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As accountability in corporate leadership continues to broaden across a wider range of issues, legal challenges remain a significant concern for businesses. In Sovereign Insurance&rsquo;s annual Q&amp;A series, <a href="https://www.sovereigninsurance.ca/our-team/toronto/eduard-lecker" title="" target="">Eduard Lecker</a>, Senior Underwriter, &nbsp;Management Liability, shares his insights on key loss trends and exposures in this area in 2024 and what organizations should be aware of in 2025 as new risks take shape.&nbsp;
What were the key loss trends and exposures you saw in 2024?
The key loss trend in 2024 remained consistent with the previous year: an increasing number of claims focused on environmental, social and governance (ESG).1 These legal actions&mdash;which can be initiated by consumers, shareholders and investors, and environmental advocacy groups&mdash;are typically centred on allegations related to greenwashing and climate change. For example, a company might make misleading claims about its environmental strategies or fail to disclose climate-related risks, which can expose them to significant legal and financial risks.&nbsp;
What are some emerging risks to keep an eye out for in 2025?&nbsp;
One emerging risk is claims related to artificial intelligence (AI). As more companies use AI, there&rsquo;s a growing risk of misrepresentation about what these systems can do. Some tech companies may overstate AI&rsquo;s capabilities. Companies using AI for hiring, financial reporting, or ESG decision-making are especially vulnerable, as they could face legal action if the technology doesn&rsquo;t live up to expectations. For example, AI systems that filter job applicants can have unintentional biases, and companies may claim that AI can replace human decision-making&mdash;when, in reality, there&rsquo;s still a lot of human oversight involved. If AI tools generate inaccurate reports&mdash;like pulling up the wrong numbers&mdash;and those figures influence critical decision-making, legal claims can arise. Similarly, when companies use AI to track their environmental impact, inaccurate data could also expose them to risk.
There are a couple of emerging issues in the U.S. to keep an eye on, as developments there often follow suit in Canada. Under the new U.S. &nbsp;leadership, there are rollbacks in climate policies and diversity, equity and inclusion initiatives. For example, the U.S. has pulled out of the Paris climate agreement, which could prompt companies to scale back their own sustainability effects. This could expose them to legal challenges from groups that feel misled by these changes.&nbsp;
With the current trade war between the U.S. and Canada, there&rsquo;s growing sentiment around &lsquo;Buy Canadian,&rdquo; but labelling what qualifies as Canadian-made is complicated. For instance, a product might contain American apples processed in Canada but is labelled as being made in Canada. If a product doesn&rsquo;t meet legal definitions of terms like &lsquo;Product of Canada&rsquo; or &lsquo;Made in Canada,&rsquo; this could lead to claims. &nbsp; For example, if incorrect labels lead to misrepresentation of a product or its origin, it could lead to claims of misrepresentation or breach of contract.&nbsp;
We&rsquo;re also keeping an eye on U.S. cases in which directors and officers are facing personal liability in lawsuits. Holding directors personally liable for their decisions could lead to more legal challenges and impact decision-making at the top level. &nbsp;
How can organizations mitigate these risks?&nbsp;
For AI, it really comes down to transparency. Don&rsquo;t overstate, misrepresent, or overpromise what AI can do, and understand the legal consequences of any claims you make. It&rsquo;s similar to how companies should approach environmental strategies&mdash;be transparent about your actions and results. Like the saying goes, &lsquo;understate, overperform.&rsquo;
For the developments that we&rsquo;re watching in the U.S., it&rsquo;s difficult to say how to mitigate against them because there are still a lot of unknowns. When it comes to labelling Canadian products, it&rsquo;s important to be aware of the legal requirements. Transparency is key here, too&mdash;if there&rsquo;s any uncertainty, you can direct customers to your website where you outline your process, which some companies are starting to do. If you&rsquo;re not misrepresenting your actions, you&rsquo;re far less likely to face legal issues.&nbsp;
Sources 1 Jan. 31, 2025: Moodys, &ldquo;D&amp;O series &ndash; Evolving risks in the boardroom: A new era of D&amp;O liability &ndash; Part 3&rdquo; 1 Aug. 22, 2024: McCarthy Tetrault &ldquo;Greenwashing and AI Washing: Emerging Trends in D&amp;O Claims Across North America&rdquo; 1 Oct. 22, 2024: &ldquo;The Insurer: Greenhushing &ndash; An emerging D&amp;O liability?&rdquo;

Loss trends and emerging risks in 2025: Management liability 

Managing Risk

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As businesses continue to rely on essential machinery and equipment, the risk of damage and breakdowns remains a significant concern. These incidents can disrupt operations, lead to costly repairs and result in extended downtime. &nbsp; As part of our annual Q&amp;A series, <a href="https://www.sovereigninsurance.ca/our-team/calgary/razvan-ionescu">Razvan Ionescu</a>, Manager, Equipment Breakdown Underwriting, Large Accounts &amp; Operations at Sovereign Insurance, shares insights into key loss trends from 2024 and emerging risks that organizations should be aware of in 2025.&nbsp; What were the key loss trends and exposures you saw in 2024? If we were to look for trends in the equipment breakdown insurance industry, the most notable phases would be the heating season and the cooling season. In colder months when heating systems are activated, for example, boilers that are used for heating buildings might experience breakdowns. This happens because they haven&rsquo;t been used for an extended period and when they&rsquo;re restarted, can fail due to improper shutdowns or lack of maintenance during the off-season. Similarly, with cooling systems, a lack of ongoing use and maintenance can lead to mechanical failures. In addition to seasonal concerns, we continue to see typical breakdowns of production machinery, transformers, and other equipment that businesses rely on day in and day out. This can be caused by issues like aging equipment, wear and tear, and lack of preventative maintenance.&nbsp; What are some emerging risks to keep an eye out for in 2025? One emerging risk I&rsquo;ve seen is a shift from traditional generators to electric or lithium-ion batteries as backup power sources or to reduce the on-peak service use. While generators have been in use for a long time, some businesses are turning to electric batteries. This shift brings new risks, especially when it comes to maintenance and exposure. With traditional generators, you typically need a mechanical specialist on-site to keep things running smoothly. But with electric batteries, the high-capacity maintenance is usually handled by the OEM (original equipment manufacturer), who monitors the battery&rsquo;s performance in various ways, for instance, through remote monitoring. So, the whole approach to upkeep is different. A big concern here is fire risks. Batteries are prone to something called thermal runaway, which is a chemical reaction inside the battery that causes it to overheat and potentially catch fire. This can happen without the presence of oxygen, which makes it more dangerous than other types of fires. If a thermal runaway event happens, it could damage the entire battery system, which might cost a company hundreds of thousands to replace. And of course, there are significant human safety risks with any type of fire. In contrast, if something in a backup generator breaks down, it&rsquo;s typically a mechanical issue that can be fixed &ndash; similar to how you would repair a car. How can organizations mitigate these risks? To keep machinery and equipment running smoothly and safely, the best approach is to follow the OEM recommendations. For example, if the OEM advises performing thermal scanning on batteries on a regular basis, it&rsquo;s important to stick to that schedule. There&rsquo;s a well-known saying: &ldquo;If you don&rsquo;t schedule maintenance, your equipment will schedule it for you.&rdquo; By regularly scheduling maintenance, you can ensure it&rsquo;s completed on time and reduce the chances of delays in sourcing spare parts. When it comes to batteries, there are also specific best practices to follow around proper use, storage, transportation, and disposal. Organizations should familiarize themselves with these guidelines to minimize risks. For any type of equipment, preventative maintenance is essential. Although insurance policies are designed to cover profit losses during downtime, the key is to maintain uninterrupted service to customers.

Loss trends and emerging risks in 2025: Equipment breakdown

From distracted driving on busy highways to the explosive rise of quick e-commerce deliveries on city streets, the landscape of risk is rapidly shifting for the transportation sector. As part of Sovereign&rsquo;s 2025 Q&amp;A series, Kevin Dutchak, Senior Risk Specialist, Commercial Auto, provides insights into the key loss trends of 2024 and offers practical advice on how businesses can mitigate risks to protect their operations this year and beyond.
<h4>What were the loss trends and key exposures you saw in 2024?</h4>
Distracted driving is still a big issue and it&rsquo;s becoming even more significant with the growing use of technology in the industry. Technology can be great, but it can also be distracting. For example, some drivers try to map out routes on the fly, and in the e-commerce delivery space, drivers are constantly looking at addresses along residential streets. These kinds of distractions may lead to a lot of loss incidents.
Additionally, traffic seems to get busier all the time. During rush hour and with ongoing construction, it&rsquo;s like that old video game, Frogger, with drivers switching lanes back and forth, speeding, suddenly cutting in front of other drivers, and trying to get ahead of everyone. Statistics show that road travel continues to be the riskiest form of transportation, from property loss and minor fender benders to serious injuries and fatalities. When you add distracted driving and traffic congestion into the mix, it can increase the risk significantly.
Driver controls are another ongoing issue. For example, there are cases where drivers took short cuts to try to save time. But that winding two-lane highway with limited passing lanes, for instance, can put you more at risk, especially in winter conditions.
<h4>What emerging risks should businesses be aware of in 2025?</h4>
Climate change and severe weather events are becoming more of an issue for the transportation sector. We&rsquo;re seeing more frequent storms and extreme temperatures, which can cause delays and put drivers in unsafe situations.
While cybercrime is becoming more of a risk in many industries, I don&rsquo;t see much of that in trucking yet. But as more companies integrate artificial intelligence into their operations, they should ask what they&rsquo;re doing to protect themselves so people can&rsquo;t hack into that and use it to their advantage.
<h4>How can organizations effectively mitigate these risks?</h4>
When it comes to distracted driving, the key to mitigation is the constant reminder that driving is your job 100% of the time. You can&rsquo;t afford to compartmentalize your thinking&mdash;you have to concentrate on the road because it&rsquo;s such a fluid situation.
Sound defensive driving practices are also critical. I&rsquo;m surprised at the number of fleets that don&rsquo;t provide that training, assuming that because their drivers have a licence, they don&rsquo;t need it. But despite our best efforts, we can all become complacent, distracted and forgetful. So, companies need to get the focus back on training. It&rsquo;s an investment in your drivers that can pay dividends.
In terms of driver controls, trip management programs can mitigate risks. Managers should have discussions with drivers to outline expectations: Here is when we expect you to be on the road, this is the route we expect you to take, here&rsquo;s when we expect you to stop. When there is an interruption to the plan due to situations such as poor road and weather conditions, traffic delays on route and driver fatigue, protocols should be in place for drivers to communicate with dispatch and operations staff to keep them advised, which in turn can be communicated to their clients. The safety of drivers and other road users is always the top priority. Telematics can also be used to monitor drivers&rsquo; routes and ensure drivers are following the proper procedures, such as speed limits and safety protocols.
If a driver does have a significant loss event, it&rsquo;s critical for companies to take effective corrective action, such as retraining or a driver interview. Often, a lack of corrective action can lead to further and more significant losses.
For weather events, fleet operations should focus on forecasting models, if they aren&rsquo;t doing so already. When severe weather conditions are imminent, companies should consider shutting down operations in the affected areas; all drivers should find the first safe place to park, advise dispatch of their status and stay in place until the shutdown order is lifted.

Loss trends and emerging risks in 2025: Transportation 

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Sovereign - Managing Risk

Even the most advanced technologies and significant investments in cybersecurity can&rsquo;t fully protect businesses from a major cyber risk: their own employees.
In the 2024 Voice of the CISO report by cybersecurity firm Proofpoint, 74% of survey respondents said human error is their most significant risk when it comes to cyberattacks. This finding is echoed in a 2023 study by Verizon, which found that human error is indeed a factor in 74% of total breaches, despite ongoing efforts by enterprises to strengthen their defences and increase training in cybersecurity.1,2
Employee training can fall short for several reasons: distractions in the workplace, a lack of awareness about the critical role employees play as the first line of defence, and the challenge of staying on top of the evolving threat landscape, to name a few.3
Small- and medium-sized businesses (SMBs) face an even bigger challenge: They might not have the resources to conduct employee training in the first place, relying instead on third parties to support their security measures. This can be a costly mistake.
Despite the perception that cybercriminals only target large corporations, certain types of attacks, such as social engineering, are more frequently aimed at small businesses. These companies are typically not financially prepared for an attack, and it could even put them out of business. According to IBM&rsquo;s 2023 Cost of a Data Breach Report, the average cost of a data breach on organizations with fewer than 500 employees is US$3.31 million.4,5
<h4>Simple steps for employee training in SMBs</h4>
While it may not be feasible for SMBs to regularly conduct extensive employee training sessions, mitigation strategies don&rsquo;t have to be complex. There are simple and cost-effective measures that can be easily understood and adopted, making it possible for SMBs to strengthen their cybersecurity efforts.
Make employees aware of the critical role they play: First and foremost, employees must understand the &ldquo;why.&rdquo; According to a 2023 survey by the Insurance Bureau of Canada, many employees underestimate the role they play in being cyber safe at work and the impact of potential cyberattacks on their employer. Nearly half (47%) believe technology plays more of a role in protecting their workplace from cyber threats than they do; 30% believe their employer is solely responsible for protecting the organization from cyber threats; and 31% do not believe cyber criminals would target them.6
Whether it&rsquo;s in the form of interactive workshops or channels like emails and posters, employers should regularly communicate security awareness to staff. When they are aware of the importance of cybersecurity and their role in safeguarding their company, employees are more likely to take this issue seriously and report suspicious activities.7,8
Educate employees about common and evolving threats: Educating staff about different types of cyberattack, how to spot them, and how to respond to them is crucial for protecting against breaches. Recognizing phishing tactics, for example, includes identifying suspicious emails, unusual requests, and fake websites. Staff should also be clear on who to contact if they encounter a suspicious message. In a social engineering attack, cybercriminals may mimic the writing style of a CEO to trick an employee into sending money. In this case, businesses should have dual controls in place, meaning a second person should verify the request.9,10
As part of awareness training, SMBs can take advantage of free online resources, such as webinars, toolkits, articles and e-learning courses from cybersecurity organizations like the <a href="https://www.cyber.gc.ca/en/small-medium-businesses" target="_blank" rel="noopener">Canadian Centre for Cyber Security</a> and the <a href="https://www.unb.ca/cic/webinars.html" target="_blank" rel="noopener">Canadian Institute for Cybersecurity</a>, the Government of Canada&rsquo;s <a href="https://www.getcybersafe.gc.ca/en/resources/get-cyber-safe-guide-small-businesses#C7" target="_blank" rel="noopener">Get Cyber Safe</a> platform, as well as cybersecurity firms.
Other ways to keep employees informed are through newsletters with tips, news about recent threats and best practices; informal lunch-and-learn lessons where employees can share news and insights; and a database or guidebook where employees can stay up to date on the latest threats and find answers to their cybersecurity questions.11,12,13
Nurture a cybersecurity culture: A strong culture of cybersecurity &ndash; meaning it&rsquo;s entrenched in the company&rsquo;s values &ndash; is essential. SMBs should lead by example, showing the company is committed to cybersecurity at all levels. This makes employees more likely to follow suit. Since employee engagement is a key element of building a cybersecurity culture, business leaders should also recognize and reward employees who demonstrate good practices.14
Another way to build a strong cybersecurity culture is to speak employees&rsquo; language. Experts advise communicating in plain language, avoiding technical jargon and focusing on practical advice employees can use daily. For example, rather than using the term &ldquo;multi-factor authentication,&rdquo; they can explain there is an extra layer of security when logging in.15
Additionally, fostering open communication and a &ldquo;no-blame culture&rdquo; is essential. Employees should feel comfortable asking questions, reporting suspicious emails and voicing concerns without fear of reprisal.16
While SMBs may face resource constraints, the cost of not investing in cybersecurity &ndash; even in the simplest of ways &ndash; is far greater. By prioritizing employee awareness and creating a strong cybersecurity culture, businesses can turn their weakest link into their strongest line of defence.
&nbsp;
&nbsp;
Sources
1 Proofpoint, &ldquo;<a href="https://www.proofpoint.com/us/newsroom/press-releases/proofpoints-2024-voice-ciso-report-reveals-three-quarters-cisos-identify" target="_blank" rel="noopener">Proofpoint&rsquo;s 2024 Voice of the CISO Report Reveals that Three-Quarters of CISOs Identify Human Error as Leading Cybersecurity Risk</a>,&rdquo; May 21, 2024
2 Verizon, &ldquo;<a href="https://www.verizon.com/about/news/2023-data-breach-investigations-report" target="_blank" rel="noopener">2023 Data Breach Investigations Report: frequency and cost of social engineering attacks skyrocket</a>,&rdquo; June 6, 2023
3 Skillsoft, &ldquo;<a href="https://www.skillsoft.com/blog/why-security-training-fails-and-how-to-fix-it" target="_blank" rel="noopener">Why Security Training Fails And How To Fix It</a>,&rdquo; June 3, 2022
4 &nbsp;StrongDM, &ldquo;<a href="https://www.strongdm.com/blog/small-business-cyber-security-statistics" target="_blank" rel="noopener">35 Alarming Small Business Cybersecurity Statistics for 2024</a>,&rdquo; Feb. 1, 2024
5 Business.com, &ldquo;<a href="https://www.business.com/articles/smb-budget-for-cybersecurity/" target="_blank" rel="noopener">The Cost of Cybersecurity and How to Budget for It</a>,&rdquo; Aug. 13, 2024
6&nbsp; Insurance Bureau of Canada, &ldquo;<a href="https://www.ibc.ca/news-insights/in-focus/ibcs-research-suggests-business-owners-and-employees-could-be-putting-their-organizations-at-risk" target="_blank" rel="noopener">Are you cyber savvy? IBC&rsquo;s research suggests business owners and employees could be putting their organizations at risk</a>,&rdquo; Nov. 6, 2023
7 LinkedIn, &ldquo;<a href="https://www.linkedin.com/advice/1/you-need-communicate-security-awareness-your-ob68f" target="_blank" rel="noopener">You need to communicate security awareness to your employees. What are some effective ways?</a>&rdquo;
8 FasterCapital, &ldquo;<a href="https://fastercapital.com/content/Train-your-employees-on-cybersecurity.html#The-Importance-of-Cybersecurity-Training-for-Employees" target="_blank" rel="noopener">Train your employees on cybersecurity</a>,&rdquo; June. 4, 2024
9 Pure IT, &ldquo;<a href="https://www.pureit.ca/five-ways-small-businesses-can-stop-a-cyber-breach-from-ever-happening/" target="_blank" rel="noopener">Five Ways Small Businesses Can Stop A Cyber Breach From Ever Happening</a>&rdquo;
10 Teal, &ldquo;<a href="https://tealtech.com/blog/cybersecurity-awareness-training-for-employees/" target="_blank" rel="noopener">5 Ways to Promote Employee Cybersecurity Awareness Training</a>,&rdquo; July 25, 2024
11 Mitnick Security, &ldquo;<a href="https://www.mitnicksecurity.com/blog/remote-security-tips" target="_blank" rel="noopener">Remote Security: 5 Cyber Security Tips for Employees and Businesses</a>,&rdquo; Feb. 22, 2024
12 The AME Group, &ldquo;<a href="https://www.theamegroup.com/headlines/engage-employees-to-increase-cyber-safety/" target="_blank" rel="noopener">Engage Employees To Increase Cyber Safety</a>&rdquo;
13 &nbsp;Compyl, &ldquo;<a href="https://compyl.com/blog/cybersecurity-awareness-training-for-small-business/" target="_blank" rel="noopener">Getting Started With Cyber Security Awareness Training for Small Business</a>,&rdquo; Sept. 5, 2024
14 Babylon Solutions, &ldquo;<a href="https://www.babylonsolutions.com/cybersecurity-guide-for-small-businesses-how-to-protect-your-company/" target="_blank" rel="noopener">Cybersecurity Guide for Small Businesses: How to Protect Your Company</a>,&rdquo; Oct. 7, 2024
15 SMB Solutions: &ldquo;<a href="https://www.smbsolutions.com.au/10-easy-steps-to-building-a-culture-of-cybersecurity-awareness/" target="_blank" rel="noopener">10 Easy Steps to Building a Culture of Cybersecurity Awareness</a>,&rdquo; Aug. 23, 2024
16 Tripwire, &ldquo;<a href="https://www.tripwire.com/state-of-security/cultivating-cybersecurity-culture" target="_blank" rel="noopener">Cultivating a Cybersecurity Culture</a>,&rdquo; Jan. 23, 2024

