Canadian businesses today are scrambling to keep up with a rapidly evolving risk landscape resulting from the COVID-19 pandemic. In the latest instalment of IBC Talk, Severio Pacini, vice president of risk control at CNA, and Matthew Adair, risk control consultant, discuss the key considerations that will help business leaders manage disruptive incidents — regardless of how, when or where they occur.
Listen now: Establishing strategic business resilience
“The risk landscape for Canada’s businesses… changed really quickly in the wake of the COVID crisis,” said Pacini. “And you know, it continues to evolve every day, as we hear and read the newspapers and see on TV, as we try to get back to some normalcy of business.”
Business leaders across the country were forced to react early to public health policies involving lockdowns, while simultaneously developing proactive strategies to address the evolving risks. Pacini noted that some were more prepared than others, but the increase in strategic business resiliency across the board remains unquestionable. In regard to understanding key supply chain vulnerabilities, Adair added that Canadian businesses were highly proactive and did especially well in the manufacturing, technology and life sciences industries.
“These industries may have global supply chains subject to significant natural hazard disruptions and high-tech or difficult to produce raw materials and components,” said Adair. “In these cases, sourcing for key equipment, ingredients and parts can be very challenging, and sometimes secondary suppliers simply don’t exist. When it comes to high value machinery, a manufacturer may not be able to justify having redundancy because their volume with customers simply doesn’t support it and the upfront costs are high.”
Supply chain challenges remain at the forefront for small and large business owners today. Business leaders who decreased inventories during the pandemic will continue to face considerable supply barriers as they compete to meet the spikes in demand for products and services in the coming weeks and years.
“Extended lead times, delayed deliveries and increased freight costs — all of that [is] expected to continue due to bottlenecks at major cargo ports. Truck driver shortages [have] been going on for a number of years (not just aggravated by the pandemic), and equipment shortages … we’re seeing these exact scenarios playing out today,” said Pacini. “Businesses should be asking themselves, ‘How quickly can we find a new supplier?’ ‘Are there any high-value, foreign, unique, or obsolete pieces of equipment used in production that have long lead times to replace?’ and ‘Are there any regulatory requirements that need to be met prior to restoring the operation in event of a business disruption?’”
Another key resiliency consideration involves a more strategic approach to business insurance coverage. Adair explained how insurance is a vital component of any effective business resilience program.
“An established business resilience strategy for a company’s operation should allow an organization to better design insurance coverage that directly supports the successful implementation of [their] response, recovery and restart plans following a disruption,” said Adair. “For example, business interruption coverage, or BI coverage, is an essential element to enable financial resilience. … Another example is equipment breakdown insurance, which can also provide coverage for physical damage, repair or replacement, and associated business income loss from mechanical machinery breakdown, based on the policy terms and conditions, of course.”
Find out more about CNA’s broad portfolio of market-leading risk management solutions for businesses here.
