When things go wrong at work, you could face two types of consequences: immediate challenges and long-term repercussions. Unfortunately, business interruption risks – those factors that force you to put your operations and revenue stream on hold – can be easily overlooked.
In their 2021 Risk Barometer report, Allianz pinpoints business interruption as the most important business risk, followed by pandemic outbreak and cyber incidents. The report highlights some key causes that any business owner should keep in mind, and while some of these may come as no surprise, other risks are newer on the scene and tend to affect a wide variety of businesses.
What exactly is business interruption? Find out more about this crucial coverage here.
In fact, you don’t need to have a huge brick-and-mortar operation to feel the pinch (although a fire or flood could do more damage to a larger space and stock). In many cases, small businesses can suffer just as much when they’re forced to close their doors while they recover from a setback. Here are five key causes of interruption to Canadian businesses, plus a business impact analysis template with all the factors to consider in a smart business continuity strategy.
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This is a more traditional business interruption scenario, but one that continues to worry business owners. In fact, according to the Allianz report, 16 per cent of Canadian businesses fear fire and explosion more than other potential disruptions to their business.
Not all businesses will share the same level of risk when it comes to fire and explosion; the nature of your operations can determine whether or not this scenario is likely to unfold. Do you work with combustible dust, flammable liquids, complex machinery, or electrical hazards? If so, fire and explosion may be a sizable risk for your business.
Cyber incidents are one of the top concerns for business owners around the globe, and 37 per cent of Canadian business owners said that a damaging cyber event is a top fear when it comes to business risk.
It’s not too surprising that more businesses than ever are concerned about cyber risk, considering how many attacks have made news headlines in recent years. As supply chain management and industrial controls become more automated, cloud infrastructure becomes the norm, and interconnectivity spreads, any type of business operation could be interrupted by a cyber attack.
Know your risks before you build your business continuity strategy. Download our business impact analysis template to get acquainted with your unique business interruption risks!
41 per cent of Canadian business owners expressed concerns about health and workplace issues, as well as restrictions, closures, and disruptions due to the pandemic.
One of the lessons business owners have learned, is that extreme business interruption events are not just theoretical, but a real possibility.
“Businesses have seen the consequences of the pandemic – the loss of revenue and disruption to production and supply chains – which has resulted in heightened awareness of the potential for losses from both traditional physical sources of business interruption and non-physical damage triggers. The pandemic has shown that business interruption risk is not isolated to a geography or sector, and that it can be overarching and span different geographies, markets and customers,” says Philip Beblo, Global Practice Group Leader Utilities & Services, IT Communication at AGCS.
More extreme weather, including floods, hail, and wildfires in recent years are putting a lot of business owners on edge – which is no surprise, given that Allianz reported around $80 billion in global insured losses in 2020, which is up more than 40% from 2019. For businesses, more natural disasters could mean more losses that shut down operations for uncomfortably long stretches.
And it gets worse. As globalization continues, natural disasters can bring even more risk of business interruption: a flood in one region could have a direct impact on the supply chain for a business in another region, and in the worst cases, it could bring those business operations to a halt.
Regulatory or legal changes
Globalization has changed trade dynamics in other ways, too. Uncertain political landscapes, coupled with new rules and legal changes, can shake up the way your company does business with international parties. In some cases, that can force a change in strategy; in others, it could prevent your business from growing in the ways you were hoping.
Administration changes led to an unpredictable economy in 2017, and as uncertainty surrounding trade pacts continues, sudden problems could pop up for certain businesses, particularly in the manufacturing sector.
Anyone who works with complex equipment or machinery knows how much depends on a functioning system. When one crucial piece of equipment is lost or broken, you’re not only faced with repair or replacement costs – you could be left scrambling to fulfil orders, relocate to another facility, and convince unhappy clients to stick around while you recover.
Manufacturers’ insurance may be able to help you recover if your business operations come to a halt unexpectedly.
Know your risks and plan ahead with our template
Every business is different, and it can be difficult to uncover all the risks to your operations. Our impact analysis template is a great place to begin, but we have other great resources to help you build a business continuity strategy, emergency action plan, and more.
If you could use some help getting started, turn to the professionals – our Risk Services specialists have expertise in dozens of industries! Learn more about how risk management can help you mitigate business interruption risks and their consequences.