Empowering employees to help prevent cyberattacks

Directors and officers wear many hats, but one that&rsquo;s exceedingly important is their role in identifying and mitigating cyber risks. According to PwC&rsquo;s 2024 Global Digital Trust Insights survey (conducted May-June 2023), mitigating cyber risk is now second on the list of prioritized risks for business and tech executives, as the scale and cost of cyberattacks grow. The proportion of businesses that have experienced a data breach of more than US$1 million has increased significantly year over year &ndash; from 27% in the previous year&rsquo;s report to 36%.1
Alongside growing cybers risks, businesses are contending with a changing regulatory environment that puts directors and officers under heightened scrutiny. Bill C-26, which includes the Critical Cyber Systems Protection Act (CCSPA), proposes new cybersecurity requirements designed to protect services and systems deemed vital to Canada&rsquo;s security or public safety, including banking, telecommunications, energy and transportation. Directors and officers can be held personally liable if they &ldquo;directed, authorized, assented to, acquiesced in, or participated in the commission of a violation.&rdquo; Any violation can result in a hefty monetary penalty &ndash; up to $1 million in the case of an individual and up to $15 million for designated operators. Contravention of specific provisions of CCSPA can also result in imprisonment.2,3
While the proposed regulations start with Canada&rsquo;s vital industries, directors and officers in any business who fail to implement adequate cybersecurity measures or respond appropriately to breaches could open the door to claims against them.
<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/why-directors-and-officers-could-face-cyber-breach-lawsuits" title="" target="">See: Why directors and officers could face cyber&nbsp;breach lawsuits</a>
&nbsp;With increased liability risks &ndash; along with the damage cyberattacks can inflict on a company &ndash; cybersecurity governance is more critical than ever. Described as &ldquo;the backbone of an organization&rsquo;s defense against cyber threats,&rdquo; cybersecurity governance refers to the policies, processes and practices organizations implement to manage and protect their information systems and digital assets. Directors and officers must take the lead, establishing a structured framework to address risks, compliance requirements and the changing threat landscape.4
As with other governance matters, the starting point is in the boardroom. In a Harvard Business Review article, experts observe that cybersecurity discussions in board meetings typically cover threats and the actions or technologies the company is implementing to protect against them. Instead, the conversation needs to focus on resilience. Board members should focus on the biggest risks to cyber resilience (from financial to technological to organizational to supply chain) and how to quickly respond and recover should that situation happen.5,6
The makeup of the board of directors itself may need to evolve. A lack of depth in cyber expertise can prevent directors from leading meaningful discussions about risks, which ultimately impacts governance and accountability.7
Organizations are advised to either educate their board members in cybersecurity and risk management or look to recruit directors with relevant experience in this field. As one risk consultant advises: &ldquo;When assessing candidates, ensure they can communicate multifaceted cyber issues at a board level, as this will be critical to holding the entire management team accountable for the cyber strategy&hellip;. The board&rsquo;s cyber experts should also ensure that all cyber-related materials and resources are regularly updated so that all members can stay informed about the organization&rsquo;s cyber strategy.&rdquo;8
For many organizations, the evolving risk environment may also necessitate a new role in the C-suite: Chief Information Security Officer (CISO). According to a Harvard Law School article, having a dedicated CISO, which is separate and distinct from the Chief Information Officer (CIO) role, has become increasingly important. &ldquo;The office of the CISO may have traditionally been seen as an IT function, but the far-reaching implications of a cybersecurity incident mean that cybersecurity must be considered a business risk,&rdquo; the article states. With oversight responsibility increasingly at the board level, &ldquo;the modern CISO needs to be able to communicate dynamic and fast-changing cyber risks in terms that resonate with both the business and the board.&rdquo; 9
Just as companies evaluate their cybersecurity measures to see where they&rsquo;re protected and where gaps exist, they should assess their insurance coverage. Directors &amp; Officers (D&amp;O) insurance can provide individuals protection against personality liability in the event of a cyber-related incident. What&rsquo;s more, having proper D&amp;O coverage can help attract and retain directors and officers, knowing they can confidently lead and make decisions without fear of personal financial loss.10
With comprehensive coverage and governance in place, organizations can stay one step ahead of the evolving cyber and regulatory landscape, ensuring their business and their people are protected.
&nbsp;
Sources 
1 PwC, &ldquo;<a href="https://www.pwc.com/us/en/services/consulting/cybersecurity-risk-regulatory/library/global-digital-trust-insights.html">The C-suite playbook: Putting security at the epicenter of innovation</a>&rdquo;
2 Government of Canada, &ldquo;<a href="https://www.justice.gc.ca/eng/csj-sjc/pl/charter-charte/c26_1.html">Bill C-26: An Act respecting cyber security, amending the Telecommunications Act and making consequential amendments to other Acts</a>&rdquo; 
3 Cox &amp; Palmer, &ldquo;<a href="https://coxandpalmerlaw.com/publication/bill-c-26-new-cyber-security-obligations-for-canadian-businesses-vital-to-national-security-and-public-safety/" title="" target="">Bill C-26: New Cyber Security Obligations for Canadian Businesses Vital to National Security and Public Safety</a>,&rdquo; Sept. 12, 2022
4 Safety Culture, &ldquo;<a href="https://safetyculture.com/topics/cyber-security/cybersecurity-governance/">Understanding the Essence of Cybersecurity Governance to Organizations</a>,&rdquo; Feb. 25, 2024
5 Harvard Business Review, &ldquo;<a href="https://hbr.org/2023/05/boards-are-having-the-wrong-conversations-about-cybersecurity">Boards Are Having the Wrong Conversations About Cybersecurity</a>,&rdquo; May 2, 2023
6 MIT News, &ldquo;<a href="https://news.mit.edu/2024/now-corporate-boards-have-responsibility-cybersecurity-too-0429">Now corporate boards have responsibility for cybersecurity, too</a>,&rdquo; April 29, 2024
7 CSO, &ldquo;<a href="https://www.csoonline.com/article/656596/how-much-cybersecurity-expertise-does-a-board-need.html">How much cybersecurity expertise does a board need?</a>&rdquo; Oct. 23, 2023
8 Directors &amp; Boards, &ldquo;<a href="https://www.directorsandboards.com/board-issues/cyber-risk/strengthening-cybersecurity-governance-amid-new-regulations/">Strengthening Cybersecurity Governance Amid New Regulations</a>,&rdquo; Nov. 10, 2023
9 Harvard Law School Forum on Corporate Governance, &ldquo;<a href="https://corpgov.law.harvard.edu/2022/11/10/building-effective-cybersecurity-governance/">Building Effective Cybersecurity Governance</a>,&rdquo; Nov. 10, 2022
10 HRO, &ldquo;<a href="https://hroresources.com/do-insurance-its-role-in-recruiting-independent-board-members/">D&amp;O Insurance: Its Role in Recruiting Independent Board Members</a>&rdquo;

Cybersecurity starts at the top – with strong governance 

It&rsquo;s virtually impossible for business leaders to not know about the dangers of cyberattacks, as breaches regularly make headlines and cybersecurity earns a more prominent spot, on corporate agendas. Where companies may be in the dark, however, is the growing risk of personal liability for directors and officers following a cybersecurity breach.
While there are legal protections for directors and officers that shield or limit their liability, avenues do exist in Canada to pursue individuals for data breaches. With the ever-growing risk of cyberattacks, it becomes more likely a company&rsquo;s financial performance and reputation will be affected. 1,2&nbsp; And that could put directors and officers in the hot seat.
Why might an individual be at risk as opposed to a company? <a href="https://www.pallettvalo.com/whats-trending/not-just-a-cyber-attack-evolving-issues-for-director-and-officer-liability-in-the-us-and-canada/">As one Canadian law firm explains</a>: &ldquo;If a director or officer is seen to have failed in their duties to prevent a cyberattack, or more egregiously, has misrepresented the company&rsquo;s position with regard to them, this could realistically lead to harm for a corporation which, in turn, opens boards and senior management up to a host of regulatory (e.g. commission enforcement) or secondary market (i.e. shareholder class action) liability.&rdquo;
On the regulatory front, for example, <a href="https://www.dataguidance.com/notes/canada-data-protection-overview">data protection laws</a> require companies to protect sensitive data and maintain certain cybersecurity standards. Failure to comply could result in monetary penalties and legal action against directors and officers. In addition, failure to comply with federal disclosure requirements following a breach could lead to secondary market liability.3,4
Legal cases are already happening in the United States, where there are increasing attempts to hold directors and officers liable for the impacts of cyber incidents on companies and their shareholders. For example, in 2023, the <a href="https://www.sec.gov/news/press-release/2023-227">U.S. Securities and Exchange Commission</a> (SEC) charged software company SolarWinds and its Chief Information Security Officer (CISO) for fraud and internal control failures relating to a cyberattack. This marked the first time the SEC brought charges against a company&rsquo;s CISO in connection with a cyberattack. While there have yet to be cybersecurity-related lawsuits against directors and officers in Canada, legal observers say that may not be the case forever, as laws may &ldquo;continue to expand fiduciary and standard of care duties for senior management and boards.&rdquo;5,6
Preventing cyberattacks from becoming legal issues 
With the ever-changing legal and cyber landscape, the pressure is on directors and officers to ensure their organization is protected from cyber threats, while ensuring they (as individuals) are protected.
To mitigate risks, directors and officers must first familiarize themselves with all regulatory guidelines to protect their company from cyberattacks, as well as potential legal and financial consequences of cyberattacks.7,8
Aided by ongoing training and education, directors and officers are encouraged have a comprehensive understanding of evolving cybersecurity trends and threats and how their company would respond. Since many boards have knowledge gaps when it comes to cyber, companies can consider recruiting directors with professional cybersecurity and risk management experience.9,10
As threats evolve, directors and officers are also advised to regularly update their organizations&rsquo; risk management frameworks to identify and manage new risks. In addition, they should review and practise their incident response plans (well-documented plans that cover how to detect, respond to, and recover from cyber incidents).11
Another important piece in the cyber-protection puzzle is Directors &amp; Officers (D&amp;O) insurance. This type of insurance is designed to help protect individuals from personal losses stemming from lawsuits alleging a breach of duty. Sovereign Secure Pro, for example, offers comprehensive, competitive coverage designed to support the new and emerging risks to Canadian businesses. As cyber and legal risks become more complex, being prepared is an organization&rsquo;s best defence.
&nbsp;
Sources
1,5 Pallett Valo LLP, &ldquo;<a href="https://www.pallettvalo.com/whats-trending/not-just-a-cyber-attack-evolving-issues-for-director-and-officer-liability-in-the-us-and-canada/">Not Just a Cyber Attack: Evolving Issues for Director and Officer Liability in the US and Canada</a>,&rdquo; April 2024
2,11 Torys, &ldquo;<a href="https://www.torys.com/en/our-latest-thinking/publications/2022/04/director-and-officer-liability-for-cybersecurity-breaches-in-canada-and-the-us">Director and officer liability for cybersecurity breaches in Canada and the U.S.</a>,&rdquo; Spring 2022
3 Baker McKenzie, &ldquo;<a href="https://resourcehub.bakermckenzie.com/en/resources/global-data-privacy-and-cybersecurity-handbook/north-america/canada/topics/penalties-for-non-compliance">Penalties for Non-compliance</a>,&rdquo; Dec. 26, 2023
4,7 Canadian Insurance Law, &ldquo;<a href="https://www.canadainsurancelaw.com/cyber-insurance-and-do-liability">Cyber Insurance and D&amp;O Liability</a>,&rdquo; Sept. 3, 2019
6,8 Forbes, &ldquo;<a href="https://www.forbes.com/sites/betsyatkins/2023/11/16/sec-charges-ciso-with-fraud-in-landmark-cybersecurity-case">SEC Charges CISO With Fraud In Landmark Cybersecurity Case</a>,&rdquo; Nov. 16, 2023
9 Business Day, &ldquo;<a href="https://businessday.ng/opinion/article/the-new-face-of-corporate-governance-why-boards-need-to-prioritize-cybersecurity-training-1/">The new face of Corporate Governance: Why boards need to prioritize cybersecurity training</a>,&rdquo; Oct. 25, 2023
10&nbsp; CSO: &ldquo;<a href="https://www.csoonline.com/article/656596/how-much-cybersecurity-expertise-does-a-board-need.html">How much cybersecurity expertise does a board need?</a>&rdquo; Oct. 25, 2023

Why directors and officers could face cyber breach lawsuits 

Technology and Cyber,Management Liability

Construction projects have a lot of moving parts, and unexpected challenges are a given. Unfortunately, equipment losses from theft, fire, and transportation and operations are common challenges &mdash;and costly ones. While there is no sure-fire way to guard against equipment loss and damage, construction business owners and contractors can take action to prevent and mitigate risks.&nbsp; Theft Construction equipment is an attractive target to criminals, who can make huge profits selling stolen machines and tools. Job sites can be especially vulnerable to theft and vandalism if they&rsquo;re at a remote location or lack the proper security measures.&nbsp; Mitigating losses starts with administrative controls. Management must be committed to theft prevention and communicate a &ldquo;zero tolerance&rdquo; philosophy, so employees take their efforts seriously. Implementing theft prevention policies and unannounced site inspections can help control losses, particularly from &ldquo;inside jobs&rdquo;, which unfortunately do happen from time to time. On site, there are a wide range of security measures that can be implemented. Premises security can include fencing and gates to minimize access points, lighting, and motion-sensitive video cameras and alarms that are actively monitored.&nbsp; Prevention measures can also be taken with the equipment itself. For example, beyond antitheft marking and tracking devices, small and medium-sized equipment can be protected by using &ldquo;smart&rdquo; keys, locking wheels and trailer hitches. For larger equipment, hidden kill switches, fuel shutoffs, track locks and alarm systems can be installed. Fire Vehicles such as dump trucks and bulldozers have complex mechanical systems and operate under intense conditions, resulting in an above average fire risk. Similarly, off-road vehicles accumulate debris on the frame and under the chassis, creating a greater risk of ignition as they use combustible liquids such as fuel, oil, grease, and hydraulic fluid.1&nbsp;It&rsquo;s likely some or all of these vehicles will find themselves at your construction site, so fire risks and prevention should be top of mind. Fire prevention starts with identifying where fires are most likely to occur, delivering ongoing training, and communicating the plan to everyone on the work site.3 Minimizing the risk of fire involves conducting regular inspections and maintenance to your equipment&rsquo;s high-risk areas, such as the electrical system, engine blocks, turbochargers, and braking systems. It&rsquo;s also important not to overlook the basics, such as routine cleaning of debris.3 In order to fuel your equipment safely, one solution is to engage an outside vendor to provide fuel services. If that&rsquo;s not possible, some considerations for contractors include:
<ul>
<li>locating the onsite fuel supply away from ignition sources</li>
<li>grounding and bonding procedures when handling and dispensing fuel&nbsp;</li>
<li>establishing procedures for immediate cleanup of fuel spills </li>
</ul>
In addition, training all employees in the use of fire extinguishers, which must be available on each piece of equipment, is a must.4
Transportation &amp; Operations Construction equipment can be damaged not only when it&rsquo;s in operation, but also while being transported between jobs and storage sites. Whether in operation or transport, employees should be thoroughly trained on company policies, safety rules and emergency procedures.5 While there are plenty of hauling companies with the right equipment and expertise for successful transport, construction business owners should keep a few key considerations top of mind in order to transport heavy equipment safely:
<ul>
<li>check the owner&rsquo;s manual for specific instructions on how it should be transported</li>
<li>map the most linear route ahead of time, keeping an eye out for road widths, overhead passes and bridges</li>
<li>immobilize equipment wheel components</li>
<li>outfit vehicles with proper banners, signs and lights.6 </li>
</ul>
On the equipment operations side, preventing damage from overturns starts with hiring drivers with a high level of knowledge, skill and experience. In addition, there are specific operating procedures that should be observed, such as load considerations; the environment, including soil conditions and ground irregularities; clearances, including keeping loads low when overhead obstructions are present; and slopes, including avoiding side hill travel.7 While there are no guarantees in any construction project, implementing controls can reduce the likelihood of equipment losses. In addition, construction business owners and contractors should ensure there are no gaps in their insurance coverage, so they can protect their business and keep their construction projects running smoothing.&nbsp; Sources 1 &ldquo;Best practices for construction equipment from fire damage,&rdquo; California Builder and Engineer,&rdquo; Jan. 25 2018.&nbsp; 2 &ldquo;<a href="https://www.surrey.ca/sites/default/files/media/documents/CWCConstructionFireSafetyManual.pdf" target="_blank" rel="noopener">Construction site fire safety: A guide for construction of large buildings,</a>&rdquo; Canadian Wood Council and University of the Fraser Valley, April 2015 3,4,6 Contactors&rsquo; Equipment Guide to Loss Prevention, Inland Marine Underwriters Association, 1998.&nbsp; 5 &ldquo;<a href="https://www.equipmentjournal.com/on-the-job/transporting-heavy-equipment/" target="_blank" rel="noopener">A how-to for transporting equipment,</a>&rdquo; Equipment Journal, Jan. 19, 2019&nbsp; and &ldquo;<a href="https://thompsontractor.com/about/resources-(1)/safe-heavy-load-transport" target="_blank" rel="noopener">How to safely load and transport equipment,&rdquo; Thompson Tractor Co.</a>

How contractors can avoid equipment losses

While no business is immune to fraud, construction projects create the right environment for all kinds of fraudulent acts to be committed.&nbsp; A key reason is construction projects typically have numerous participants &ndash; including employees, contractors, subcontractors and suppliers &ndash; and a lot of moving parts. In addition, financing and payment systems may lack internal controls, and transparency and communication among all the different parties may be missing.&nbsp; <a href="https://www.sovereigninsurance.ca/our-team/toronto/don-maxwell" target="">Don Maxwell, AVP Commercial Solutions, National Operations</a> at Sovereign Insurance, says insurance brokers need to be aware of common fraud scenarios that can be carried out by both internal and external bad actors on a construction project. Here, he shares five common types of fraud scenarios so brokers can help clients actively manage their risk and exposure &ndash; and protect their bottom lines. And since preventing fraud should be part of a robust risk management plan, Don also offers a few tips on mitigation.&nbsp; False payment applications: False payment applications &ndash; documentation that contractors and subcontractors share during payment &ndash; are said to be the most common type of construction fraud and can happen several ways. Contractors and subcontractors can inflate labour or material costs, bill for unperformed work, or charge improper wage rates or categories. For example, a subcontractor may charge a journeyman rate for work that was done by an apprentice, or bill rental fees for equipment they own.1 Another example is employees falsifying pay applications to cover up personal purchases.2 Prevention Tip: Carry out due diligence background checks on contractors, finding out if they have previously been investigated for fraud. Independently verify the correctness of submitted invoices, for example, and confirm that goods and services were delivered.3&nbsp; Social engineering: Social engineering is a manipulation tactic that can happen in any industry, including construction. With this type of fraud, a request for funds or confidential information (typically by email or phone) is made to look like it&rsquo;s coming from an employee&rsquo;s boss or a company vendor or partner. But the request is actually made by an imposter and when it&rsquo;s discovered, it&rsquo;s often too late.&nbsp; Prevention Tip: Implement appropriate policies for procedures like transferring money, making a payment, or disclosing financial information. Provide employee training on how to identify red flags associated with social engineering, such as fake email addresses.4 Changing lump sum costs to material costs and time: There are a few different billing methods in construction. Lump sum or fixed-price billing determines a single cost for an entire project based on a detailed estimate. Time and materials billing bases the contract price on hourly or daily labour rates and the cost of materials used.5 In a fraud scenario, a contractor or subcontractor will budget expenses in a lump-sum amount, however the equipment is also later billed on a material and time basis.6 Prevention Tip: Monitor the project closely. Before you send out the payments, ensure that you always compare the actual costs to the budget.7 Equipment and materials fraud: In this fraud scheme, equipment and materials aren&rsquo;t what they&rsquo;re said to be. A contractor or subcontractor may commit to using a certain grade or brand of material or equipment, then substitute it with a lower-quality or cheaper one &ndash; and pocket the difference. Another fraudulent practice is to over-order equipment or materials, then move the excess to another job site, meaning the construction company is paying for goods they&rsquo;re not using.8 Prevention Tip: Keep track of all equipment and materials needed, ask for receipts every time equipment and materials are delivered to the site, and get confirmation of the brands being used.9 Theft of non-cash assets: Theft on construction sites is another fraudulent activity to watch out for. Non-cash assets that can be stolen by employees or outside criminals include equipment, supplies, scrap metal, and other materials on the site.10 In addition to the cost of replacing stolen goods, there could be costs to rent equipment in the meantime and lost productivity, with delays potentially resulting in hefty fines. 11 Prevention Tip: Make sure the site is well lit and fenced. Lock up tools and building materials and secure equipment when not in use. Keep a daily inventory log of all materials, tools, equipment and keys to ensure everything is accounted for.12 Depending on the circumstances, a company could have insurance coverage for acts of fraud under Employee Theft in a Commercial Crime coverage. Brokers are encouraged to work with the clients and insurance partners to determine how they can be best protected. In addition to insurance coverage, having strong preventative protocols is key. By properly identifying, managing and monitoring fraudulent activities, construction companies will ensure they&rsquo;re protected.&nbsp;&nbsp; Sources&nbsp; 1,7,8 Levelset, &ldquo;<a href="https://www.levelset.com/blog/construction-fraud/" target="_blank" rel="noopener">Construction Fraud: Common Issues and How to Combat Them</a>,&rdquo; Feb. 20, 2019 2 ResX, PC, &ldquo;<a href="https://www.resxpc.com/Blog/Construction-Blogs/Protect-Your-Construction-Project-from-Contract-Billing-Abuse/" target="_blank" rel="noopener">Protect Your Construction Project From Contract Billing Abuse</a>,&rdquo; Feb. 2021 3 The International Anti-Corruption Resource Center (IACRC), &ldquo;<a href="https://iacrc.org/resources/" target="_blank" rel="noopener">Guide to Combatting Corruption &amp; Fraud in Development Projects</a>&rdquo; 4 StickmanCyber, &ldquo;<a href="https://www.stickmancyber.com/cybersecurity-blog/8-ways-organisations-prevent-social-engineering-attacks" target="_blank" rel="noopener">8 Ways Organisations Prevent Social Engineering Attacks,</a>&rdquo; April 23, 2021 5 Concannon Miller, &ldquo;<a href="https://blog.concannonmiller.com/4thought/common-billing-methods-in-construction-whats-best-for-your-company" target="_blank" rel="noopener">Common Billing Methods in Construction: What&rsquo;s Best for Your Company</a>,&rdquo; Aug. 23, 2022&nbsp; 6,9, 10 Pro Crew Schedule, &ldquo;<a href="https://procrewschedule.com/how-fraud-happens-in-construction-and-ways-to-prevent-it/" target="_blank" rel="noopener">How Fraud Happens in Construction and Ways to Prevent It</a>,&rdquo; Aug. 4, 2021&nbsp; 11,12 ConstructConnect, &ldquo;<a href="https://www.constructconnect.com/blog/five-steps-for-preventing-construction-site-theft" target="_blank" rel="noopener">5 Steps for Preventing Construction Site Theft,</a>&rdquo; Dec. 3, 2021

Construction Fraud: A Primer for Brokers

Building a comprehensive succession plan can be a complex task, but it&rsquo;s vital for construction business owners. A well-designed plan will set the stage for the next generation of leadership and ensure the successful continuation of the firm&rsquo;s operations, stability, and long-term value.&nbsp; While it&rsquo;s important to prepare for the future, it&rsquo;s equally important to consider how a succession plan&mdash;or lack thereof&mdash;can impact the business today. For example, in some markets, contractors are being asked to show evidence of a business continuity plan while tendering public sector projects. That&rsquo;s due, in part, to awareness that the last of the baby boomers will soon reach retirement age, and many of them occupy ownership and leadership positions in the construction trades. Project owners want assurance that any given project will be completely successfully and with minimal disruption.&nbsp; Certainly, this generational shift looms large. According to a 2021 PwC study, half of first-generation Canadian family business owners expect the next generation will be majority shareholders in five years&rsquo; time. With this shift, PwC says succession planning is key. However, only 34% of Canadian family businesses have a robust, documented, and communicated succession plan in place.1&nbsp; In the construction industry, succession planning is always top of mind, but more work needs to be done. A U.S. survey of construction executives by FMI and Construction Financial Management Association (CFMA) found that 30% of respondents said economic slowdown would affect their ownership transfer plan, 50% do not have an ownership transfer plan, and 66% of identified successors won&rsquo;t be ready to take over for another three to five years.2 While planning for the future isn&rsquo;t always high on the to-do list for busy owners, now is the perfect time to start your succession plan. Here are three steps to help you in the process:&nbsp; Start as early as possible Whether your business is sold to a third party or passed on to the next generation, the key is to allow plenty of time and start thinking about the process. This puts you in the driver&rsquo;s seat and allows you to act proactively instead of reactively in the event of unforeseen circumstances.&nbsp; When it comes to choosing a successor, you&rsquo;ll have to decide if you want to pass the business on to a family member, transition it to a company insider, or sell it to an outside buyer. In addition, you&rsquo;ll have to think about your level of involvement in the business (if any) after the transition, so you can structure the transaction accordingly. 3&nbsp; Consult trusted professionals Given the complexity of transferring the business, recognize that you can&rsquo;t go it alone. Succession planning typically requires significant legal and financial help you make the right decisions and implement the best processes to ensure a smooth transition.4 Work closely with a consultant or advisor, accountant, tax specialist, banker, and legal advisor. Your team of trusted professionals can help you develop an effective step-by-process, adequately value the business, and assess and minimize tax implications.&nbsp; Commit to implementing the plan Once you develop a succession plan, allocate time and resources to follow through and implement the plan&mdash;don&rsquo;t just shelve it.&nbsp; If you&rsquo;re passing on the business to a family member or transitioning it to a non-family-member executive, communicate your expectations and start preparing your successor by working closely together. Experts advise having a transition phase of three to five years. This will allow time to transfer knowledge about running the business, as well as prepare key personnel for the change. It&rsquo;s also important to prepare the right legal documents and ensure that strong internal management and accounts systems are in place.5 While making time to develop a succession plan is easier said than done, it&rsquo;s well worth it in the end. By having a strong plan in place, you&rsquo;ll prevent losses to the business today and be assured your company is in good hands in the future.&nbsp;
&nbsp;
&nbsp;
Sources&nbsp; 1 PwC Canada, &ldquo;<a href="https://www.pwc.com/ca/en/private-company/family-business-survey-canadian-insights-2021.html" target="_blank" rel="noopener">Family Business Survey 2021&mdash;Canadian insights</a>&rdquo; 2 FMI, &ldquo;<a href="https://fmicorp.com/uploads/media/FMI_OTMS_Study_2021_FINAL.pdf" target="_blank" rel="noopener">2021 FMI and CFMA Ownership Transfer and Management Succession Industry Survey</a>&rdquo;&nbsp; 3 BDC, &ldquo;<a href="https://www.bdc.ca/en/articles-tools/change-ownership/plan-succession/succession-planning-leadership-transition" target="_blank" rel="noopener">Six steps to effective succession planning</a>&rdquo; 4,5 Business Chief, &ldquo;<a href="https://businesschief.com/leadership-and-strategy/succession-planning-must-start-early-for-family-owned-firms" target="_blank" rel="noopener">Succession planning must start early for family-owned firms</a>,&rdquo; Oct. 8, 2022&nbsp; Additional resources: CCA Conference Seminar Presentation&mdash;March 2016&mdash;Barnes Strategic IR: &ldquo;Preparing Your Business for Sale &amp; What to Expect from the Sale Process&rdquo;&nbsp;&nbsp;
<div>&nbsp;</div>

