, the insurer notes.
Supply chain resilience is being hit as companies drive toward technological advancement and efficiency. Further, failures or disruptions at any point in a supply chain now tend to be more severe and don’t leave much time for companies to respond, says Michael Bruch, global head of risk advisory services at Allianz Commercial.
“While many organizations strive to implement comprehensive strategies for disaster recovery and business continuity, there remains a concern that contingency plans themselves may be overly dependent on technology, highlighting the need for diverse and adaptable solutions,” he adds.
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NatCats’ impacts
Not surprisingly, natural catastrophes driven by storms, floods, wildfires, extreme weather and possibly earthquakes are the Number 2 business risk for Canadian companies.
“Natural catastrophes in Canada have resulted in the most expensive year on record for insurers, with losses exceeding US$6 billion,” Allianz’s report notes. “The Calgary hailstorm in August, with hailstones exceeding 7 cm, became the country’s costliest insured [severe convective storm] event on record, with $2.2 billion. Extreme rainfall caused by Hurricane Debby’s remnants led to considerable flooding in Ontario and Montreal, which resulted in insured losses above $1.9 billion.”
The report also notes the Toronto flooding event and Jasper wildfire, both of which happened in July.
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Cyber incidents take Number 3 on Canada’s business risk list, including cybercrime, network and service disruptions, data breaches, malware and ransomware. And operational, physical and financial risks resulting from climate change are Number 4.
There is a tie for fifth place in this year’s Risk Barometer report between changes in legislation and regulation – which includes protectionism, environmental, social and governance, sustainability requirements and other new directives – and a shortage of skilled workers, which is impacting numerous sectors including tech and home building.
Interestingly, Allianz says it has an eye on insolvencies in household-oriented business sectors. “When it comes to sectors, construction and real estate have recorded noticeable jumps in business insolvencies in 2024, as evidenced by the latest available figures,” the report reads. Canada is among a list of countries being watched that also includes Sweden, Netherlands, France, Germany, Italy, Japan and the U.S.
Canada’s Top 10 business risks round out with fire and explosion at Number 7, Macroeconomic developments like inflation, deflation, monetary policy changes and austerity programs at Number 8. And tied for Number 9, critical infrastructure blackouts such as power failures and aging bridges, dams and railroad tracks; and new technologies, which includes impacts of artificial intelligence and other connected or autonomous machines.
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Feature image by iStock/alexsl