The value of succession planning for contractors

Cybersecurity continues to be one of the biggest risks &ndash; if not the biggest &ndash; for businesses.1 As part of our second annual Q&amp;A series, Sovereign&rsquo;s <a href="~/our-team/toronto/lynda-david" target="">Lynda David, Senior Underwriter, Technology &amp; Cyber</a>, shares her thoughts on the major cyber loss claims from 2022 and what businesses need to watch out for in 2023.&nbsp; What are the loss trends/key exposures you saw in the past year?&nbsp; &nbsp; Ransomware and business email compromise have been the leading causes of cyber claims over the past year. Ransomware is malicious software (or malware) that blocks a user from accessing their own files or device. Access is only provided if a ransom is paid to the attacker, typically in cryptocurrency. Business email compromise is a sophisticated scam that targets companies through <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/spot-a-phish-protect-your-business" target="">phishing </a>emails that appear to come from trusted sources. In this type of attack, an employee is tricked into revealing sensitive information, opening malicious files, or transferring funds to a cyber criminal who might be posing as a supplier, the company&rsquo;s CEO, or someone from the IT team.&nbsp; The costs associated with these incidents continue to rise. For example, one study found that for Canadian organizations, the average ransom payment demanded is nearly $450,000.2 While no business is immune, the industries most affected are healthcare, financial (including banking, insurance, and other financial institutions) and professional services, which include organizations such as consulting firms, law firms and accounting firms.&nbsp; &nbsp; What are some of the emerging risks to keep an eye out for next year?&nbsp; &nbsp; Internet of Things (IoT) is all around us, with an estimated 43 billion devices connected to the internet in 2023.3 From smart watches to household appliances to home security systems, more and more products are becoming connected to the internet each day, which increases the number of entry points for cyber criminals to infiltrate a network. Organizations need to be aware of these new gateways and protect themselves accordingly. The perpetual concern is, as organizations become more diligent with their controls and protocols, cyber criminals are responding with increased sophistication in their attacks.&nbsp; &nbsp; How can organizations mitigate these risks? &nbsp; Insurers have been enforcing certain mandatory requirements in terms of controls that their Insured must implement prior to obtaining a cyber insurance quote. Multi-factor authentication (MFA) is an example of one control that is quickly becoming an industry standard. When signing into an account, MFA requires the user to provide two or more verification factors, such as a one-time password or code, to prove who they are. While this can sometimes feel like a tedious task, I would compare this to adding a security chain to your front door and a peephole to verify who is actually knocking versus only having a single lock. &nbsp; Finally, one of the most effective ways an organization can be proactive is to provide employee training on privacy and data security, as many breaches are caused by employee error. This training should include random phishing tests throughout the year. With heightened awareness, an organization can better protect their data and help mitigate breaches that have occurred to reduce claims costs. Awareness is key, so spread the word. To learn more about mitigating cyber risks, see:&nbsp;<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/cyber-loss-prevention-how-to-mitigate-cyber-risks-to-your-business" target="">Cyber loss prevention: How to mitigate cyber risks to your business</a> Sources&nbsp; 1 ICAEW, &ldquo;<a href="https://www.icaew.com/insights/viewpoints-on-the-news/2022/oct-2022/businesses-face-perfect-storm-of-risks">Businesses face perfect storm of risks</a>,&rdquo; Oct. 10, 2022&nbsp; 2 Palo Alto Networks, &ldquo;<a href="https://www.paloaltonetworks.ca/resources/research/2021-palo-alto-networks-canada-ransomware-barometer">2021 Palo Alto Networks Canada Ransomware Barometer</a>,&rdquo; Dec. 9, 2021 3 Forbes, &ldquo;<a href="https://www.forbes.com/sites/bernardmarr/2022/11/07/the-top-4-internet-of-things-trends-in-2023/?sh=7c8c30ff2aea">The top 4 internet of things trends in 2023</a>,&rdquo; Nov.7, 2022&nbsp; &nbsp; &nbsp;

Loss trends and emerging risks: Cybersecurity

Being in the construction business has never been easy. Over the decades, contractors have had to navigate economic downturns, labour woes, safety issues, technological disruptions, and even everyday variables like the weather.&nbsp; In today&rsquo;s environment, there&rsquo;s both good news and bad news for commercial contractors and their clients. Post-pandemic, public construction spending has rebounded, and Canada is in the midst of a 12-year, $180 billion infrastructure plan.1&nbsp; According to the latest figures from Statistics Canada, investment in the country&rsquo;s non-residential construction sector increased 2.4% to $5.3 billion in June 2022. Commercial investment advanced 2.7% to $3 billion, led by Ontario (4.1%). In the second quarter of 2022, the total value of investment in building construction rose 3.3% to $62.3 billion &ndash; the third consecutive quarterly increase.2 While spending varies by province, overall it continues to rise. However, many contractors continue to face material cost escalations. In fact, non-residential construction building costs rose 12.5% year-over-year in the first quarter of 2022, according to Statistics Canada. Construction cost increases were the largest in Toronto (+15.6%), Montreal (+13%) and Ottawa (+12.6%).3&nbsp; What&rsquo;s behind the rising costs? As every business is well familiar with, record-high inflation rates and ongoing supply chain disruptions are putting pressure on the bottom line. But there are many other reasons material costs are escalating.&nbsp; Contractors surveyed by Statistics Canada attributed part of the growth in building construction costs to skilled labour shortages and high labour costs. Despite a decline in the number of vacancies in the sector from April to July 2022, the vacancy rate remains high. That has kept upward pressure on wages in the industry. Labour contract renegotiations also contributed to higher labour costs in the third quarter. In addition, higher material costs and limited availability of materials and equipment, particularly concrete, steel, glass, and piping contributed to higher costs. Contractors also noted that fuel prices continue to add upward pressure on construction costs.4 These complex issues aren&rsquo;t going to be resolved anytime soon, so contractors need to take steps to mitigate the effects of cost escalations.&nbsp; One strategy for contractors is to buffer their bids to account for fluctuating costs and build in a higher gross margin. A buffer is essentially a contingency or cushion that helps protect the project from uncertainty.&nbsp; When possible, contractors should push for a cost-escalation clause, which is a provision in a contract that allows for increases in agreed-upon fees, wages, or other payments to account for fluctuations in the costs of raw materials or labour.&nbsp; However, this is easier said than done. Some contractors may be unsuccessful in getting cost-escalation clauses built into contractors, especially on longer-term public projects. Clients may push back because they&rsquo;re seeking certainty on the numbers at the time of the bid.&nbsp; Another strategy, particularly for larger firms that have access to capital, is to buy material in bulk at the beginning of a project to ensure cost certainty. Smaller firms, meanwhile, can leverage the strong relationships they have built with their suppliers and sub-trades, and work with them to ensure cost certainty.&nbsp; In the longer-term, contractors will have to find ways to attract and retain employees beyond wage increases, particularly as a large number of workers are retiring over the next 10 years. Government, industry and organizations have various initiatives that aim to get more women and young people involved in the trades, as well as attract immigrants to build up the labour pool.5,6 It&rsquo;s also critical to have the right insurance coverages in place. This will help contractors project their businesses and keep their projects on track.&nbsp; While the difficulties are many, it&rsquo;s important to keep in mind it&rsquo;s not all doom and gloom. Contractors are known to be resilient and adaptable, and as with past bumps in the road, they will rise to the challenge.
&nbsp;
&nbsp;
 Sources&nbsp; 1 Infrastructure Canada, &ldquo;<a href="https://www.infrastructure.gc.ca/plan/placemat-tableausynthese-eng.html" target="_blank" rel="noopener">Investing in Canada: $180 billion infrastructure plan over 12 years</a>&rdquo;&nbsp; 2 Statistics Canada, &ldquo;<a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220812/dq220812a-eng.htm" target="_blank" rel="noopener">Investment in building construction, June 2022</a>,&rdquo; Aug. 8, 2022 3,4 Statistics Canada, &ldquo;<a href="https://www150.statcan.gc.ca/n1/daily-quotidien/221101/dq221101a-eng.htm" target="_blank" rel="noopener">Building construction price indexes, third quarter 2022</a>,&rdquo; Nov. 1, 2022 5 Canadian Real Estate Wealth, &ldquo;<a href="https://www.canadianrealestatemagazine.ca/news/we-must-lay-groundwork-to-get-more-youth-into-construction-industry-334997.aspx" target="_blank" rel="noopener">We must lay the groundwork to get more youth into construction industry,</a>&rdquo; Jan. 20, 2022&nbsp; 6 Jobsite, &ldquo;<a href="https://www.procore.com/jobsite/canada-making-strides-in-attracting-women-to-construction-but-more-work-is-needed/" target="_blank" rel="noopener">Canada making strides attracting women to construction, but more work is needed,</a>&rdquo; March 2, 2021
&nbsp;

What’s behind soaring material costs and how can contractors cope?

Safety is always job number one when there&rsquo;s work in progress on construction sites and infrastructure projects. However, protecting people, the surrounding environment, and the project itself starts long before you break ground. Prior to starting construction, it&rsquo;s essential to conduct a geotechnical survey.&nbsp; Sovereign&rsquo;s Cheryl Kindopp, Senior Underwriting Specialist, and Joseph Alcaraz, Associate Vice President, Risk Engineering at Sovereign Insurance discuss the basics of geotechnical reports that are musts to know for property owners and developers. They also examine the importance of geotechnical reports, why following through on recommendations is vital, and what insurance providers are on the lookout for.&nbsp; What is a geotechnical report? When proposing a plan for building a new structure or rebuilding an existing structure, a geotechnical investigation will need to be conducted. The investigation allows property owners and developers to determine if the geological elements of the site are suitable for the plans and ensure the project can be safely and successfully constructed.&nbsp; A geotechnical report documents the data and findings from the research and tests conducted by geotechnical engineers during the investigation, including general site conditions, geology, drainage, and ground cover. The report also provides an assessment of subsurface conditions, including soil, rock and water, as well as recommendations for the proposed design and construction.&nbsp; Why is it needed? A geotechnical report is typically needed to obtain a building permit for a construction project, as well as to obtain appropriate insurance coverage. The report is vital to identify potential risks and hazards that can result in structural failures, building degradation, environmental damage, and more.&nbsp; For example, usually every attempt is made to construct shallow foundations&mdash;the cheapest and fastest foundation type. However, if the soil immediately below the footing is weak or compressible, other foundation types need to be considered.&nbsp; &ldquo;Engineers and developers are looking for the fastest, most cost-effective way of building any type of structure,&rdquo; said Joseph. &ldquo;That can cause potential issues because the foundation is obviously what is so important when it comes to construction.&rdquo;&nbsp; If the geotechnical engineer finds that the soil conditions don&rsquo;t meet the structural support requirements, they&rsquo;ll make recommendations on how to remedy the problem.&nbsp; What are insurance providers looking for?&nbsp; &nbsp; Cheryl noted that when she and her team receive an insurance submission, one key question is: Is the geotech report done? Importantly, if it has been done, she&rsquo;ll look to see when it was conducted.&nbsp; &ldquo;A report could be 25 years old, so the question is: Has there been a building on that site since they&rsquo;ve done the report? What is around the site now that wasn&rsquo;t there back then?&rdquo; said Cheryl. &ldquo;So, that is where I start.&rdquo;&nbsp;&nbsp; Even in the case of a rebuild, a geotechnical report conducted 10 years before is likely too old. &ldquo;Chances are, [the new building] is going to be bigger and taller and have other elements covered in the old report that aren&rsquo;t relevant today,&rdquo; said Cheryl.&nbsp; It&rsquo;s advisable to conduct a geotechnical survey shortly before obtaining permits. Cheryl says if a report is more than three to five years old, there would be a need to look into the specifics of the situation to determine if the report is still valid based on the project and site conditions. After understanding the report&rsquo;s timelines, Cheryl would look at the recommendations and how the applicant is going to comply with them. &ldquo;It&rsquo;s not our place to tell them what they have to do, but it is within our right to [determine the risk] based on how they&rsquo;re going to move forward,&rdquo; she said.&nbsp; Both Cheryl and Joseph shared examples of red flags and failures related to geotechnical issues. Cheryl noted that, during construction of the LRT tunnel in Ottawa (not a project she was involved with), a massive sinkhole opened up on Rideau Street, likely from the instability of wet, sandy soil in the area. 1&nbsp;&nbsp; Joseph noted an example of a multi-storey condo building that used a foundation technique called a slurry wall that hadn&rsquo;t been done before in the area. &ldquo;They were unable to control the groundwater and it started seeping into the foundation walls during the course of construction,&rdquo; said Joseph. He added that, when builders and developers plan to use an unusual or uncommon construction method, this could be a red flag on a geotechnical report.&nbsp; With any geotechnical report, Joseph stressed: &ldquo;It&rsquo;s very important for developers and contractors to revisit and comply with the recommendations.&rdquo; Loss control specialists are valuable partners who can help developers understand the importance of a geotechnical report and take steps to complete them. Before breaking ground on any new development or construction project, it&rsquo;s imperative that a geotechnical report is completed.
&nbsp;
Sources
1 <a href="https://www.cbc.ca/news/canada/ottawa/city-of-ottawa-root-cause-report-rideau-sinkhole-1.4054616" target="_blank" rel="noopener">Tunnel work likely loosened sandy soil, causing sinkhole</a>: Report, CBC News, April 5 2017&nbsp;

The importance of geotechnical reports before breaking ground

The uses and benefits of commercial garage doors seem like an open-and-shut case: They give businesses access to their warehouses, vehicles, inventory and more, while being vital for productivity, protection against the elements, and smooth day-to-day operations. However, commercial garages do have a downside: they&rsquo;re a prime target for thieves.&nbsp; As with residential garage doors, commercial garage doors provide an easy entry point into a property, giving thieves the opportunity to steal valuable goods and equipment that can be resold. What&rsquo;s more, acts of theft can often go undetected, since people are constantly bringing goods in and out of warehouses and storage areas, through multiple entrances and exits.1&nbsp; Not having the right security measures in place can be costly for business owners. There are direct losses, including replacement costs for stolen materials, and in many cases, damage to the garage door itself. Additional losses may arise from lost productivity and downtime.&nbsp; While no security measure is guaranteed to deter thieves, it&rsquo;s always a good idea to take stock of what&rsquo;s in place and see if you can make improvements.&nbsp; Here are a few key recommendations to increase your commercial garage security and help keep thieves at bay: 
<h5>Update your opening system with new technology&nbsp;</h5>
Commercial garage door openers may offer burglars an easy way into your facility or business. Opening systems that are outdated (installed before 1999) most likely use fixed codes, which can be easily hacked by burglars using code-cracking devices.2 With fixed codes, hackers can try as many combinations as possible, and eventually, they&rsquo;ll find the right one that opens the door.3 To reduce the risk of being hacked, modern garage door openers use rolling codes. This technology selects a new code from billions of possible combinations each time the system is activated, or on a timed schedule.4 Every time your garage door is opened and closed, the code rotates and the previous one becomes useless. So, if a burglar is trying to gain access, their chances of finding the right code are slim.5&nbsp; Check the manufacturer and model of your commercial garage doors. If you&rsquo;re using older openers, upgrade to a modern system that uses rolling code technology. And while security has gone high-tech, traditional locks add an additional layer of protection and should be used when the business is closed.&nbsp; 
<h5>Limit visibility into your operations</h5>
If thieves can see what&rsquo;s behind closed garage doors, they may be more tempted to steal from your facility. While certain types of businesses like car dealerships use all-glass garage doors that allow for greater visibility and natural light, most commercial businesses have security worries over having windows. If you&rsquo;re in the market for a new garage door, consider adding a window at the top of the door, which would let light in but prevent people from seeing in.6 You can also consider covering your windows, especially after hours. 7&nbsp; Another key to limiting visibility is keeping garage doors closed when they&rsquo;re not in use, as an open door is an open invitation to thieves. Consider adding timers so your garage doors automatically close if there&rsquo;s no activity for a certain period of time.8 
<h5>Keep your commercial garage doors well maintained</h5>
Just like other aspects of your business operation, your garage doors need to be inspected regularly. In warehouses, for example, forklifts can cause damage to garage doors, such as dents and gaps. A garage door that is in disrepair can make it easier for thieves to gain access to your facility.9 And it&rsquo;s not just workplace mishaps that cause damage: Any commercial garage door can experience problems with normal wear-and-tear.&nbsp; &nbsp; Keep your commercial garage doors maintained and in good condition, repairing damaged parts as necessary. In addition, test your opening system to make sure it&rsquo;s functioning properly. A door that doesn&rsquo;t close properly can result in security issues and theft.10 Theft can take a serious toll on your bottom line. By taking these simple steps to secure your garage doors, you can help keep thieves out and your valuable supplies and equipment in.&nbsp; 
Sources&nbsp; 1The Fulfillment Lab, &ldquo;<a href="https://www.thefulfillmentlab.com/blog/warehouse-security">8 Types of Warehouse Security Measures + Tips for Improving Safety</a>&rdquo; 2,5 DistribuDoors, &ldquo;<a href="https://www.distribudoors.com/tips-garage-door-security/">5 Tips for Garage Door Security,</a>&rdquo; April 21, 2022 3,4 Overhead Door, &ldquo;<a href="https://www.overheaddoors.com/blog/protect-your-garage-door-opener-from-hackers/">How To Protect Your Garage Opener From Being Hacked</a>&rdquo; 6 B&amp;M Garage Door, &ldquo;<a href="https://www.bmgaragedoor.com/ca/blog/commercial-garage-door-reflect-who-you-are">The effect of your business&rsquo;s commercial door on the company</a>&rdquo; 7,8 Zumwalt Corporation, &ldquo;<a href="https://www.zumwaltcorporation.com/5-security-tips-for-your-commercial-garage-doors">5 Security Tips For Your Commercial Garage Doors,</a>&rdquo; March 20, 2019&nbsp; 9 Premier Door Corp, &ldquo;<a href="https://premierdoorcorp.com/security-tips-for-your-commercial-garage-door">Security Tips for Your Commercial Garage Door</a>,&rdquo; Aug. 3, 2020 10 Omaha Door &amp; Window, &ldquo;<a href="https://omahadoor.com/blog/the-importance-of-commercial-garage-door-maintenance/">The Importance of Commercial Garage Door Maintenance</a>,&rdquo; June 16, 2015

Anti-theft Tips For Commercial Garage Doors

Most Canadians don&rsquo;t give a second thought to the electricity that runs their homes. Even problems like power outages are merely an inconvenience when they&rsquo;re resolved quickly enough. However, for businesses that need to keep the lights on &ndash; literally and figuratively &ndash; electricity is top of mind, as power disruptions can have devastating impacts.&nbsp; &nbsp; Manufacturers in sectors such as auto, food and beverage, and pharmaceuticals are particularly vulnerable. Power outages, even brief ones, can damage equipment and lead to production line shutdowns. In addition, power surges &ndash; momentary increases in voltage &ndash; can wreak havoc on computers, servers and other sensitive IT equipment, which can lead to loss of both the equipment and valuable data.1,2 &ldquo;When equipment breaks down as a result of a power-supply event, it can cost days, weeks or even months to recover from the loss,&rdquo; says Shivani Sharma, Underwriting Specialist &ndash; Equipment Breakdown, at Sovereign Insurance. Those losses include replacement costs, business interruption, lost revenue, and the expense of restoring data.&nbsp; One of the major reasons for today&rsquo;s power problem stems from Canada&rsquo;s aging and overburdened energy infrastructure, which hasn&rsquo;t seen significant investment since the 1970s and &rsquo;80s.3 Since then, new technology, machinery and automation has proliferated, putting further strain on provincial power grids and distribution systems inside commercial buildings.&nbsp; &ldquo;On top of that, the growth in alternative energy has further stressed the infrastructure, which is not currently set up to handle the integration of renewable energy,&rdquo; says Shivani. &ldquo;So, the existing energy infrastructure needs urgent reform.&rdquo;&nbsp; It&rsquo;s a problem that&rsquo;s only going to intensify. As the Canadian Climate Institute notes in a recent report, electricity demand will be 1.6 to 2.1 times larger in 2050 compared to today. That means the capacity of Canadian electricity systems needs to at least double, if not more than triple, over the same time frame. Meanwhile, the federal government has set a target to achieve zero-emissions electricity by 2035, further amplifying the need to transform Canada&rsquo;s electricity system.4 As the government and energy sector takes steps towards this goal &ndash; and modernization could take years &ndash; organizations across sectors will remain at risk. &ldquo;As power grids are stressed, this creates more stress on the actual equipment used by commercial businesses,&rdquo; Shivani explains. &ldquo;So, we continue to see power-supply events being a key equipment breakdown loss trend.&rdquo;&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/hot-topics/loss-trends-and-emerging-risks-equipment-breakdown" target="">Loss trends and emerging risks: Equipment Breakdown</a> How can organizations mitigate risks? Power disruptions may be beyond a business&rsquo;s control, but there are ways to mitigate risks and help safeguard equipment. The key is being prepared, so a comprehensive plan or checklist should be developed, outlining what to do before a power-supply event, during an event, and afterwards. And while there&rsquo;s no one-size-fits-all plan, a few key best practices apply to almost any organization.&nbsp; To start, Shivani says organizations should train employees on how to properly use the equipment, including how to identify early warning signs of failure. &ldquo;If they&rsquo;re not trained, they&rsquo;re not going to know when there&rsquo;s something wrong with the equipment and the impact that may have,&rdquo; she says. &ldquo;Employees should also be trained on proper restarting procedures to prevent damage to the equipment.&rdquo;&nbsp; Preventative maintenance schedules should also be in place for all equipment. This can potentially reduce damage to the equipment and help lower repair costs stemming from a power disruption.&nbsp;&nbsp; Organizations can also shore up protection through various products on the market. For example, surge protectors help prevent voltage spikes from damaging equipment. Many organizations also purchase backup power supplies such as generators.&nbsp; In any case, awareness is the first step. Shivani notes brokers and risk managers have a role to play, as they can educate clients on the effect Canada&rsquo;s aging infrastructure can have on their business and provide information on mitigating risks.&nbsp; &ldquo;Brokers and risk managers are extremely knowledgeable about the different types of risks, what preventative measures companies need to take, and where they can make improvements,&rdquo; she says. &ldquo;So, while power disruptions are unexpected, that doesn&rsquo;t mean organizations can&rsquo;t be prepared.&rdquo;&nbsp; Sources 1 ABB, &ldquo;<a href="https://new.abb.com/news/detail/15996/the-importance-of-power-protection-for-modern-industries">The importance of power protection for modern industries</a>,&rdquo; Feb. 12, 2022 2 Penny Electric, &ldquo;<a href="https://pennyelectric.com/blog/the-effects-of-power-outages-on-computers-electronics/">The effects of power outages on computers &amp; electronics</a>,&rdquo; Oct. 16, 2018 3 Powertec Electric, &ldquo;<a href="https://www.powertec.ca/modernizing-canadas-aging-power-grid">Modernizing Canada&rsquo;s aging power grid</a>,&rdquo; April 20, 2019 4 Canadian Climate Institute, &ldquo;<a href="https://climateinstitute.ca/wp-content/uploads/2022/05/The-Big-Switch-May-4-2022.pdf">The Big Switch: Modernizing Canada&rsquo;s Net Zero Future</a>,&rdquo; May 2022

Equipment Breakdown: Dealing with Canada's aging electricity system

For commercial business owners, few things are more frightening than the thought of a fire ripping through their workplace. The potential loss of business and damage to property pales in comparison to the risk of losing lives.&nbsp; Most workplace fires can be avoided if the right precautions are taken. But if a fire does occur, a fire safety plan can minimize the impact, as it identifies specific actions that should be taken. Not only is a fire safety plan essential to help keep people safe, it&rsquo;s also the law in many cases. In Canada, fire safety plans are required by provincial regulations and local fire codes for certain types of buildings and occupancy types.1&nbsp; While plans should be tailored to the specific property or business, generally they must detail: a safe and orderly way for occupants to evacuate the building; proper maintenance and housekeeping required to prevent fires; and how to minimize damage should a fire occur. Typically, owners have to submit their plan to their local fire department for review and approval.2 There&rsquo;s no time like the present to brush up on your current fire safety plan, or familiarize yourself with the essentials if you need to create one. To that end, here are some key requirements and best practices to help ensure your people and your business are protected.&nbsp; Regularly train employees on emergency procedures: Your employees must be aware of what to do in a variety of fire emergencies. Staff training should include instruction on: where the fire alarm pull stations and exits are located; procedures for sounding the alarm; how to alert the fire department; potential fire hazards; how to use portable fire extinguishers; procedures for evacuating the building quickly and safely; and where the exits and muster points (or meeting places) are located. In addition to instructing new hires, be sure to retrain existing staff at least annually.3 Appoint fire wardens: Designated fire wardens are specially trained volunteer employees who help implement the fire safety plan. Fire wardens&rsquo; responsibilities include instructing employees on emergency procedures; checking safety equipment, such as extinguishers and exit doors; alerting authorities in the event of a fire; helping people evacuate quickly and safely; and more. There should be one fire warden for each floor or area (or more to cover absences).4&nbsp;&nbsp; Install highly visible signs: While your employees may be trained on what to do in the event of a fire, they&rsquo;ll likely need visual cues to orient themselves in an actual emergency. Fire safety plans require evacuation diagrams that highlight exits, directional areas, pull stations and more. Diagrams must be permanently affixed to the wall near elevators and exits.5 Inspection and testing of exit signs and emergency lighting should be performed and documented annually.&nbsp; &nbsp; Other signage tips are: ensure exits and other evacuation signs are large enough to be seen from a distance, and illuminated so they can easily be seen in a power outage.6 Avoid displaying too many signs in close proximity, as this can increase the chance of confusion and vital information being overlooked. In addition, post warning signs to remind people to take precautions around hazardous areas of your workplace.7&nbsp; Practice, review, and revise: Fire drills put your fire safety plan into action, ensuring that your employees are familiar with what to do and can evacuate in an orderly fashion. Fire drills should be conducted at least twice a year (or as required by your local jurisdiction). The Canadian Centre for Occupational Health and Safety recommends observing the response to fire drills and adjusting the plan as necessary to ensure its effectiveness.8 Aside from fire drills, your fire safety plan as a whole should be reviewed every year, especially if there are any changes to the layout, content or headcount of your workplace. If there are any changes to your plan, you must notify your local fire department.9 Reviewing and revising your plan will not only help you be prepared in the event of an emergency, it will give everyone in your workplace peace of mind.&nbsp; 
Sources
1,2,8 Canadian Centre for Occupational Health and Safety, &ldquo;Fire Protection&rdquo;&nbsp; 3,9 Brantford Fire Department, <a href="https://www.brantford.ca/en/living-here/resources/Documents/FireSafety/FireSafetyPlan-Guideline.pdf" target="_blank" rel="noopener">&ldquo;Standard Template for Fire Safety Plan Development&rdquo;</a>&nbsp;&nbsp; 4 Fire Monitoring of Canada Inc., &ldquo;The importance of designating a fire warden in your office<a href="https://www.fire-monitoring.com/the-importance-of-designating-a-fire-warden-in-your-office/" target="_blank" rel="noopener">&rdquo;</a>&nbsp; 5 Township of Muskoka Lakes Fire Department, &ldquo;<a href="https://muskokalakes.civicweb.net/document/78051/" title="" target="">Guidelines to Developing a Fire Safety Plan</a>" 6 ProFire Safety Services, &ldquo;How to plan a fire evacuation plan for your business,&rdquo; July 3, 2022&nbsp; 7 Glendining Signs, <a href="https://www.glendining.co.uk/blogs/health-safety-signs-in-the-workplace" target="_blank" rel="noopener">&ldquo;Health safety signs in the workplace&rdquo;&nbsp;</a>

What should be included in your fire safety plan?

It&rsquo;s been a rollercoaster ride for construction material costs, giving commercial building owners good reason to make sure their property insurance policy is still on track.&nbsp; This past May, lumber prices hit record highs as home renovations and repairs flourished throughout the pandemic and supplies were squeezed. According to Statistics Canada, softwood lumber prices rose by 118.9% in Canada between March 31, 2020 and March 21, 2021.1 By July, lumber prices came crashing down, however, industry experts predict they will stay above pre-pandemic levels for the next five to 10 years.2 Meanwhile, prices for iron and steel products were 50.9% higher year-over-year in July, driven by strong demand from China.3 What do construction costs have to do with property insurance? &ldquo;When the cost of materials such as lumber and steel go up, the replacement costs naturally go up,&rdquo; says Bob Lawlor, Senior Casualty Specialist &ndash; Atlantic Region, at Sovereign Insurance. &ldquo;And so, policyholders need to make sure they are properly insured based on today&rsquo;s replacement costs and the property&rsquo;s true value.&rdquo;&nbsp; With increases and fluctuations in the cost of materials, commercial building owners may be at risk of being underinsured. If the price to rebuild or repair damage or loss is more than a policyholder is insured for, they have to pay the difference out of pocket.&nbsp; The reason has to do with an often misunderstood term for policyholders: co-insurance. A co-insurance clause requires a building to be insured for a percentage of its replacement value. The clause makes sure policyholders insure their property to a specified percentage of the property&rsquo;s value in order to receive full compensation in the event of loss or damage. Generally, if a commercial building owner is insured for replacement costs, they are required to have at least 90% of the value of the property insured. So, for example, if they have a $1 million building, they need at least $900,000 in coverage to have it replaced. If they have the building insured for $500,000, a penalty clause would be invoked since they chose to retain part of the risk themselves. (The formula is basically dividing the amount of insurance purchased by the amount they should have to satisfy co-insurance, which is then multiplied by the amount of the loss.)&nbsp; Even though lumber prices have come back down to earth, it&rsquo;s believed that a significant amount of buildings were under-insured before COVID-19 happened. In fact, one report suggests that on average, 70% of commercial properties in Canada are under-insured by 40%.4 This is a good opportunity for any commercial building owner to review their coverage.&nbsp; &ldquo;Brokers and insurance companies have the same goal: we want to provide our clients with proper insurance,&rdquo; says Bob. &ldquo;It&rsquo;s important that buildings have the proper values documented on their policies, so that in the event of a loss or damage, the client is covered properly as the costs can be significant.&rdquo; Ultimately, the onus rests on the insured to make sure the proper value of their building is documented in their policy. Bob suggests that if there is any doubt, owners should get a commercial building appraisal or have a contractor assess the property, taking into consideration replacement costs. For their part, brokers can be proactive and raise the issue with their clients. &ldquo;If they haven&rsquo;t had those conversations yet, and a client has a loss today, they could be underinsured,&rdquo; says Bob. &ldquo;My advice would be don&rsquo;t wait until the policy is up for renewal. Be in contact with clients now to make sure they&rsquo;re aware of the issue and that their building values are up to date. Then, the client can determine a course of action on their coverage if necessary.&rdquo;&nbsp; Sources 1 The Western Producer, &ldquo;StatsCan data confirms stratospheric increase in lumber costs,&rdquo; May 6, 2021 <a href="https://www.producer.com/news/statscan-data-confirms-stratospheric-increase-in-lumber-costs/">https://www.producer.com/news/statscan-data-confirms-stratospheric-increase-in-lumber-costs/</a> 2 CTV News, &ldquo;Lumber prices have plunged, but experts don&rsquo;t expect them to back to pre-pandemic levels,&rdquo; July 30, 2021 <a href="https://www.ctvnews.ca/business/lumber-prices-have-plunged-but-experts-don-t-expect-them-to-go-back-to-pre-pandemic-levels-1.5529452">https://www.ctvnews.ca/business/lumber-prices-have-plunged-but-experts-don-t-expect-them-to-go-back-to-pre-pandemic-levels-1.5529452</a> 3 Kitco, &ldquo;Canadian steel products prices up 51% year-over-year in July on strong demand from China,&rdquo; Aug. 27, 2021 4 Nova Scotia Insurance Women&rsquo;s Association, &ldquo;Underinsurance in Atlantic Canada,&rdquo; May 16, 2016 <a href="https://www.nsiwa.com/risk-management-2/underinsurance-atlantic-canada/">https://www.nsiwa.com/risk-management-2/underinsurance-atlantic-canada/</a>

Cost of Construction Materials: Is your building adequately insured?

Risk Resilient: Thermal Imaging: Electrical & Mechanical Applications

Risk Resilient: Portable Electric Heater Safety

Risk Resilient: Fire Alarm Systems

Risk Resilient: Carbon Monoxide in the workplace

Hackers are constantly looking for ways to access your personal information and email has become one of the most common ways to do so. Simply clicking on a misleading link could compromise the security of an entire company. Here are 5 ways to reduce the risk of being hacked through your email.

Email Safety: 5 ways to keep email hackers at bay

Follow these eight tips to help you form monthly digital habits to keep you organized.

Digital Habits: How to Organize your Digital Life

Risk Resilient - Air Conditioners: Dealing with a Heat Wave

Social engineering via phone call is called voice phishing or &ldquo;vishing&rdquo;. Unlike other attacks to hack into people&rsquo;s computers or accounts, there are fewer security technologies that can detect and prevent a phone call attack; also, it is much easier for criminals to convey emotion and build trust over the phone, which makes it easier to trick their victims. Here are 7 ways to avoid becoming a victim:&nbsp;

7 Ways to Avoid Becoming a Victim of Vishing

When the winter months blow in, they can put even the most seasoned drivers to the test. Navigating snow, ice, slush, and decreased visibility is challenging, yet expected, during a Canadian winter. Fortunately, what you anticipate you can prepare for. &nbsp;&nbsp; The principles of safe winter driving aren&rsquo;t complicated &ndash; if you&rsquo;re an experienced driver or fleet manager you&rsquo;ve likely seen many of these tips before. But how many are you actively implementing? Drivers can stay safe in all kinds of winter conditions by adopting these best practices. Plan ahead1 As the saying goes, &lsquo;an ounce of prevention is worth a pound of cure&rsquo;. Before you even turn the ignition, lay the groundwork for a safe drive.
<ul>
<ul>
<li>Check the weather forecast for your route and avoid driving in really bad conditions.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Check provincial "Road Reports" for updates on road conditions along your route (511 Service is available in both French and English in most provinces). </li>
</ul>
</ul>

<ul>
<li>Plan your route in advance and ensure key parties, including your fleet manager and contact at your destination, are aware of your route and planned arrival time. Ensure your route follows main roads as these are most likely to be plowed and salted often.</li>
</ul>

<ul>
<li>Assume delays. Don&rsquo;t rely on estimated arrival times in your GPS. Allow extra time for your trip to take into account any route delays due to inclement weather, such as accidents, slow traffic, reduced visibility, roadblocks, etc.&nbsp; </li>
</ul>

Prepare the vehicle for winter conditions Preparing your vehicle for winter conditions goes beyond switching to snow tires &ndash; but that&rsquo;s certainly part of it! Other key preparations include:
<ul>
<ul>
<li>Remove snow and ice from your vehicle. Clear your vehicle &ndash; including your straight truck driver and tractor trailer &ndash; of any snow or ice before heading out on the road. Ensure all windows, mirrors and headlights are cleared as well as the top of your trailer/cargo box before you start driving. This is not only important for visibility, but also required by law for safety purposes as snow from your vehicle can fall or blow off, causing serious damage and potential injury to other vehicles on the road.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Warm up before you go. Warm up your vehicle before driving to help reduce condensation on the inside of the windows. Un-fog all windows for clear visibility before you step on the gas. However, be sure to never warm up your vehicle in a closed garage as the buildup of carbon monoxide emissions can be very dangerous.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Carry out a full pre-trip inspection of your tractor and trailer. While this should always be performed before any trip, it&rsquo;s especially vital when winter driving conditions are expected.</li>
</ul>
</ul>

<ul>
<ul>
<li>Check your tires. Winter tires provide additional traction in colder weather. Ensure your tires have proper traction for the conditions, as traction is the key to good movement, turning, and stopping on wet, slushy or icy surfaces. Check the tire pressure and if necessary, restore it to levels recommended by the vehicle manufacturer. The pressure drops about 1 psi for every 5&deg;C (9&deg;F) drop in temperature2.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Test your brakes. A single brake out of adjustment can be enough to cause you to lose control of your unit. Ensure your brakes are checked regularly.</li>
</ul>
</ul>

<ul>
<ul>
<li>Check your exhaust. Exhaust leaks can be extremely dangerous in winter, when windows are usually kept closed and poisonous gases can accumulate in the cabin.</li>
</ul>
</ul>

<ul>
<ul>
<li>Lubricate your hitch. A fifth wheel that is not properly lubricated or lubricated with the wrong grade of lubricant can cause sticking and contribute to a loss of control.</li>
</ul>
</ul>

<ul>
<ul>
<li>Top up your fuel tank. Keep your fuel tank at least half full.</li>
</ul>
</ul>

<ul>
<li>Clear your windshield. Top up your windshield washer fluid, using fluid that it is rated in the -40C temperature range, and replace wiper blades that streak as the use of worn windshield wipers can significantly impair your visibility. </li>
</ul>
Pack an emergency kit If you get into an accident, get stuck, breakdown, or need to pull over for an extended period of time, you could find yourself in a dangerous predicament if you&rsquo;re not adequately prepared. Every driver should have a properly stocked emergency roadside kit in their vehicle.&nbsp; Use this checklist to help ensure your emergency kit contains all the essentials:
<ul>
<ul>
<li>Copy of your emergency plan</li>
</ul>
</ul>

<ul>
<ul>
<li>Food that won't spoil, such as energy bars</li>
</ul>
</ul>

<ul>
<ul>
<li>Water &ndash; in plastic bottles so they won't break if frozen (change every six months)</li>
</ul>
</ul>

<ul>
<ul>
<li>Blanket</li>
</ul>
</ul>

<ul>
<ul>
<li>Extra clothing, including a hat, wind-proof pants, and warm footwear</li>
</ul>
</ul>

<ul>
<ul>
<li>First aid kit &ndash; with seatbelt cutter</li>
</ul>
</ul>

<ul>
<ul>
<li>Candle in a deep can and matches</li>
</ul>
</ul>

<ul>
<ul>
<li>Crank flashlight</li>
</ul>
</ul>

<ul>
<ul>
<li>Roll of paper towels</li>
</ul>
</ul>

<ul>
<ul>
<li>Whistle &ndash; in case you need to attract attention</li>
</ul>
</ul>

<ul>
<ul>
<li>Roadmaps</li>
</ul>
</ul>

<ul>
<ul>
<li>Warning devices such as emergency lights and warning triangles</li>
</ul>
</ul>

<ul>
<ul>
<li>"Call Police" or other help signs or brightly coloured banners</li>
</ul>
</ul>

<ul>
<ul>
<li>Small shovel, ice scraper, and snowbrush</li>
</ul>
</ul>

<ul>
<ul>
<li>Sand, salt, or cat litter (non clumping)</li>
</ul>
</ul>

<ul>
<ul>
<li>Traction mats</li>
</ul>
</ul>

<ul>
<ul>
<li>Tow rope&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Properly fitting tire chains</li>
</ul>
</ul>

<ul>
<ul>
<li>Antifreeze/windshield washer fluid appropriate for sub-freezing temperatures</li>
</ul>
</ul>

<ul>
<ul>
<li>Fuel line de-icer (methanol, also called methyl alcohol or methyl hydrate)</li>
</ul>
</ul>

<ul>
<ul>
<li>Jumper cables</li>
</ul>
</ul>

<ul>
<li>Fire extinguisher </li>
</ul>
Adjust your driving style for the conditions No matter what the weather conditions, the difference between an average driver and a good driver is that an average driver reacts to situations on the road, while good drivers anticipate them3.&nbsp; Consider these best practices to anticipate all kinds of winter driving conditions:
<ul>
<ul>
<li>Slow down. Fog, black ice, slush, and snow-covered roads can make driving dangerous &ndash; so slow down! Speed limits are intended for regular weather conditions, so be mindful and ready to adjust your speed for the conditions at hand.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Accelerate smoothly. When driving on snow and ice, smooth acceleration allows for the best traction. Spinning your wheels not only decreases traction but can cause a dangerous loss of control if you suddenly hit dry pavement.</li>
</ul>
</ul>

<ul>
<ul>
<li>Brake gently. As temperatures rise and ice becomes more slippery, the best way to maintain control around a curve is to brake gently and allow for longer stopping distances.</li>
</ul>
</ul>

<ul>
<ul>
<li>Read the colour of the road. White or grey roads may indicate ice or snow coverage, whereas shiny and dark roads could indicate black ice. However, don&rsquo;t just rely on the road&rsquo;s colour; when in doubt, slow down.&nbsp;</li>
</ul>
</ul>

<ul>
<ul>
<li>Keep a safe distance. Leave plenty of distance between vehicles, especially small vehicles that can stop much quicker than a large transport truck.&nbsp;</li>
</ul>
</ul>

<ul>
<li>Don&rsquo;t use cruise control. The use of cruise control on roads with icy patches can cause a skid or loss of control. Braking/cutting the fuel quickly is very important in these circumstances.&nbsp;</li>
</ul>
 While these precautions can certainly help mitigate many winter driving risks, sometimes the best decision you can make is to call your dispatcher to let them know plans have changed, get off the road, and wait for conditions to clear. After all, safety is the top priority!
<div>&nbsp;&nbsp;</div>
1,2Government of Canada, C. (2021, January 15). <a href="https://www.ccohs.ca/oshanswers/safety_haz/icesnow.html" target="_blank" rel="noopener">Driving Tips - Winter : OSH Answers</a>. Retrieved January 15, 2021 3&nbsp;Canadian Centre for Occupational Health and Safety. <a href="https://www.ccohs.ca/oshanswers/safety_haz/icesnow.html " target="_blank" rel="noopener">&ldquo;Driving tips &ndash; winter&rdquo;</a>. Retrieved October 23

Winter driving tips

Keeping data safe and out of the hands of cyber criminals is a serious concern for IT professionals and C-level executives across every industry. While there&rsquo;s good reason cyber security is top of mind for those in charge, the issue should be a priority for all employees in an organization.&nbsp; Research shows that breaches are becoming more serious, as cyber criminals continue to target intellectual property. This can potentially put companies&rsquo; reputations at risk and increase their financial liability.1 At the same time, employees and others using a company&rsquo;s IT systems are often weak links in the cyber security chain. They might share passwords, unwittingly open malicious attachments, use unapproved cloud applications, or neglect to encrypt sensitive files.2 This is where a cyber security policy comes in. The policy&rsquo;s aim is to ensure everyone plays their part in protecting their organization&rsquo;s data and defending against losses from cyber attacks. Specifically, it explains the processes and procedures employees and others must follow to protect the organization&rsquo;s IT systems and data; assigns roles and responsibilities so everyone knows their respective tasks; and details the potential consequences if the policy is ignored or deliberately breached. 3&nbsp; In creating an effective cyber security policy, there&rsquo;s no one-size-fits-all approach. The content will depend on the specific assets, needs and issues in your organization, which can be identified in a risk assessment. However, there are several common areas to cover, including:&nbsp; 

<ul>
<li>Acceptable internet use: Employees, contractors, vendors and others who can access your internet should be educated on safety precautions online. This includes avoiding <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/social-engineering-your-business-is-at-risk-from-human-blunders" target="">social engineering</a> scams such as <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/spot-a-phish-protect-your-business" target="">phishing</a>, and recognizing untrustworthy sites, especially those that encourage users to download content, which can be used to infect the device with malware.4,5</li>
</ul>

<ul>
<li>Creating strong passwords: Weak passwords continue to be one of the biggest security problems that organizations face. Your policy should urge staff to create stronger passwords by outlining specific rules, such as using a combination of upper- and lowercase letters, numbers and special characters, or using the first letter of each word in a sentence to form a unique password.6</li>
</ul>

<ul>
<li>Transferring data: Hackers can steal data while it is being transferred. Best practices for safe data transfers include data <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/how-to-encrypt-email" target="">encryption</a>; using a file-transfer protocol (FTP), which requires a username and password to upload and download files; using secure file-transfer protocol (SFTP), which requires access to a server as well as a username and password; and installing Off the Record (OTR) messaging, which encrypts emails before transferring them. 7</li>
</ul>

<ul>
<li>Software updates: Software updates often contain security improvements based on recent viruses and attacks. 8 Employees, especially those who are using their own devices for work, should keep their software as current as possible. Best practices include turning on automatic updates for the operating system; using secure web browsers that offer automatic security updates; and keeping browser plug-ins updated.9</li>
</ul>

<ul>
<li>Remote work: <a href="https://www.sovereigninsurance.ca/advice-and-tools/hot-topics/7-tips-to-protect-your-business-from-the-risks-of-remote-employees" title="" target="">Remote work</a> brings increased security challenges, as safeguards usually aren&rsquo;t the same as in the office. Sensitive information can be protected through the establishment of a <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-reasons-to-offer-a-vpn-to-remote-employees" target="">secure VPN</a>, backups, and encryption, as well as only giving staff access to the information they need to do their jobs. Meanwhile, devices can be protected by practices such as using multi-factor authentication and using password-enabled screen savers. 10</li>
</ul>

 In addition to best practices for specific areas, your cyber security policy should identify individuals&rsquo; roles and responsibilities. This includes who issued the policy, who is responsible for enforcing it, who will train employees on security awareness, who responds to and resolves security incidents and how, and which individuals have admin rights and controls.11 If you&rsquo;re considering creating a cyber security policy, there are numerous templates available online that can help you get started. Experts also advise taking a look at cyber security regulations when developing a plan to ensure you&rsquo;re operating within the law.12 You may want to consult with your organization&rsquo;s legal experts.&nbsp; As the work world continually evolves and cyber threats grow, it&rsquo;s critical to have a solid cyber security plan in place, as well as other safeguards such as insurance. Contact your broker to see if you need any additional security layers in your cyber coverage.&nbsp; 
 1&ldquo;<a href="https://www.mcafee.com/enterprise/en-us/assets/executive-summaries/es-data-exfiltration-2.pdf" target="_blank" rel="noopener">Grand Theft Data II &ndash; The Drivers and Shifting State of Data Breaches</a>,&rdquo; McAfee, April 30 2019&nbsp;&nbsp; 2 <a href="https://www.mcafee.com/enterprise/en-ca/security-awareness/cybersecurity/cybersecurity-policies.html" target="_blank" rel="noopener">&ldquo;How Cybersecurity Policies and Procedures Protect Against Cyberattacks,</a>&rdquo; MCafee 3 &ldquo;<a href="https://www.techradar.com/news/world-of-tech/roundup/creating-an-internet-security-policy-for-your-business-1074425" target="_blank" rel="noopener">Creating an internet security policy for your business,</a>&rdquo; Tech Radar, Aug. 4 2012 4,6 &ldquo;<a href="https://www.itgovernance.co.uk/blog/how-to-develop-a-robust-cyber-security-policy" target="_blank" rel="noopener">How to develop a robust cyber security policy</a>,&rdquo; IT Governance, Feb. 27 2020&nbsp; 5 &ldquo;<a href="https://www.boostitco.com/top-3-security-flaws-file-sharing-platforms/" target="_blank" rel="noopener">Top 3 Security Flaws with File Sharing Software</a>,&rdquo; Boost IT 7 &ldquo;<a href="https://techengage.com/ways-of-securing-data-transfer/" target="_blank" rel="noopener">5 Ways of Securing Data Transfer,&rdquo; TechEngage,</a>&rdquo; Feb. 23 2021 8 &ldquo;<a href="https://www.getcybersafe.gc.ca/en/blogs/cyber-security-small-businesses-why-software-updates-are-essential" target="_blank" rel="noopener">Cyber security for small businesses: Why software updates are essential,</a>&rdquo; Government of Canada, Jan. 2020 9 &ldquo;<a href=" https://thinkred.redriver.com/cyber-security-basics-software-update-policy" target="_blank" rel="noopener">Cyber Security Basics: Keeping Employee Software Updated,</a>&rdquo; Red River, March 7 2019 10 &ldquo;<a href="https://cyber.gc.ca/en/guidance/telework-security-issues-itsap10016" target="_blank" rel="noopener">Security Tips for Remote Workers</a>,&rdquo; Canadian Centre for Cyber Security, May 2020 11, 12 &ldquo;<a href="https://blog.malwarebytes.com/101/2016/03/how-to-create-a-successful-cybersecurity-policy/" target="_blank" rel="noopener">How to create a successful cyber security policy</a>,&rdquo; Malwarebytes Labs, updated Jan. 25 2019&nbsp;

How to develop a cyber security policy

In the event of a cyber-attack, properly prepared businesses take immediate action, whether it&rsquo;s putting their IT team on the case, or calling in experts like a cyber breach coach. While having a response plan in place is vital to mitigate risks such as business interruption, regulatory fines, or legal costs, there&rsquo;s another critical side to the cyber security coin: prevention.&nbsp; With shifts in our work lives and technology usage, new cyber risks have emerged. For example, a recent study found that 82% of IT leaders believe their company is at greater risk of phishing attacks when employees are working remotely. 1 In addition, with many employees using personal devices for work, IT professionals are worried about security risks such as downloading unsafe apps, malware infections and software updates.2 In this changing landscape, it&rsquo;s crucial for businesses of all sizes to take a proactive approach to cyber protection. Having the right safeguards in place can help prevent a range of cyber losses &mdash; from data breaches and theft of intellectual property, to financial losses stemming from social engineering, ransomware, and other attacks.&nbsp; Here&rsquo;s a look at key measures that can help protect your business from cyber losses: Employee training programs and simulations: Human error&mdash;meaning an unintentional action or lack of action that allows a cyber incident to take place&mdash;is behind nearly all successful data and security breaches.3 That&rsquo;s why employee training and education is so vital: it can help you avoid cyber incidents and strengthen your organization&rsquo;s overall cyber security culture. 4&nbsp; The Canadian Centre for Cyber Security recommends organizations consider education and training topics such as: creating unique passphrases and complex passwords for all accounts; using the internet and social media safely in the workplace; using approved software and mobile applications; and identifying malicious emails. 5 You can then put that training to the test with attack simulations. These allow you to see how employees would respond to different types of attacks, in real-world situations. For example, a phishing test sends employees a fake malicious email and/or a fake website to see if they&rsquo;ll open attachments and/or click on the links, or if they report the suspicious email.6 Vulnerability scans and penetration tests: On the IT side, you can test your organization&rsquo;s defenses with vulnerability scans and penetration tests. Vulnerability scanners are automated tools that allow organizations to check if their networks, systems and applications have security weaknesses that could expose them to attacks. 7&nbsp; Common vulnerabilities include substandard backup and recovery; weak authentication management; and poor network monitoring, among others. 8 Penetration testing, also known as a &ldquo;pen test&rdquo; or &ldquo;ethical hacking,&rdquo; goes beyond vulnerability scanning. Using a mix of automated tools and manual techniques, a penetration test identifies vulnerabilities and then attempts to exploit those vulnerabilities. 9 To illustrate the difference between vulnerability scans and penetration testing, a cyber security firm uses this analogy: A vulnerability is like walking up to a door, checking to see if it&rsquo;s unlocked, and stopping there. A penetration test not only sees if the door is unlocked, but also opens the door and walks right in.10 Cyber security consultants: While cyber breach coaches help organizations deal with the aftermath of a cyber-attack, cyber security consultants are often hired to build the right defenses. These experts provide a range of services, including IT systems auditing, system monitoring, building firewalls and helping organizations stay compliant with government regulations.&nbsp; Cyber security consultants are typically involved with every employee contact point for company data, including devices, applications, data storage and internal networks. Knowing how staff interact digitally allows these experts to identify potential weaknesses and plan for how to protect against them.11 As risks evolve, a proactive approach to cyber protection is crucial. When planning your defense strategy, it&rsquo;s important to consider insurance coverage that&rsquo;s specifically designed to address the unique and emerging risks to your business.&nbsp; The Sovereign Secure TechPro product suite offers a new Policy wording that includes Technology E&amp;O and Cyber Liability with enhanced first and third party liability coverages. This new modular product offers flexible coverages adapted to the unique and emerging risks to Canadian businesses &ndash; giving policyholders more of what they need and less of what they don&rsquo;t. So not only is their policy comprehensive, but they&rsquo;re getting great value too.&nbsp; Contact your broker to learn more.
&nbsp;
 
&copy;2021 The Sovereign General Insurance Company, a member of The Co-operators group of companies. Sovereign&reg; is a registered trademark of The Sovereign General Insurance Company. Not all advertised products may be available in all jurisdictions. For full terms and conditions, including coverage limitations and exclusions, please refer to the policy wording. The Sovereign General Insurance Company is committed to protecting the privacy, confidentiality, accuracy and security of the personal information that we collect, use, retain and disclose in the course of conducting our business. Visit sovereigninsurance.ca or call toll free at 1-800-661-1652 to learn more.
 Sources
1,2 Tessian, <a href=" https://www.tessian.com/blog/hybrid-working-cybersecurity-risks/" target="_blank" rel="noopener">&ldquo;How hybrid-remote working with affect cybersecurity,&rdquo;</a> Sept. 2020 3 Hacker News, &ldquo;<a href="https://thehackernews.com/2021/02/why-human-error-is-1-cyber-security.html" target="_blank" rel="noopener">Why human error is #1 cyber security threat to businesses in 2021</a>,&rdquo; Feb. 4 2021 4,5 Canadian Centre for Cyber Security, <a href="https://cyber.gc.ca/en/provide-employee-awareness-training" target="_blank" rel="noopener">&ldquo;Provide employee awareness training,</a>&rdquo; Feb. 16 2021 6 Dashlane, <a href=" https://blog.dashlane.com/phishing-test/" target="_blank" rel="noopener">How to run an effective phishing test at work</a>, March 7 2020 7, 9 Rhino Security Labs, &ldquo;<a href="https://rhinosecuritylabs.com/penetration-testing/need-vulnerability-scan-penetration-test/" target="_blank" rel="noopener">Do I need a vulnerability scan or penetration test?</a>&rdquo; 8 Logsign, &ldquo;<a href=" https://www.logsign.com/blog/what-are-the-types-of-cyber-security-vulnerabilities/" target="_blank" rel="noopener">What are the types of cyber security vulnerabilities</a>?&rdquo; 10 Control Scan, <a href="https://www.controlscan.com/penetration-tests-vulnerability-scans-different/" target="_blank" rel="noopener">&ldquo;Penetration tests vs. vulnerability scans: What&rsquo;s the difference?&rdquo;</a> 11 EC-MSP,<a href=" https://www.ecmsp.co.uk/it-blog/cybersecurity-consultant-for-business" target="_blank" rel="noopener"> &ldquo;What can a cyber security company do for your business?&rdquo;</a>

Cyber loss prevention: How to mitigate cyber risks to your business

When a data breach happens, businesses have a lot to lose. IBM&rsquo;s global Cost of a Data Breach report found that in 2020, companies spent an average of US$3.86 million per breach. The costs include time and effort dealing with the breach, lost revenue due to system downtime, reputation losses, regulatory fines, and legal costs1.&nbsp; While many companies work hard to ensure their data security is tight, cyber criminals are notorious for being one step ahead.&nbsp;That means it&rsquo;s vital to be prepared for &ldquo;when&rdquo; a data breach happens, not &ldquo;if.&rdquo; To manage data breaches, battle-ready businesses will want to put together a dedicated response team and implement their own plan of attack. Here are five steps to include in the plan:&nbsp;
Identify how the breach happened and what was leaked.&nbsp;
First, you need to determine how the attack took place and what data was affected, which can be done using root-cause analysis and forensics2.&nbsp; Common causes of data breaches include stolen or weak passwords, application vulnerabilities, malware, employee error, and malicious internal acts. By identifying the root cause of the breach and investigating what was leaked, you&rsquo;ll be able to carry out the next steps more effectively 3,4. Contain the breach. Take steps to contain the breach in as short a time as possible to minimize further damage and risk. An effective course of action is: stopping the unauthorized practice; shutting the system down that was breached; changing passwords immediately; limiting access of individuals suspected of causing the breach; recovering the records; and correcting weaknesses in physical or electronic security5,6.&nbsp;&nbsp; Notify those affected.&nbsp; Notify your customers, business partners, vendors, or other parties whose data was affected by the breach. Include the date of the breach; details on what was compromised; and what action, if any, the recipient needs to take7. Not only do you need to notify individuals of any breach of the security of safeguards involving their personal information, but if the breach is believed to be of &ldquo;significant harm&rdquo;, your organization must also report the breach to the Privacy Commissioner of Canada8.&nbsp;&nbsp; The Personal Information Protection and Electronic Documents Act (PIPEDA) defines &ldquo;significant harm&rdquo; to include bodily harm, humiliation, damage to reputation or relationships, loss of employment, business or professional opportunities, financial loss, identity theft, negative effects on the credit record, and damage to or loss of property9.&nbsp; &nbsp;Notification to impacted individuals and the Privacy Commissioner should take place as soon as possible when the organization determines a breach has occurred. Whether you&rsquo;re notifying vendors and customers, or the media (if that&rsquo;s necessary), be open and sincere, describe solutions for affected users, and explain how you&rsquo;re preventing similar issues from happening again8,10.&nbsp; Keep in mind: you may also need to report the breach to authorities, depending on the specific circumstances of the breach11.&nbsp;&nbsp; Conduct a security audit. Managing a data breach doesn&rsquo;t stop once you&rsquo;ve patched things up. A smart next step is to conduct a data-security audit, which allows you to identify threats and vulnerabilities in your company&rsquo;s IT infrastructure and security systems.&nbsp; The steps in an audit generally include: establishing the scope of the audit; creating a master list of all the assets that require protection; defining threats to your data; assessing the risk of each threat; and creating a list of security measures you need to implement9,12 .
Prepare for future attacks. If your company is attacked once, there&rsquo;s a strong possibility it will happen again, as cyber criminals are enticed to try again if they&rsquo;ve already succeeded13.&nbsp; The vulnerabilities uncovered in your security audit will help you put the right data-security systems and procedures in place, whether it&rsquo;s performing better data backups, conducting cyber-security awareness training, or acquiring more appropriate security technology14.&nbsp; As you firm up your data-security measures, consider your insurance coverage as a critical component in your plan. Some insurers even offer breach preparation and crisis management services. Contact your broker and ensure you&rsquo;re properly covered in the event of a data breach or other cyber-attack.&nbsp; &nbsp; 1&nbsp;<a href="https://www.capita.com/sites/g/files/nginej146/files/2020-08/Ponemon-Global-Cost-of-Data-Breach-Study-2020.pdf" target="_blank" rel="noopener">&ldquo;Cost of a Data Breach Report 2020,&rdquo;</a> IBM Security and Ponemon Institute, July 2020 2,3 &ldquo;<a href="https://digitalguardian.com/blog/data-breach-experts-share-most-important-next-step-you-should-take-after-data-breach-2014-2015" target="_blank" rel="noopener">Data breach experts share the most important next step you should take after a data breach in 2019 &amp; beyond,&rdquo;</a> Digital Guardian, Aug. 11, 2020 4 <a href="https://www.avertium.com/digging-in-why-root-cause-analysis-is-crucial-in-ir/" target="_blank" rel="noopener">&ldquo;Digging in: Why root cause analysis is crucial in IR,&rdquo; Avertium,&rdquo;</a> July 17, 2020 5 <a href="https://techaeris.com/2020/12/15/data-breaches-why-and-how-to-handle-the-attack/" target="_blank" rel="noopener">&ldquo;Data breaches: Why and how to handle the attack,&rdquo; </a>TechAeris, Dec. 15, 2020 6 &ldquo;<a href="https://www.priv.gc.ca/en/privacy-topics/business-privacy/safeguards-and-breaches/privacy-breaches/respond-to-a-privacy-breach-at-your-business/c-t_201809_pb/" target="_blank" rel="noopener">Preventing and responding to a privacy breach,&rdquo;</a> Office of the Privacy Commissioner of Canada, Sept. 2018&nbsp;&nbsp; 7 <a href=" https://securitytrails.com/blog/top-5-ways-handle-data-breach" target="_blank" rel="noopener">&ldquo;Top 5 ways to handle a data breach,&rdquo;</a> SecurityTrails, Nov. 27, 2018 8,9&nbsp; Office of the Privacy Commissioner of Canada. (2018, October 29). <a href="https://www.priv.gc.ca/en/privacy-topics/business-privacy/safeguards-and-breaches/privacy-breaches/respond-to-a-privacy-breach-at-your-business/gd_pb_201810/" target="_blank" rel="noopener">What you need to know about mandatory reporting of breaches of security safeguards</a>. Retrieved February 05, 2021, 10&nbsp; <a href="https://digitalguardian.com/blog/data-breach-experts-share-most-important-next-step-you-should-take-after-data-breach-2014-2015" target="_blank" rel="noopener">&ldquo;Data breach experts share the most important next step you should take after a data breach in 2019 &amp; beyond,&rdquo;</a> Digital Guardian, Aug. 11, 2020 11,12 <a href="https://www.priv.gc.ca/en/privacy-topics/business-privacy/safeguards-and-breaches/privacy-breaches/respond-to-a-privacy-breach-at-your-business/gd_pb_201810/" target="_blank" rel="noopener">&ldquo;What you need to know about mandatory reporting of breaches of security safeguards,&rdquo;</a> Office of the Privacy Commissioner of Canada,&nbsp; Oct. 2018&nbsp; 13 <a href="https://www.smartdatacollective.com/4-easy-steps-conduct-security-audit-company/" target="_blank" rel="noopener">&ldquo;4 easy steps how to conduct IT security audit of your own company,&rdquo;</a> SmartDataCollective, May 22, 2017&nbsp; 14&nbsp; <a href="https://www.computerworld.com/article/3535590/avoid-security-breaches-how-to-protect-your-data.html" target="_blank" rel="noopener">&ldquo;Avoid security breaches: How to protect your data,&rdquo;</a> Computer World, April 1, 2020&nbsp;

5 steps to manage a data breach

In one form or another, boilers have been around for centuries, and with them, safety concerns. In the early 20th century, steam boiler explosions in North America happened frequently, prompting the first legislation dealing with the design and construction of steam boilers.1 Today, boilers are equipped with important safety features and are strictly regulated, but unfortunately, accidents can still happen.&nbsp; Every step of the lifecycle of a boiler or pressure vessel (BPV) can introduce risks if not carried out properly, from design and manufacturing, to installation and operation, to maintenance and decommissioning. While all areas are important to help BPV owners avoid serious problems and breakdowns, one area we find many owners need more awareness about&mdash;and where insurance companies can help&mdash;is first-time installation and periodic inspections.&nbsp; What do companies need to know, or brush up on? Let&rsquo;s take a look at the regulatory requirements in Ontario and Qu&eacute;bec, as well as steps organizations can take to help mitigate risk.&nbsp; Call the professionals: Proper installation of boilers and pressure vessels by experienced professionals is critical. An engineer or other expert can help you develop a plan and choose the equipment that&rsquo;s right for your operations and that it is designed to code in your jurisdiction, while a licensed contractor should be enlisted for installation. Make sure you confirm and document the work that is being done.&nbsp; Know the law: In Ontario, if a boiler or pressure vessel falls under provincial regulations, the onus is on the owner to have it inspected before being put into operation. At the owner&rsquo;s request, the Technical Standards and Safety Authority (TSSA) will conduct an installation inspection of the equipment. If successfully completed, TSSA will issue a Certificate of Inspection, and the equipment is then subject to periodic inspection by the company&rsquo;s insurer or TSSA.&nbsp; This may take place every one, two, or three years, depending on the type of boiler or pressure vessel.2 See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/ontario-equipment-breakdown-boiler-and-pressure-vessel-checklist" target="">Ontario Equipment Breakdown Boiler and Pressure Vessel Checklist</a> In Qu&eacute;bec, if a boiler or pressure vessel falls under the regulations, the company is responsible for having it approved by the R&eacute;gie du B&acirc;timent du Qu&eacute;bec (RBQ) before it&rsquo;s put into service. Following that, the equipment must be inspected every one to four years (depending on the type of equipment) by a person or body recognized by the RBQ, which issues a periodic inspection certificate.3 See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/quebec-equipment-breakdown-boiler-and-pressure-vessel-checklist" target="">Quebec Equipment Breakdown Boiler and Pressure Vessel Checklist</a> Check for exemptions: Not all types of boilers and pressure vessels fall under provincial regulations and require an installation inspection. In Ontario, for example, the exemptions include: low-pressure steel boilers with 30 ft2 (2.79 m2) or less of wetted heating surface; hot water tanks, hydropneumatic tanks, and cushion tanks 24 in (610 mm) diameter or less; among others.4&nbsp;&nbsp;In Qu&eacute;bec, the exemption are mentioned at the article 3 of the Regulation respecting pressure installations (B-1.1,r.6.1).&nbsp;&nbsp; Your contractor should know if the unit requires an installation inspection. However, some popular boiler designs today have a small square footage. Based on sight, they appear to be exempt from the regulations, but they may not be. Make sure your contractor understands the exemptions and checks the precise measurements and/or specifications of your boiler or pressure vessel.&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/why-do-you-need-a-jurisdictional-inspection" target="">Why do you need a jurisdictional inspection?&nbsp;</a> Follow servicing and repair requirements: What also tends to be lesser known among companies is the frequency associated with servicing and/or replacing safety valves, as per the regulations. Ontario typically requires servicing every five to 10 years (some could be every 3 years), depending on the device. For example, power boilers (steam operating above 103 kPa or 15 psi and hot water operating above 1103 kPA or 121&deg;C) require a five-year maximum servicing interval for safety relief valves, as well as annual system pressure or annual lift tests.5 Repairs to a boiler or pressure vessel requiring welding must be done to retain its integrity and per the Code of construction.&nbsp; The repair must be inspected and accepted by your insurer&rsquo;s inspector (Ontario) or the RBQ (Qu&eacute;bec).&nbsp; Your qualified repair contractor should be aware of when an inspection is needed and will ask you to contact your insurer to arrange an inspection. While there are many things to consider with regards to BPV installations and inspections, it all boils down to safety. Staying on top of the risks and regulations will help give you peace of mind that your equipment is working safely and efficiently, and help keep your business running smoothly.&nbsp;&nbsp; Sources 1 CEP, &ldquo;<a href="https://cep-experts.ca/keeping-boilers-safe/" target="_blank" rel="noopener">Keeping Boilers Safe</a>,&rdquo; June 17, 2021 2 TSSA, &ldquo;Inspections,&rdquo; <a href="https://www.tssa.org/en/boilers-pressure-vessels/inspections.aspx " target="_blank" rel="noopener">https://www.tssa.org/en/boilers-pressure-vessels/inspections.aspx&nbsp;</a> https://www.tssa.org/en/boilers-pressure-vessels/resources/151_TSSA_BPV_IG_v3b_May27_2021-Final.pdf 3 Publications Qu&eacute;bec, &ldquo;<a href="http://legisquebec.gouv.qc.ca/en/ShowDoc/cr/B-1.1,%20r.%206.1" target="_blank" rel="noopener">Regulation respecting pressure installations, Building Act</a>&rdquo; 4,5 TSSA, Boilers and Pressure Vessels Safety Program, Code Adoption Document Amendment, Dec. 1, 2020

Boiler and pressure vessel installation: first time installation and periodic inspection requirements

Cranes are workhorses on large-scale construction projects, providing the efficient and effective movement of heavy construction materials throughout the site. While safety is the number-one priority for crane operators, accidents and near misses do unfortunately happen, and often with serious consequences. Human error continues to be a major cause of crane accidents&mdash; with estimates as high as 90% 1 &mdash;therefore, they can be considered preventable.&nbsp; The best way to mitigate accidents is a strong commitment to safety across all aspects of a construction project. The following are important safety tips and best practices to help ensure the safe operation of tower and mobile cranes and keep construction projects running smoothly.&nbsp; Tower Cranes
Tower cranes are fixed and commonly used in high-rise building construction. They are designed, tested, and manufactured to lift and move heavy loads safely. When used properly, they are safe, reliable, and can lift heavy loads to great heights.&nbsp; It&rsquo;s critical for a construction project to operate their tower crane safely by observing safe operating practices including its initial installation. In Canada, the code for tower cranes is CSA Z248-172 . Construction project managers and operators should familiarize themselves with the code, as well as applicable codes in their province and jurisdiction, and it&rsquo;s recommended they adopt the more stringent requirements. It&rsquo;s also important that project managers adhere to the tower crane manufacturer&rsquo;s specifications and requirements, along with the oversight and signoff from a professional engineer where applicable.&nbsp; The safe operations of tower cranes include (but are not limited to) the following practices: 

<ul>
<li>Ensure operators are knowledgeable of the crane&rsquo;s construction and relevant safety codes and standards, including maintenance needs for the equipment.</li>
</ul>

<ul>
<li>Complete inspection, testing, and maintenance as required &ndash; daily, weekly, and annually &ndash; in accordance with the manufacturer&rsquo;s recommendations and the requirements of the jurisdiction.</li>
</ul>

<ul>
<li>Provide the load rating chart with each tower crane and attach it in a location visible to the operator while seated at the controls and at remote control stations. The operator should be familiar with load limitations.</li>
</ul>

<ul>
<li>Consider weather conditions, including temperature (greater than -20 oC,) wind (less than 50 km/h,) electrical storms, snow and ice, and visibility.</li>
</ul>

<ul>
<li>Isolate and de-energize overhead power lines when possible. If not possible, a minimum clearance of three metres should be maintained between the crane, or the load being handled, and the energized power lines. It&rsquo;s recommended that the stricter jurisdictional authority be observed.</li>
</ul>

<ul>
<li>Follow load management guidelines closely. It&rsquo;s important that loads to be lifted weigh within the rated capacity of the crane and are properly rigged by a competent person to prevent any dislodgement. Prior to unhooking, the load should have safely landed and blocked. Whenever possible, don&rsquo;t leave loads suspended and arrange to prevent them from passing over workers.</li>
</ul>

<ul>
<li>Assign a designated qualified signaller to work with the crane operator when signals are required to control hoisting operations. Except for a &lsquo;stop&rsquo; signal, the tower crane operator should only take direction from the designated signaller.</li>
</ul>

 Mobile Cranes3 
Mobile cranes can be mounted on a crawler, or a truck type carrier that is primarily hydraulically powered with a telescoping boom. The main benefit of a mobile crane as opposed to a tower crane is exactly that: it&rsquo;s mobile. It can be moved around the job site itself, or to other job sites easily. However, there are significant lifting height limitations to the mobile crane as it&rsquo;s limited to how far the boom can be extended. The safe operations of a mobile crane are similar to a tower crane, but there are some significant differences. Safe operating practices of mobile cranes include, but are not limited to, the following:&nbsp; 
<ul>
<ul>
<li>Avoid or remove obstructions to allow the movement of the load. As mentioned above, avoid passing loads over workers, pedestrians, and roadways. Obstructions such as energized power lines are a major cause of mobile crane accidents &mdash; nearly 45% of the cases according to the Occupational Safety and Health Administration4.&nbsp; </li>
</ul>
</ul>

<ul>
<ul>
<li>Ensure ground conditions have enough stability and bearing capacity to support all loads placed on it by the crane. Special considerations need to be made when a mobile crane is located beside buildings under construction with possible uncompacted backfill, along trenches, or areas where water mains, sewer pipes, etc., are buried.&nbsp; </li>
</ul>
</ul>

<ul>
<ul>
<li>Be mindful that leveling can significantly affect the load rating capacity. The load rating charts are based on the crane being perfectly level in all directions. A crane that is three degrees out of level may need to reduce the rated capacity by as much as 50%5 .&nbsp;</li>
</ul>
</ul>
&nbsp;
While job sites will always have hazards, it&rsquo;s vital to keep the potential dangers of crane operations at bay. By following relevant safety codes and industry best practices, construction project managers and operators will be doing their part to ensure employee safety, peace of mind, and a successful construction project.&nbsp; 
&nbsp;
1&nbsp; <a href="https://ilt.safetynow.com/crane-safety-stats-and-facts/" target="_blank" rel="noopener">Crane Safety &ndash; Stats and Facts</a>. SafetyNow ILT. (n.d.). 2&nbsp; <a href=" https://www.techstreet.com/standards/csa-z248-17?product_id=2002137" target="_blank" rel="noopener">CSA Z248-17</a>. (2017, December 1). CSA Z248-17 - Techstreet 3&nbsp;<a href="https://www.jespear.com/factors-affecting-mobile-crane-safety/" target="_blank" rel="noopener"> Mobile Crane Safety: Factors Affecting Rated Capacity</a>. (2018, November 15). JE Spear Consulting, LP | Environmental Consulting Services. h 4, 5 <a href="https://www.graphicproducts.com/articles/crane-accidents/ " target="_blank" rel="noopener">Crane Accidents</a>. Graphic Products. (n.d.).

Ways to ensure tower and mobile crane safety

Safe commercial auto fleets start with safe drivers, and there&rsquo;s good reason fleet managers should make driver training a top priority. Not only can proper training ensure everyone is safe on the road, it can also help protect your bottom line. Other benefits of training may include improved productivity, reduced labour issues, potential for in-house advancement, and regulatory compliance. This is important as on-the-job accidents may result in significant losses, including property damage, legal fees, loss of business from negative publicity, and more.&nbsp; While Mandatory Entry Level Training (MELT) is being implemented throughout Canada (the program is currently in Ontario, Saskatchewan and Alberta), it&rsquo;s geared towards new commercial truck drivers. Kevin Dutchak, Senior Risk Specialist at Sovereign Insurance, notes that even seasoned drivers should have refresher training to reinforce their knowledge and skills, and some drivers may need corrective training if issues arise. Either way, having your own driver training program can help your company proactively manage risk.&nbsp; Components of a driver training program vary depending on the training objectives, but can include in-class presentations; group demonstrations (e.g. defensive driving training in a vehicle such as a van to allow for multiple participants); one-on-one training (e.g. corrective action training); online training; and third-party vendor training, which can provide specialized instruction that may be too costly for a small company to provide on its own.&nbsp; Driver training provides one of the best opportunities to improve the effectiveness of the driver in their role, with the ultimate goal of improving driver safety and performance. To help you get on your way to a safer operation, Kevin provides an overview of how to administer, enforce, and document a driver training program.&nbsp; Administering: Driver trainer programs are typically administered through the safety management function within an organization. Instructors or coaches (either in-house experts or outside instructors) provide training both in class and on the road.&nbsp; A defensive driving class, for example, might start with an in-class session on driver theory and practices, followed by the coach demonstrating those practices on the road. Trainees would then be put to the test and evaluated on how successfully they put defensive driving principles into practice.&nbsp; Other topics in a driver training program might include vehicle inspection, hazard avoidance, winter driving, transportation of dangerous goods, load securement, and hours of service compliance.&nbsp; Tip: Design your training program to be engaging. To keep drivers&rsquo; attention and cater to different learning preferences by offering content in a variety of formats, such as videos, interactive activities, online learning, and hands-on learning.&nbsp; Enforcing: A driver training program doesn&rsquo;t end when the proverbial school bell rings. Once the initial training and testing is done, drivers should be monitored on an ongoing basis to ensure they&rsquo;re still following safety protocols and company procedures.&nbsp; Monitoring tools include random spot checks to see if drivers are doing proper pre-trip inspections; ride-alongs or shadow runs whereby supervisors evaluate drivers on the road; feedback from other drivers in the fleet; and feedback from the public that comes in through unsafe-driver call services.&nbsp; On the high-tech side, telematics systems can use GPS technology, sensors and vehicle data to monitor drivers&rsquo; behaviours. The system collects and transmits a broad range of information including hard braking, speeding and harsh acceleration. This feedback helps you identify at-risk drivers and reinforce the training you provided in the program.&nbsp;&nbsp; Tip: Incentives can help reinforce safe practices. Consider rewarding drivers who receive positive evaluations with incentives such as gift cards, cash bonuses, or merchandise.&nbsp; Documenting: As the saying goes, if you didn&rsquo;t document it, it didn&rsquo;t happen. In the fleet industry, it&rsquo;s critical to document all forms of education, training, and corrective actions, with details on who provided the training, who was trained, what they were trained in, and when it took place.&nbsp; While there are various regulatory requirements around driver training documentation, it&rsquo;s also important from a risk-management perspective. In the event of a loss that goes through litigation, you can help protect your company by being able to show records on the driver&rsquo;s training. The more detailed your documentation, the better.&nbsp; Tip: Have your drivers sign all of the documentation about their training, as well as sign company policies that state they have read, understand and will comply with the policy. While nothing is guaranteed in court, it&rsquo;s better to have your i&rsquo;s dotted and your t&rsquo;s crossed. This also ensures that drivers and their managers are in agreement with what training has taken place and what measures or corrective actions were implemented.&nbsp;Driver training programs are an investment in your people, and being proactive in mitigating risks before they happen helps you build a resilient business. Sovereign Insurance can work with your broker to help you continue to build a culture of safety. Contact your broker to learn more.

How to build, roll-out, and enforce a fleet driver training program

A <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-steps-to-manage-a-data-breach" target="">data breach </a>is a business emergency that has to be managed quickly and effectively to mitigate losses and stay on the right side of compliance. When such an event happens, many organizations call in a data breach coach: the &ldquo;first responder&rdquo; who leads the response and recovery.&nbsp; Typically, a data breach coach is a lawyer who specializes in cyber security and privacy law. Acting as a project manager, they guide an organization on the best course of action, with help from a team they assemble from a variety of disciplines. The team can include experts from IT, forensics, legal, regulatory and communications, all of whom may be needed to help manage the breach.1 Why work with a data breach coach? As in many other crisis-management situations, your in-house staff may not have the expertise to handle a data breach, or you may want to keep your key staff focused on their regular responsibilities.&nbsp; Having a legal expert take the lead is beneficial, as they understand laws regarding notification requirements and have experience working with regulators on issues like fines and penalties. One legal expert also noted that as lawyers, data breach coaches are able to guard your information with solicitor-client privilege, which can add an extra layer of protection and security to your communications. 2 There are three key areas that data breach coaches manage:
<ol>
<li>Breach Investigation: A data breach coach can help you hire a computer forensics company to investigate the cause and scope of breach. Forensic teams work to identify the type of hack, approaches used, the source and timeline, and determine how best to recover compromised data. 3 They also preserve all the necessary evidence and can work with the data breach coach to identify potential legal and compliance issues.4</li>
<li>Notification Requirements: A data breach coach will analyze the facts uncovered by forensics to determine what steps to take in a legal context and help your business remain compliant. Legal obligations may include providing notice of the breach to affected individuals and regulators, depending on what information was compromised. For example, in Canada, a breach involving &ldquo;real significant harm&rdquo; to individuals needs to be reported to the Office of the Privacy Commissioner of Canada.&rdquo; Real significant harm is determined based on the sensitivity of the information involved in the breach and probability for misuse.5</li>
<li>Crisis Communications: A data breach coach can secure crisis communications professionals to ensure any communications regarding a data breach are carefully planned and managed. This can reduce risks such as reputational harm to your business. 6 The team can determine how those affected by the breach should be alerted, what statements to make to the public and the media, and how to communicate with authorities. They can also provide contact information and handle inquiries from customers and the media. 7,8</li>
</ol>
 In the event of a data breach, it&rsquo;s important to respond quickly and correctly. If your organization doesn&rsquo;t have the internal resources to handle legal and compliance issues, or have expertise in crisis communications, having a data breach coach take the lead is a smart move. They are an invaluable source of information and expertise, and can help take the load off your shoulders in a time of crisis.&nbsp; Sources: 1 <a href="https://www.siskinds.com/data-breach-frequently-asked-questions/" target="_blank" rel="noopener">&ldquo;Data Breach: Frequently Asked Questions,&rdquo;</a> Siskinds, May 2020&nbsp; 2,6 <a href="https://www.forbes.com/sites/forbestechcouncil/2019/07/29/why-your-company-should-secure-a-breach-coach/?sh=244dc8006b76" target="_blank" rel="noopener">&ldquo;Why Your Company Should Secure A Data Breach Coach,&rdquo;</a> Forbes, July 29, 2019&nbsp; 3,4 <a href="https://securecyberdefense.com/digital-forensics-identifying-the-who-what-when-and-how-of-cyberattacks-2/" target="_blank" rel="noopener">&ldquo;Digital Forensics: Identifying the Who, What, When and How of Cyber Attacks,&rdquo;</a> Secure Cyber Defense 5 &ldquo;<a href="https://www.priv.gc.ca/en/privacy-topics/business-privacy/safeguards-and-breaches/privacy-breaches/respond-to-a-privacy-breach-at-your-business/gd_pb_201810/#_Part_6" target="_blank" rel="noopener">What you need to know about mandatory reporting of breaches of security safeguards,&rdquo; </a>Office of the Privacy Commissioner of Canada, Oct. 2018 7 <a href="https://www.pushkinpr.com/blog/crisis-communications-plan-data-breaches/" target="_blank" rel="noopener">&ldquo;A Crisis Communications Plan for Data Breaches,&rdquo;</a> Pushkin PR 8 <a href="https://medium.com/@crisisPR/why-your-company-needs-a-data-breach-communications-plan-6dd3488bb3e3" target="_blank" rel="noopener">&ldquo;Why Your Company Needs a Data Breach Communications Plan,&rdquo; </a>Medium, March 9, 2020&nbsp;

Do you need a data breach coach?

As the frequency and severity of cyber attacks rises, cyber loss control measures are becoming a must-have for many businesses &ndash; and for insurers too.&nbsp; In the first half of 2021, global cyber attacks increased by 29%, as threat actors continue to exploit the COVID-19 pandemic and shift to remote work. Meanwhile, ransomware attacks surged 93%, fueled by a new attack technique that targets organizations as well as their customers and/or business partners.1&nbsp; As the number of claims continues to climb, carriers are trying to help clients prevent attacks from happening in the first place. Many are investigating whether some risk mitigation measures (such as encryption or enhanced permissions) should be required as a pre-condition for insurance. Some carriers have already implemented more rigorous underwriting standards that require specific cyber-security measures in place to obtain coverage. 2 It&rsquo;s also expected that in the future, the insurance sector will collectively adopt security baseline requirements as a standard for cyber insurance. 3 &ldquo;When it comes to cyber attacks, the common refrain is, &lsquo;it&rsquo;s not if, but when,&rsquo;&rdquo; says Ian Fraser, Associate Vice President, Cyber/Technology &amp; Professional Lines, at Sovereign Insurance. &ldquo;However, when it does happen, the better a business is prepared for it, the lower the severity and impact on the business will be. That&rsquo;s where the concept of cyber loss control comes into play. It&rsquo;s about helping to shape policyholders&rsquo; cyber-security practices and risk posture into a much stronger position, prior to an event happening.&rdquo; Here are five cyber loss control measures that could be a pre-condition for insurance in the future, but are also common-sense practices for any business to implement today. 
<ol>
<li>Multi-factor authentication (MFA): MFA is an authentication method that requires the user to provide two or more verification factors to gain access to a resource such as a network, application, or website. Usernames and passwords are particularly vulnerable to cyber attacks, so using MFA can help organizations stay safe. &ldquo;Multi-factor authentication can be easily implemented at a relatively low cost and have a significant impact on exposure,&rdquo; notes Ian. Some common MFA methods are answers to personal security questions, fingerprints, or facial recognition, and one-time passwords sent by text or email.&nbsp;</li>
<li>Encryption: Encryption essentially makes data unreadable by anyone who isn&rsquo;t authorized to view that information. Businesses should ensure there is a level of encryption implemented within the security architecture of a network, as well when data travels across networks and between locations. Ian stresses the importance of staying current with encryption methods. &ldquo;As technology rapidly evolves, older methods of encryption may no longer be secure,&rdquo; he says. &ldquo;And while the topic can be complex, many new software solutions and devices have encryption elements built-in.&rdquo;&nbsp; </li>
<li>Software patches and system upgrades: As cyber threats constantly evolve, it&rsquo;s important to stay on top of software patches and updates that fix security vulnerabilities. Outdated IT systems may also need to be upgraded to provide a better level of protection against today&rsquo;s threats. &ldquo;This comes at a cost and it&rsquo;s a challenge for many businesses to determine what they&rsquo;re going to spend on cyber security,&rdquo; says Ian. &ldquo;The key is finding a good balance between reinvesting in IT infrastructure and investing in other areas of the business.&rdquo; </li>
<li>Permissions: Permissions, or access controls, dictate who in the organization gets access to what resources, including networks, files, applications, and so on. The goal is to minimize the security risk of authorized access to sensitive data. Ian notes that in many startups and small businesses, all employees have access to everything, but it&rsquo;s important to limit access from the start. &ldquo;Businesses need to be mindful that they shouldn&rsquo;t wait until they hit a certain size to implement controls,&rdquo; he says. &ldquo;These are elements that need to be built from the ground up, and a sound starting point is using the &lsquo;least privilege&rsquo; access principle.&rdquo;&nbsp; </li>
<li>Incident response plans: An incident response plan is a set of detailed instructions to help IT professionals and staff detect, respond to, and recover from network security events. Ian stresses the importance of having a well-documented plan that is widely communicated to employees and practiced at least once a year. &ldquo;Just as schools practice fire drills, businesses need to practice how they&rsquo;re going to respond to a cyber event and make adjustments to their plan if necessary.&rdquo; </li>
<li>Dealing with cyber risk today involves much more than buying an insurance policy. It&rsquo;s about having the right loss controls in place &mdash; including having the right vendors and partners &mdash; to be prepared for a breach and to deal with the aftermath of a cyber event. &ldquo;I think of it like a three-legged stool,&rdquo; says Ian. &ldquo;Businesses need to constantly address and improve their pre-breach cyber-risk posture, have a well-documented and practiced post-breach plan, and purchase a cyber insurance policy to be properly guarded and well protected.&rdquo;&nbsp;</li>
</ol>

Sources
1 Check Point,<a href="https://pages.checkpoint.com/cyber-attack-2021-trends.html" target="_blank" rel="noopener"> &ldquo;Cyber Attack Trends 2021 Mid-Year Report&rdquo;&nbsp;</a> 2 Property Casualty 360, <a href="https://www.propertycasualty360.com/2021/05/17/regulatory-guidance-on-cyber-breaches-and-impact-on-the-insurance-market-414-202513/" target="_blank" rel="noopener">&ldquo;Cyber breaches, regulatory guidance and the insurance market,&rdquo;</a> May 17, 2021 3 Canadian Underwriter,<a href="https://www.canadianunderwriter.ca/insurance/should-insurers-and-others-be-banned-from-making-cyber-ransom-payments-1004208496/" target="_blank" rel="noopener"> &ldquo;Should insurers (and others) be banned from making cyber ransom payments?&rdquo; </a>May 30, 2021

Top 5 cyber loss controls that could become a pre-condition for insurance 

Top 5 cyber loss controls that could become a pre-condition for insurance | Featuring Ian Fraser

For many Canadians, the shift to working from home has been a silver lining of the global pandemic. Employees generally find they have a more flexible schedule, save time by not commuting and have fewer office distractions, leading to a happier and more efficient workforce. For employers, remote work has been overwhelmingly successful. In a January 2021 survey by PwC, 83% of employers said the shift to remote work has been successful for their company, up from 73% in PwC&rsquo;s June 2020 survey.&nbsp; However, while there are clear advantages to working from home, there remains a dark cloud over businesses: cyber risk.1 Around the world, cyber attacks &mdash; and their associated costs &mdash; have skyrocketed during the pandemic. In Canada, the cost of cyber compromise now averages more than $1.25 million, a 47% increase from&nbsp;&nbsp;2019, according to a new report by IT firm CDW Canada. An alarming 99% of businesses surveyed having reported a cyber attack between November 2019 and November 2020. 2 It&rsquo;s not only faceless criminals behind cybersecurity incidents. The 2020 Netwrix Cyber Threats Report found that since organizations went remote, four of the top six types of cybersecurity incidents they experienced were caused by internal users: accidental mistakes by admins (experienced by 27% of respondents); accidental improper sharing of data by employees (26%); misconfiguration of cloud services (16%) and data theft by employees (14%).3&nbsp; See: &ldquo;<a href="https://www.sovereigninsurance.ca/advice-and-tools/hot-topics/7-tips-to-protect-your-business-from-the-risks-of-remote-employees" target="">7 tips to protect your business from the risks of remote employees</a>&rdquo; If employers didn&rsquo;t take cyber security seriously before, they&rsquo;re certainly on high alert now. The global cybersecurity market is booming: it&rsquo;s forecast to reach US$230 billion this year as businesses beef up their cybersecurity spending to prevent attacks. There is a specific focus on securing remote infrastructure and Internet Protocol (IP) solutions because of the work-from-home shift.4 See: &ldquo;<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/cyber-loss-prevention-how-to-mitigate-cyber-risks-to-your-business" target="">Cyber loss prevention: How to mitigate cyber risks to your business</a>&rdquo;&nbsp; While taking measures to prevent cybersecurity incidents is imperative for businesses today, it&rsquo;s important to avoid a &ldquo;one and done&rdquo; approach. Cyber threats are constantly evolving, criminals are always one step ahead, and employees are only human. To further mitigate risks, businesses need to stay on top of emerging threats and continually provide cybersecurity <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-ways-to-bolster-your-it-security-strategy-with-employee-training" target="">awareness training for their employees</a>.&nbsp; This applies to the post-pandemic world too. Many companies are planning hybrid work models, so they&rsquo;ll have to stay vigilant about security for both remote work and physical office spaces.&nbsp; Despite their best efforts, no business can guarantee they&rsquo;re 100% secure against cybersecurity incidents. That&rsquo;s why <a href="https://www.sovereigninsurance.ca/industries-and-solutions/technology-and-cyber" target="">cyber security insurance</a> is a key piece of the risk mitigation puzzle. With the right coverage in place, a business can protect its bottom line and reputation in the event of a cyber attack or accidental data leak.&nbsp; Businesses should partner with an insurance company that&rsquo;s also evolving as the cyber landscape changes. Sovereign Insurance&reg;, for one, recently launched a new product suite, <a href="https://cdn-ca.aglty.io/sovereign-1/brochure-pdf/2023/Technology Risk and Cyber Liability Insurance_Sell Sheet.pdf" target="">Sovereign Secure TechPro</a>. It features more precise language designed to address the unique, new and emerging risks to Canadian businesses; enhanced policy forms to offer more comprehensive coverage; and modular products to provide greater flexibility.&nbsp; In addition to the financial protection provided to our clients by their technology or cyber policy, we provide education and consulting to help businesses keep pace with the rapidly changing risks of new technology and data regulations. With our partner CyberScout&reg;, we also provide resources in breach preparedness and crisis management services.&nbsp; Contact your broker to find out more about cyber coverage from Sovereign Insurance and how we can be an ally in your fight against cyber attacks. 
&nbsp;

&nbsp;CyberScout&reg; is a trademark of CyberScout, LLC and used with permission.
&nbsp;
&copy;2021 The Sovereign General Insurance Company, a member of The Co-operators group of companies. Sovereign&reg; is a registered trademark of The Sovereign General Insurance Company. Not all advertised products may be available in all jurisdictions. For full terms and conditions, including coverage limitations and exclusions, please refer to the policy wording. The Sovereign General Insurance Company is committed to protecting the privacy, confidentiality, accuracy and security of the personal information that we collect, use, retain and disclose in the course of conducting our business. Visit sovereigninsurance.ca or call toll free at 1-800-661-1652 to learn more. 
<div>&nbsp;</div>
 Sources

1 PwC, &ldquo;<a href="https://www.pwc.com/us/en/library/covid-19/us-remote-work-survey.html" target="_blank" rel="noopener">U.S. Remote Work Survey</a>,&rdquo; Jan. 2021 2 Business Wire, &ldquo;<a href="https://financialpost.com/pmn/press-releases-pmn/business-wire-news-releases-pmn/more-than-half-of-canadian-businesses-rarely-or-never-conduct-regular-penetration-testing" target="_blank" rel="noopener">More than half of Canadian businesses rarely or never conduct regular penetration testing</a>,&rdquo; May 4 2021 3 Insurance Business Magazine, &ldquo;<a href="https://www.insurancebusinessmag.com/ca/news/cyber/cyber-threats-related-to-insider-action-more-common-than-outside-threats-now-241627.aspx" target="_blank" rel="noopener">Cyber threats related to inside action more common than outside threats now,</a>&rdquo; Dec. 10, 2020&nbsp; 4 Markets and Markets, &ldquo;<a href="https://www.marketsandmarkets.com/Market-Reports/covid-19-impact-on-cybersecurity-market-128702677.html" target="_blank" rel="noopener">Covid impact on cybersecurity market by technology,</a>&rdquo; April 2020

How has the pandemic heightened awareness of cyber exposure?

There&rsquo;s a well-known saying in sports: &ldquo;the best offence is a good defense,&rdquo; but it applies to the trucking world as well. Defensive driving, defined by the Canadian Safety Council as &ldquo;driving to prevent collisions, in spite of the incorrect actions of others and adverse conditions,&rdquo;&nbsp; is one of the best ways to stay safe on the road.&nbsp; Just as commercial vehicle drivers have to learn the rules of the road, it&rsquo;s crucial they also learn defensive driving skills and techniques, and continually hone their safe-driving practices.&nbsp; What should defensive drivers look out for?
&ldquo;While you can&rsquo;t control the actions of other drivers or the conditions on the road, defensive driver training can help you learn how to identify potential hazards and respond safely and appropriately,&rdquo; says Kevin Dutchak, Team Lead, Commercial Auto, at Sovereign Insurance. These hazards include: careless, aggressive, or illegal actions by other drivers; poor visibility and road conditions due to adverse weather conditions; and pedestrians, bicyclists and animals that may be in harm&rsquo;s way. To illustrate the need to do more than just obey the rules, Kevin gives the example of a tractor-trailer driver who approaches a green light. He notices that a vehicle in the opposing lane has the left turn signal on, the wheels are turned, and he&rsquo;s creeping forward. Knowing he has the right of way, the tractor-trailer driver proceeds through the intersection while the other driver makes the left turn and a collision results.&nbsp; &ldquo;Who is liable for that collision? The answer is clear: the car turning left,&rdquo; says Kevin. &ldquo;But my question to commercial vehicle drivers is: was that accident preventable by both parties?&rdquo; If the tractor-trailer driver did recognize a threat, he likely could have prevented that accident. Importantly, Kevin says, drivers should look at potential hazards not from the point of view of who is liable, but from the need to prevent an accident regardless of who might be at fault.&nbsp; What are the benefits of defensive driver training?
While preventing accidents to keep people safe is the most compelling benefit of defensive driver training, there are several other benefits. These can include: safeguarding the fleet company&rsquo;s reputation through safe-driving behaviours; reduced violations and fines; reduced equipment losses; as well as fewer maintenance issues, as defensive driving techniques typically result in less wear and tear on engines, brakes and tires. In addition, defensive drivers can reduce stress on themselves, as they&rsquo;re better managing their driving environment and reducing the risk of collision. Regular training also provides drivers the opportunity to refresh their knowledge and skills. &ldquo;Even for experienced drivers, there&rsquo;s always room for improvement,&rdquo; says Kevin. &ldquo;Defensive driver training can identify complacencies that drivers have fallen into, such as not using turn signals or backing up without looking.&rdquo;&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/get-out-and-look-goal-in-action" target="">Get Out and Look: GOAL in action!</a> What are some key defensive driving skills and techniques?&nbsp; According to the Ontario Ministry of Transportation, defensive driving is based on three ideas: visibility, space, and communication. 1&nbsp; The basic principles include the following (among others):
<ul>
<li>Always be aware of traffic in front, behind and beside you.&nbsp;</li>
<li>Keep your eyes constantly moving, scanning the road ahead and checking your mirrors every five seconds or so.&nbsp;</li>
<li>Manage the space around your vehicle to let you see and be seen, and to give you time and space to avoid a collision.&nbsp;</li>
<li>Leave a cushion of space ahead, behind and to both sides.&nbsp;</li>
<li>Communicate with other road users to make sure they see you and know what you are doing.&nbsp;</li>
<li>Make eye contact with pedestrians, cyclists and drivers at intersections and signal whenever you want to slow down, stop, turn, or change lanes.&nbsp;</li>
</ul>
 For fleet owners and operators, one best practice is to have drivers participate in an annual review of defensive driving practices. This would ideally take place in the fall or spring when road and weather conditions are about to change. See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/how-to-build-roll-out-and-enforce-a-fleet-driver-training-program" title="" target="_blank" rel="noopener">How to build, roll-out, and enforce a fleet driver training program</a> &ldquo;There are additional risks with winter driving, so I recommend a review before the frost, ice, and snow arrives,&rdquo; says Kevin. &ldquo;Summer also presents additional risks, particularly with schools out and more children outside, an influx of tourists who are often unfamiliar with local road conditions and traffic flows, as well as road conditions that can deteriorate in dry, hot weather.&rdquo;&nbsp; <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/winter-driving-tips" target="">See: Winter driving tips</a> As there truly is no downside to defensive driving, fleet owners and operators should consider providing regular training for drivers at all levels of experience. Those who do will help keep their drivers and others safe on the road and help keep their fleet running smoothly.&nbsp; Sources 1 Ontario.ca, <a href="https://www.ontario.ca/document/official-mto-drivers-handbook/safe-and-responsible-driving" target="_blank" rel="noopener">&ldquo;The Official Ministry of Transportation Driver&rsquo;s Handbook: Safe and Responsible Driving.&rdquo;&nbsp;</a>

The benefits of defensive driver training

When hiring new drivers, applicants with years of trucking experience can look great on paper. However, regardless of a candidate&rsquo;s work history, it&rsquo;s crucial for fleet owners and operators to conduct a pre-hire road test to ensure the driver&rsquo;s skills and professionalism are up to speed.&nbsp; &ldquo;Obviously, you want to make sure the candidate can drive the vehicle, but the operative phrase here is &lsquo;&lsquo;in an appropriate manner,&rdquo; says Kevin Dutchak, Risk Specialist, Commercial Auto at Sovereign Insurance. &ldquo;Operators may not think they need to conduct pre-hire road tests because they only hire very experienced drivers. The problem with that is the majority of collisions don&rsquo;t occur because of issues with driving skills. The majority of loss events are due to risky driving behaviours.&rdquo;&nbsp; Those issues can be anything from driving faster than appropriate for road and weather conditions, to being distracted by things like texting or eating, to aggressive driving due to frustration with another driver on the road. &ldquo;Even if the candidate has 20 years of experience, that doesn&rsquo;t mean they&rsquo;re a safe, prudent driver,&rdquo; says Kevin. &ldquo;While you do assess skills in a pre-road test, you&rsquo;re also checking for any behavioural red flags.&rdquo;&nbsp; How are drivers put to the test?&nbsp; A pre-hire road test typically includes the following evaluation areas:
<ul>
<li>Pre-trip inspection, including: general condition of the vehicle, steering mechanism, condition of tires, lighting devices and reflectors, horn and windshield wipers, emergency equipment, and more.&nbsp;</li>
<li>Coupling and uncoupling procedures, including: connects air brake and electrical lines, charges trailer brakes, backs up slowly, visually checks for proper coupling of tractor fifth wheel to trailer kingpin, including performing a tug test, and more.&nbsp;</li>
<li>Placing the vehicle in operation, including: uses seat belt, starts vehicle properly, tests operation of air brake system, checks traffic and weather conditions prior to leaving terminal, and more.&nbsp;</li>
<li>Overall driving skills and behaviours, including: checks in all directions for traffic conditions, checks mirrors frequently, shifts gears properly, uses signals properly and well in advance, makes sure vehicle is in the proper lane for turning, stays within the speed limit, only passes in a safe location, doesn&rsquo;t allow vehicle to roll when stopped, and more.</li>
</ul>
 It may also be necessary to evaluate additional company-specific criteria. &ldquo;Previous experience does not necessarily mean the driver has the appropriate experience and behaviours for the job they&rsquo;re applying for,&rdquo; notes Kevin. For example, a driver&rsquo;s previous employment may have involved unloading containers at the local port and they were never required to back up a tractor-trailer into a dock. So, it&rsquo;s not reasonable to assume the driver will automatically be able to perform that maneuver.&nbsp; Ideally, a pre-hire test should be a minimum of two hours to ensure all areas are covered. It should also be conducted in conditions and/or on roadways that are similar to what the prospective job will entail. &ldquo;Whether they&rsquo;re going to be driving in heavy traffic, or two-lane highways in rural traffic, part of the pre-hire road test should include those types of road conditions,&rdquo; says Kevin.&nbsp; As the test goes along, the evaluator fills out a checklist or scoring sheet. It&rsquo;s up to each company how detailed the test is, as well how it&rsquo;s graded and weighted. When the test is done and the evaluation form is complete, both the evaluator and the driver should sign the document.&nbsp; Ultimately, the aim of a pre-hire road test is to help fleet owners and operators screen candidates and keep their employees, customers and the general public safe. While safety is the top priority, there are financial and reputational risks that can be mitigated by conducting pre-hire road tests. For example, carriers questioning the time or resources required to carry out a pre-hire road test should consider the cost of the equipment the new hire will be responsible for. With tractor-trailers costing well into the six figures, it&rsquo;s worth the investment to ensure they&rsquo;re hiring the right drivers.&nbsp;&nbsp; In addition, a driver that racks up fines and violations can lead to a poor carrier profile, which can impact the business. &ldquo;You may have clients or potential clients who request a copy of your carrier profile, and if you have a high violation rate, they may decide to take their business elsewhere,&rdquo; says Kevin. &ldquo;It all ties back to the quality of the drivers that you&rsquo;re hiring.&rdquo;&nbsp;

The importance of pre-hire road tests

Automobile fires are often preventable if the right risk mitigation measures are taken, and proper maintenance is followed. However, it&rsquo;s important to be aware of the common causes of vehicle fires and how to prevent them. We asked Sovereign&rsquo;s Don Mann, Risk Specialist, all of our burning questions (no pun intended) about vehicle fires &ndash; what causes them, how they spread, and most importantly how to prevent them.&nbsp; Don has over thirty years of experience in fire services and retired as an Operations Captain. He is NFPA 921 Fire and Explosion Investigations certified. Over his several years in fire operations he has attended to many single and multiple fire incidents and subsequently rendered investigative determinations on cause and origin. What are the common causes of vehicle fires?
Many of the common causes of vehicle fires that I&rsquo;ve witnessed over my career mirror those noted by Micheal Wood, a captain at Toronto Fire Services. He identifies the following1 : 
<ul>
<li>Fuel system leaks:&nbsp;Rotten fuel lines; faulty fuel line connectors; leaky fuel injection system</li>
<li>Electrical system failures :&nbsp;Faulty car battery; broken lightbulbs; short circuits; the breakdown of fuses, fusible links, and circuit breakers</li>
<li>Mechanical failures:&nbsp;Faulty design in the vehicle or improperly installed device</li>
<li>Heat source:&nbsp;Overheated engine due to worn-out water pump or cooling fan; heat from powered equipment; smoking and driving; hot or smoldering objects</li>
<li>Aftermarket accessories:&nbsp;Installations not carried out by authorized technicians can inadvertently introduce an electrical fault and cause a fire</li>
<li>Catalytic convertors:&nbsp;Catalytic converters can be a magnet for road debris that catches on the converter&rsquo;s heat shield and burns; if clogged or overworked, it can easily overheat</li>
<li>Rodents/animals:&nbsp;Nests that act as kindling; stashes of nuts; soy-based wire insulation that attracts rodents to chew through the wiring</li>
<li>Dangerous cargo:&nbsp;Propane tanks and gasoline jerry cans can fuel a fire in the event of a collision; transporting or storing toxic chemicals in vehicles not designed for the task </li>
</ul>
While there are several potential causes, and it&rsquo;s not entirely uncommon for the cause to be deemed &lsquo;undetermined&rsquo; following investigations, it&rsquo;s still critically important to carry out a thorough investigation to understand the cause of the fire and ensure the future safety of your fleet, drivers, and others on the road. For example, there was a recent example of a claim where the cause of fire was determined to be a defective block heater, and the fire occurred prior to the insured receiving a recall notice from the manufacturer. In this case, a forensic fire investigator was able to determine the cause, which was invaluable evidence along with the subsequent recall notice to be able to successfully recover the financial loss from the manufacturer. In my experience, it&rsquo;s very seldom that vehicle manufacturers accept liability, and this was one of those rare cases that was supported by a strong investigation and the preservation of evidence. There have been claims investigations for fires that ultimately do result in a manufacturer issuing a recall and this reinforces the necessity of a thorough claims investigation to recover not only for existing claims but also to protect against future claims to protect the public at large from property damage, injury, or death.&nbsp; What ignites first in a vehicle fire? I could speculate based on my experience, but it&rsquo;s best to look to the data to answer this question. According to Highway Vehicle Fires data2 , most items that first ignite fall under the category of &lsquo;general materials&rsquo;, which includes tires, insulation around electric wire and cables, trash, and fabric. The most common item to initially ignite is insulation around the electrical wiring, or cables. Unsurprisingly, the second leading category of &lsquo;items first ignited&rsquo; is liquids, piping, and filters, which include fuel in various locations throughout the vehicle.&nbsp; In your experience, is it common for engine fires to spread to the fuel tank?&nbsp;
I have never been involved in a case where the fire has spread to the gas tank. Typically, gas tanks are located at the rear of the vehicle, however considering that today most gas tanks consist of plastic, this could be viewed as an exposure potential.&nbsp; It&rsquo;s worth noting that with the rise of electric and hybrid vehicles, there are more batteries located behind rear seats and in trunks, along with the associated wiring that travels within the rocker panels and other areas of the vehicle. In the case of an electrical system failure, these wires could spread fire throughout the vehicle.&nbsp; If so, does the type or size of gas tank affect the potential exposure?&nbsp; The type or size of gas tank doesn&rsquo;t necessarily affect the potential exposure, however since most gas tanks today are comprised of plastic, this raises potential for general concern.&nbsp; When there is a vehicle fire, is the fire typically contained to the vehicle, or does it tend to spread to other vehicles or buildings?&nbsp; Typically, a vehicle fire stays contained to the vehicle. However, if the subject vehicle is located in close proximity to another vehicle, then there is potential for radiant heat to affect other exposed vehicles, leading to deflagration.&nbsp; When it comes to accumulated exposures, it is common for large industrial companies to store their vehicle in the yard, parked side by side. As we&rsquo;re well aware, vehicles contain both flammable/combustible liquids (gasoline, oils, antifreeze, etc.) and highly combustible materials (upholstery, plastics, etc.) which when exposed to fire can very quickly spread, causing a 100% loss expectancy.&nbsp; Are you familiar with any situation where a fire started in a vehicle and spread to the building that the vehicle was parked in?&nbsp; I have been involved with vehicle fires where the vehicle was in close proximity to a structure where radiant heat damaged some exterior siding materials. I have also seen a situation where the subject vehicle was located in a garage and led to the extension of fire to the interior of the building.&nbsp; Based on your experience, are specific vehicle types more susceptible?&nbsp; Not necessarily. However, electric and hybrid vehicles, due to the level of electronics and electrics within the vehicle&rsquo;s design, can tend to have greater fire development potential resulting from electrical failure and fire developing due to arcing.&nbsp; Do vehicle fires tend to happen mainly when a vehicle is running, while warming up, or after it has been shut off from being in use?&nbsp; My experience seems to indicate that vehicle fires generally occur during the use of the vehicle and after the vehicle is shut down after being used.&nbsp; What are some recommendations to help prevent vehicle fire losses? When storing vehicles in your yard/compound for extended periods of time: 
<ul>
<li>Eliminate as much fuel from the tank&nbsp;</li>
<li>Disconnect the battery or install kill switches or devices that disconnect the power supply from the batteries to the vehicle systems when the vehicles are parked overnight.</li>
<li>Separate your compound into two areas to store vehicles that are parked vs. in use.&nbsp;</li>
<li>Restrict a large accumulation of units stored together in one large group. Maintain smaller groups of vehicles and provide a clear space between groups (minimum 25 ft if possible). Large fleets should be kept at a minimum of one empty parking space every five units, when possible, to help firemen stop the spread of fire.</li>
<li>Do not store accumulations near building structures &ndash; store as far away as possible &ndash; ideally 50 ft clearance.</li>
<li>Install recordable surveillance cameras to monitor your exterior yard.&nbsp;</li>
<li>Engage in physical security patrols in rural and industrial areas</li>
<li>Make sure vehicle keys are secured inside the building but accessible so they can be accessed quickly in the event of a fire, and so that the units not involved can be moved/relocated.</li>
<li>Ensure local fire services are aware of your emergency response plan and keep a spare key to the vehicle lock box in the fire department&rsquo;s lock box, located at an offsite location and chosen by the fire department.</li>
</ul>

Fire prevention is just one of the many ways to protect your fleet, drivers, and your property. Check out the <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/auto-risk-management-toolkit" target="">Auto Risk Management Toolkit</a> for helpful resources to protect and support your drivers and help prevent road risks before they happen.&nbsp;
 
1<a href="https://autocatch.com/articles/nine-common-causes-of-car-fires/#:~:text=Fuel%20leaks%20are%20the%20most,mix%20is%20ideal%20for%20ignition." target="_blank" rel="noopener">Nine common causes of car fires.</a> (2018, January 3). Retrieved March 25, 2021, 2Highway Vehicle Fires (2014-2016). (2018). Topical Fire Report Series, 19(2).

Vehicle Fires: how they start, spread, and how to prevent them

Businesses and consumers rely on commercial truck drivers to keep the country moving. But as demand for the delivery of goods and materials rises, it&rsquo;s a challenge for fleet managers to recruit the best, most qualified drivers. While skills shortages and demographic shifts in the industry can be a roadblock, fleet companies must stay focused on hiring the right people for the job.&nbsp; &ldquo;Drivers are the heart of your fleet and your company,&rdquo; says Richard Par&eacute;, Risk Management Specialist at Sovereign Insurance. &ldquo;Just like the human body, if you have a strong heart, everything works more effectively and efficiently. So, the number-one priority for fleet managers is to conduct a thorough evaluation and selection of drivers.&rdquo;&nbsp; If you don&rsquo;t hire carefully, it can be dangerous and costly. Accidents and violations on the road can increase, and your company can be exposed to claims. To help fleet managers reduce their risk factors and find the right people for the job, Richard shares key best practices for hiring and onboarding new drivers.&nbsp;&nbsp; Establish clear hiring criteria. The first step is to establish clear hiring criteria that reflect the needs of your organization. Hiring standards start with making minimum age and experience requirements. Will you hire drivers at 18 years old with no experience, or are you looking for drivers 25+ with at least three years of experience? In addition, establish the maximum demerit points a driver candidate can acceptably have, how many violations they can have (for example, a minor speed violation may be acceptable, but three speed violations in six months, or a DUI conviction may not be acceptable), and the maximum number of accidents they can be involved in. By establishing such standards at the beginning, you have created a pre-screening of your drivers. Get more information. If the driver meets your pre-screening requirements, it&rsquo;s time to dive into the details. Have the driver fill out an application form that includes their work history and driving experience, the type of commercial vehicles they have driven, and accident history. Request a driver abstract that is no older than one month to ensure you have the most up-to-date information on any infractions. If the candidate looks like a good fit, conduct a structured interview that uses a standardized process of inquiry. This interview may help you gather more details and fill in any gaps on the application form. Be sure to take notes and document what was discussed in the interview.&nbsp; Conduct a road test. If you&rsquo;d like to move forward with a candidate after the interview, set up a road test (first checking that their driver&rsquo;s license is valid). A senior driver who has a clean record, and training as an evaluator, is the ideal person to conduct the test. Evaluate the candidate&rsquo;s driving abilities on the road, using whichever road test best suits your needs. The test should also include non-operational elements such as pre- and post-trip inspections.&nbsp; Check references. It&rsquo;s a good idea to check references after the road test, not before. Given the demands on employers today, reference checks aren&rsquo;t always easy to conduct. So, if a driver doesn&rsquo;t demonstrate great skills during the road test, you may have conducted reference checks for nothing. If the driver passes the test, then make the reference checks with previous employers and document the information you receive. Conduct a thorough and fully documented orientation. If the driver has made it this far and is hired, now it&rsquo;s time for orientation. Many organizations use an orientation sheet with various topics to discuss, including safety policies and procedures, maintenance programs, disciplinary measures, and more. When the orientation is complete, tick the boxes on the checklist and have the driver sign-off. It&rsquo;s critical to document every aspect of safety education and training, as you will need to show your due diligence in the event of an insurance claim.&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/the-importance-of-investing-in-your-drivers" target="">The Importance of investing in your drivers&nbsp;</a> Provide practical training. Before a new driver goes it alone on the road, provide practical training with a mentor driver. This will cover everything from safety inspections to load securement to driving techniques. Specific company and client training should be performed: even drivers with relevant experience require training specific to the company they will be working for (for example, equipment and procedures), and the clients they will be servicing. In any case, document the training, including who provided the training, when it took place, and what was covered.&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/how-to-build-roll-out-and-enforce-a-fleet-driver-training-program" title="" target="_blank" rel="noopener">How to build, roll-out, and enforce a fleet driver training program</a> While hiring and onboarding qualified drivers isn&rsquo;t easy, it is vital for the overall safety of your operations. Doing your due diligence from the start ensures the safety of your driver and can help your organization save money and reduce risks in the long run. As you&rsquo;ll discover, it&rsquo;s worth it to go the extra mile.&nbsp;&nbsp;

Best practices for hiring and onboarding new drivers

Risk Resilient: Water Damage

Risk Resilient: Spontaneous Combustion - Commercial

Risk Resilient: Storage of flammable and combustible liquids

Risk Resilient: Legionnaires' Disease

Get Out and Look: GOAL in action!

Check out the Commercial Building Security bulletin to learn more about how to protect your premises.

Commercial Building Premises Security

Once you've read the bulletin below, put your knowledge to the test! <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/commercial-building-premises-security" target="">Click here to see if you can spot 8</a> Commercial Building Premises Security risks.

Risk Resilient: Commercial Building Security

Cargo thefts have a significant impact on the Canadian economy, and unfortunately, the COVID-19 pandemic is expected to further increase the number of stolen cargo loads, especially in already vulnerable areas. With so many critical supplies and resources delivered by road transportation, now more than ever it&rsquo;s imperative for transport carriers to take additional steps to protect the critical cargo being hauled.&nbsp; This checklist provides general guidance only. Refer to the terms and conditions of your policy for further details regarding your obligations with respect to construction sites and partially built structures. In the event of any conflict between this general guidance and your policy, the terms of your policy will govern.

Cargo Theft Prevention Best Practices During the COVID-19 Pandemic

Businesses across Canada have taken significant measures to protect their communities from the risks of COVID-19. And no measure is arguably greater than shutting down their operations, either fully or partially, to abide by declarations of emergency and help stop the viral spread. After several weeks of shutdowns, and equipment sitting idle, businesses are getting ready to return to a &lsquo;new normal&rsquo;. However, it&rsquo;s not as simple as flicking on a switch. Important safety measures should be followed before restarting your equipment. Please find below some helpful tips to safely restart your equipment after a prolonged shutdown.

How to Safely Restart your Equipment after a Prolonged Shutdown

Few types of coverage are quite as misunderstood as Equipment Breakdown insurance. Though brokers and buyers are becoming more informed, there remains a common misconception that Equipment Breakdown only provides coverage for conventional equipment such as pressure vessels and mechanical machines. But this is not your father&rsquo;s (or your grandfather&rsquo;s) Boiler and Machinery insurance. Equipment Breakdown is an essential coverage for almost any business. While many owners and operators think losses related to equipment breakdown are covered under their Property policy, there are exclusions that Equipment Breakdown insurance is designed to fill. Not only does Equipment Breakdown insurance cover equipment that needs to be repaired or replaced, it also covers losses due to business interruption. For example, if key equipment is damaged, a company may not be able to continue their operations right away, which could have big financial and reputational impacts. Or, if a company has a refrigeration breakdown, it would be very costly to throw out spoiled product. Equipment Breakdown coverage helps companies mitigate revenue losses and get back in business as quickly as possible. So why has Equipment Breakdown coverage been widely misunderstood? A quick history lesson: Boiler and Machinery insurance was created during the Industrial Revolution to protect companies with steam boilers from the risk of explosion or other major breakdown. Over the ensuing decades, the coverage evolved to include a broader range of equipment and electronics, including computers, copiers and phone systems. Understandably, the Boiler and Machinery moniker led many people to believe that if their business didn&rsquo;t have a boiler or machinery risk, they didn&rsquo;t need the coverage. That necessitated new terminology&mdash;Equipment Breakdown insurance&mdash;which came about in the late 1990s. Today, Equipment Breakdown insurance is all-encompassing, ranging from HVAC equipment, to production machinery equipment (Computer Numerical Control &ndash; CNC - machines), to all types of electrical and technology equipment. However, there&rsquo;s still a lack of understanding about how essential this coverage is for just about every business. &ldquo;Many people who have been in the insurance industry for a long time still refer to it as Boiler insurance, but it&rsquo;s important to steer away from that language,&rdquo; says Natasha Blackbird, Portfolio Specialist, Equipment Breakdown, at Sovereign Insurance. &ldquo;If the insured doesn&rsquo;t have a boiler, they&rsquo;ll automatically think they don&rsquo;t need Equipment Breakdown insurance. But with all the new types of equipment&mdash;particularly electrical and electronics&mdash;there&rsquo;s more exposure, or failures that could temporarily shut down a company&rsquo;s operations.&rdquo; What about cost? &ldquo;Most of the time, Equipment Breakdown insurance is complementary and usually packaged with the Property policy,&rdquo; says Natasha. &ldquo;Whether Equipment Breakdown coverage is attached to a Property policy or Standalone, we work with brokers and clients to develop a tailored solution for their business.&rdquo; To keep Equipment Breakdown insurance top of mind among brokers and insureds, education is key. With the constant influx of new technologies and cutting-edge equipment, brokers need to stay up to date on the trends and have the tools and resources to provide information to clients. For Sovereign Insurance&rsquo;s part, Natasha says, &ldquo;we counsel our brokers, partners and underwriters on understanding the coverage and what questions to ask to match the insured&rsquo;s needs with the benefits of Equipment Breakdown insurance.&rdquo;

Why Equipment Breakdown Insurance is essential to your business

There&rsquo;s no disputing it: a lawsuit can have devastating impacts on a business, including financial losses and reputational harm. To protect your business against the threat of claims and lawsuits, having liability insurance suited to your business needs is critical.&nbsp; Liability insurance typically covers legal costs and payouts if the Insured is found legally liable for claims of harm or wrongdoing against a third party, including injuries or property damage. Unlike other types of insurance, liability insurance pays third parties, not policyholders.&nbsp; As there are many different types of liability coverage available in the marketplace, liability insurance can seem tricky to navigate. Here is a general overview of the different types of liability coverage and some of the most common ways these policies can help protect your business.&nbsp; General Liability: General Liability insurance typically protects your business against claims in three areas:&nbsp;
<ol>
<li>bodily injury or property damage stemming from your product or service</li>
<li>personal and advertising injury, which protects you against offenses such as libel, slander, false arrest, and copyright infringement</li>
<li>medical payments for injuries sustained by a non-employee on your premises. </li>
</ol>
This protection covers legal costs to defend a claim related to one of the three areas mentioned above as well as payments for damages if you are found liable. General Liability typically only provides coverage for any non-professional negligent acts, meaning negligence that doesn&rsquo;t relate to your rendering of professional or expert services.&nbsp; Professional Liability: Professional Liability insurance helps protect those who work in professional services, including accountants, consultants, lawyers and physicians, against claims initiated by their clients. Policies typically provide coverage for liability arising from errors and omissions, negligent acts and misrepresentation. Professional Liability policies are generally written on a &ldquo;claims made&rdquo; basis, which means you&rsquo;re covered for claims made against you only while the policy is in effect, unless your policy contains a retroactive date.&nbsp;&nbsp; Employer&rsquo;s Liability: Workers&rsquo; Compensation insurance is generally required by law and pays for medical expenses and lost wages stemming from work-related injuries and illnesses. However, it doesn&rsquo;t cover lawsuits&mdash;and that&rsquo;s where Employer&rsquo;s Liability insurance comes in. An Employer&rsquo;s Liability policy can protect you by covering legal costs and compensation should an employee sue for a work-related illness or injury. In addition, since some industries are exempt from Workers&rsquo; Compensation insurance, Employer&rsquo;s Liability can provide coverage for claims brought against a business if found to be negligent.&nbsp; Wrap-up Liability: This coverage protects most (if not all) workers on a construction project&mdash;including contractors, property owners, subcontractors, architects, developers and engineers&mdash;under a single policy. Rather than a general contractor being forced to rely on each party&rsquo;s General Liability for coverage, the project owner can buy Wrap-up Liability insurance that can cover all contractors who work on the project. This reduces any potential coverage issues among all parties involved and keep&rsquo;s a contractors General Liability policy free from losses. Another advantage is that wrap-up policies can be easily tailored to individual projects (as opposed to a broader General Liability policy).&nbsp; Third-party or Auto Liability: For companies with employees operating commercial vehicles on public roadways, accidents can lead to fatalities, injuries, property damage and costly lawsuits. Third-party Auto Liability can protect your business from the financial costs associated with these events, including legal costs and damages awarded in a lawsuit. All vehicles are legally required to carry this coverage.&nbsp; For any business, there is a strong case to be made for investing in liability insurance, as there is always the potential for a third party to be harmed through products and services. That means it&rsquo;s not whether or not you need liability insurance, but which types are suited to your business needs. Contact your broker to determine which coverage(s) may help you protect your business.&nbsp; IMPORTANT: Liability insurance does not cover everything.&nbsp; Please refer to your policy for applicable limitations and exclusions. We encourage you to review your coverages and limits regularly to ensure adequate protection.&nbsp;

Liability Coverage 101: What are the different types of liability coverage?

With the rise of Amazon and the threat to traditional retail models, organizations that manufacture products are under pressure to improve their already fine margins. Outsourcing the manufacturing of a product to a foreign company can be a great way for a company to cut costs; it&rsquo;s a natural move for many companies in today&rsquo;s increasingly globalized business world. But it&rsquo;s not quite that simple. Even outsourcing to developed market countries could bring complications. Contracts between vendor and manufacturer need to be thorough and stringent and enforced with a clear and defined strategy. Your brand reputation is based on the quality of your product, so handing that responsibility to another company is a big deal. From product quality control and delivery timelines to the parts and components that are used, there are many important things to consider when deciding on whether to outsource, and then consequently, to what company. Before an outsourcing contract can be inked, business leaders need to enforce quality control measures that ensure product standards are upheld. Here&rsquo;s some tips on how to do it. 
<h4>Commissioning an independent local auditing company to examine the contractor&rsquo;s capabilities and quality controls can be a good way of getting a clearer picture of any potential pitfalls. </h4>
<h4> Supplier Selection </h4>
One of the most important aspects of outsourcing manufacturing is finding the right contractor. Start off by identifying a selection of potential partners and then sending each a Request for Proposal (RFP). It&rsquo;s at this stage that you clearly outline your requirements and expectations around the manufacturing process, quality of product, repairs, materials, testing processes, capacity, monitoring, and reporting. It&rsquo;s also crucial to demand references &ndash; we recommend from no less than three existing clients &ndash; from your potential outsourcing partner. 
<h4>Auditing</h4>
 Commissioning an independent local auditing company to examine the contractor&rsquo;s capabilities and quality controls can be a good way of getting a clearer picture of any potential pitfalls. Auditors will examine several key areas, including quality control methods, production strategies, testing, and corrective action and inspection. With this information in hand, you&rsquo;ll be much better equipped to make an informed decision. 
<h4>Premises review</h4>
 A separate audit or report should be carried out on your potential contractor&rsquo;s facilities. Premises play a crucial role in quality control and this audit can help ensure that employees are working in a safe environment. The facilities test should follow the parameters set out by the International Organization for Standardization (ISO), using an ISO 9001-2000 Checklist. This checklist outlines the requirements for a quality management system. It requires that an organization demonstrates its ability to consistently provide product that meets customer and applicable regulatory requirements. Analyzing every point on the list will help give you a detailed account of the company&rsquo;s facilities &ndash; its strengths, weaknesses and any defects. 
<h4>Develop an on-site inspection plan</h4>
 Arrange for specialized engineers to check the product at different stages of its development cycle. Get your engineers to visit the facilities when production is in process and again when the product is complete and ready for shipment. Implementing this type of plan helps avoid the need for time consuming fixes later in the process and reduces quality risks. You might also want to consider hiring your own Quality Control (QC) / Quality Assurance (QA) Manager or Engineer to provide guidance and consultation and at every stage of the manufacturing process. Typically, this would be a Canadian QC/QA Manager or Engineer who resides and works in the city where your manufacturing is taking place. With this arrangement, you&rsquo;re able to develop a much closer relationship with your manufacturer and you&rsquo;re able to oversee the manufacturing and QC process from design, to start of production, to the packaging/shipping stage on a full-time daily basis. This arrangement may not always be possible, depending on your manufacturing arrangement or type of product. But for products that could pose severe or long-tail Product Liability exposures (i.e. liabilities that carry a long settlement period), or that require a high level of technical expertise, manufacturers should seriously consider hiring their own on-site QC/QA team. 
<h4>Summarize your findings</h4>
 Share your plans, findings and audit results with your senior management team and ask each to come back with some feedback or further questions on each potential contract manufacturer. Then, rule out the candidates that don't meet your standards. With the remaining companies, develop a detailed breakdown on each one, highlighting how they perform in the areas that are most important to you. After summarizing each candidate at length and analyzing their strengths and weaknesses, you should be able to decide on your final choice. 
<h4>There is another way&hellip;</h4>
 Outsourcing to foreign manufacturers is becoming an increasingly popular trend in the modern world, but that doesn&rsquo;t necessarily mean it&rsquo;s the best option for you. Yes, outsourcing abroad does have the potential to cut costs significantly, but one poorly executed production cycle could damage your company&rsquo;s reputation beyond repair and leave you with an insurmountable product recall list. There are ways of making outsourcing to foreign companies work but it&rsquo;s not for everyone, and it&rsquo;s okay to say &ldquo;I don&rsquo;t think it suits our company&rdquo;. Sourcing to companies in North America may be the best option for companies who rely on their product meeting exacting quality standards. Choosing the best manufacturer to create your product is one of the most important business decisions you&rsquo;ll ever make. Just remember: cheaper doesn&rsquo;t always mean more value, so it&rsquo;s important to carry out your due diligence when exploring your options. Overseas partners can help grow your business, but sometimes the solution to your production needs is closer than you think.

How to maintain quality when outsourcing your product overseas

Manufacturing,Wholesale Transportation and Logistics

Having a strong online presence is a necessity for any modern business. No matter what size you are or what industry you&rsquo;re in, having the capability to communicate with customers and carry out transactions online is now customers&rsquo; standard expectation. While most businesses are now savvy to the threats posed by a cyber breach or hack, many may not be aware of the new European privacy regulations introduced in May 2018 that are creating a whole new set of risks for companies that do business in the EU, either physically, or online.
<h4>What is the General Data Protection Regulation?</h4>
The General Data Protection Regulation (GDPR) is a set of data protection rules for all companies that either (a) have an "establishment" in the European Union (EU) and "process" "personal data" in the context of the activities of that establishment, or (b) have no establishment in the EU but they process the personal data of individuals that are in the EU and such processing relates to (1) offering goods or services to an individual in the EU or (2) monitoring the behaviour of individuals, where that behaviour occurs in the EU (all words and phrases in quotations are defined in the GDPR). The rules aim to give consumers more control over their personal data, reshape the way organizations approach data privacy and create a more level playing field for businesses. The GDPR has extra-jurisdictional effect and applies regardless of where a company is physically located. If your activities fall within (a) or (b) in the paragraph above, the GDPR applies to your company. In today&rsquo;s connected marketplace, GDPR has a very wide reach. GDPR requirements are, in many respects, more stringent and comprehensive than similar North American regulations, including the Personal Information Protection and Electronic Documents Act (Canada). The definition of personal data in the GDPR is broad, and the requirements around how to collect, use and disclose personal data in a compliant manner are, in general, more restrictive. For example, under the GDPR a notification regarding most personal data breaches must be sent to the appropriate supervisory authority without undue delay and, where feasible, not later than 72 hours after becoming aware of the breach. Further, in many cases, breach notifications must also be sent to affected individuals without undue delay.
<h4>What are the consequences of non-compliance?</h4>
Companies that fail to comply with the GDPR could face significant financial penalties of up to &euro;20 million or 4% of annual global turnover (whichever is greater) for the most serious infringements, such as violating the Privacy by Design concepts or having insufficient customer consent to process personal data. Less serious breaches of the GDPR, including not having records in order and not notifying the supervising authority and data subject about a breach, could lead to a fine of up to &euro;10 million or up to 2% of annual worldwide turnover (whichever is greater). 
 Companies that fail to comply with the GDPR could face significant financial penalties, the insurability of which remains a bit of a grey area in most jurisdictions. Although a robust cyber insurance policy may cover a company&rsquo;s exposure to privacy breaches under GDPR, PIPEDA and other privacy legislation, criminal penalties are almost never insurable. 
<h4>Can insurance provide protection for GDPR fines / penalties?</h4>
Companies that fail to comply with the GDPR could face significant financial penalties, the insurability of which remains a bit of a grey area in most jurisdictions. Although a robust cyber insurance policy may cover a company&rsquo;s exposure to privacy breaches under GDPR, PIPEDA and other privacy legislation, criminal penalties are almost never insurable. Getting a good understanding of your own GDPR related risks is an important first step. Reducing your risk of being fined can be achieved through GDPR compliance. 
<h4>If GDPR applies to your company, here are some things to consider</h4>
What personal data are we collecting and where are we storing it? The first step for any company is to understand exactly what personal data it collects and uses, and where it physically stores that personal data, so that it can then develop a GDPR compliance program. Why are we collecting the personal data? &shy; Under GDPR, all companies are required to be able to explain how the personal data they collect will be used. Companies also need to be able to send that information to the individual if requested to do so. Do we have adequate consent to collect, use and disclose personal data?&nbsp; GDPR contains strict consent requirements regarding the collection, use and disclosure of any personal data. Companies should ensure that they&lsquo;re compliant with such consent requirements. What cyber risks do we face? &shy;&shy;&shy; In addition to the myriad of other consequences that will arise from a data breach, the GDPR contains strict notification requirements with respect to data breaches. This is just one more reason to proactively analyze your cyber weak spots and to take steps to mitigate any risks. What do we do if the worst case scenario does happen?&nbsp; Having a data breach response strategy in place is essential. Make sure your key team members know exactly what to do and who to call as soon as you&rsquo;re aware of the breach. Every minute counts. Compliance is crucial but can be challenging in the murky and often complex world of online business. Being insured adds another, much-needed, layer of security against data breaches, but as we&rsquo;ve noted above, privacy regulations are adding a whole new set of risk factors. So, when it comes to speaking to your insurance broker about renewing your cyber insurance policy, you may want to add &lsquo;GDPR risks&rsquo; to your list of questions.

Collecting personal data from EU residents

While businesses are becoming increasingly aware of the dangers of social engineering, it&rsquo;s important to remain ever vigilant because the tactics continue to evolve. Tactics like phishing remain a threat and there&rsquo;s no doubt that the impact can be substantial. That being said, the impact is generally contained to one company. Vendor Email Compromise (VEC) on the other hand is an emerging social engineering tactic that not only compromises one company, but their entire supply chain. These strikes are becoming increasingly more prevalent, as they bring the possibility of an even bigger payout for attackers. According to Armen Najarian, Chief Identity Officer of The Agari Cyber Intelligence Division (ACID) group, &ldquo;on average, a Business Email Compromise (BEC) CEO fraud attack will generally pay out in the $50,000 to $55,000 range, but a successfully executed Vendor Email Compromise (VEC) attack will pay more than double at around $125,000 on average.&rdquo;1&nbsp; According to Agari, &ldquo;VEC is likely to overtake BEC as the single biggest potential financial fraud during the course of 2020.&rdquo;2&nbsp; That&rsquo;s why it&rsquo;s so important to watch out for and properly educate employees &ndash; especially those that receive and process invoices.&nbsp;
Here&rsquo;s what you need to know to prevent a VEC attack on your business. What is Vendor Email Compromise (VEC)? A VEC attack aims to take over the email account of a vendor. The attacker issues near-identical vendor invoices or billing documents to the often-larger client companies with new banking information in the hopes of diverting payments to themselves. The destination accounts are often accounts owned by the attacker, used to aggregate funds from multiple targets but, without a paper trail leading back to the attacker. &nbsp; How do they do it?
<ul>
<li>The VEC group sends phishing emails to the vendor's staff that include a malicious link.</li>
<li>Once the vendors click on the link, they're redirected to a phishing login page where vendors are asked to log in using their credentials.</li>
<li>Once the vendors enter their credentials, the attacker uses those credentials to set a forwarding rule to forward all emails received by the vendors to the attacker's email.</li>
<li>The attacker then monitors the inbox for any emails regarding invoices or payments.</li>
<li>If the attacker notices emails that contain invoices or payments, they will duplicate those invoices and send a modified invoice with new banking details pointing to an attacker owned account (often a mule account).</li>
<li>The actual target customer is never phished or directly contacted.</li>
<li>The vendor's customer makes a payment to the attacker's bank account thinking that the email invoice is from the vendor.</li>
</ul>
&nbsp; What to look for:
<ul>
<li>Urgent requests to change bank account information or payment instructions.</li>
<li>Updating account or payment information right before the normal payment cycle.</li>
<li>Requests for one-time wire transfers or EFTs to a different bank or account number.</li>
<li>Invoices from possible spoofed or suspicious looking email addresses.</li>
<li>Invoices from representatives at the vendor organization that do not typically send invoices or are not recognized.</li>
</ul>
&nbsp; Prevention Techniques:
<ul>
<li>Ask for confirmation of banking information or payment changes through another method:</li>
<ul>
<li>Telephone number published in the original intake form or published on the company's website (instead of using a phone number provided by the potentially compromised email).</li>
<li>An alternate email address from the same domain (@companyxyz.com) but not provided by the compromised email address.</li>
</ul>
<li>Consider a secondary review of payment information changes by another team member to increase the probability of identifying unusual or suspicious information.</li>
<li>Recommending preventative measures for vendors:</li>
<ul>
<li>Disallow email auto-forwarding rules.</li>
<li>Ensure anti-phishing/suspicious email training is completed.</li>
</ul>
</ul>
 1Townsend, K. (2019, November 4). <a href="https://www.securityweek.com/vendor-email-compromise-latest-identity-deception-attack" target="_blank" style="background-color: #ffffff;" rel="noopener">Vendor Email Compromise is Latest Identity Deception Attack</a>. Retrieved March 11, 2020 2Townsend, K. (2019, November 4). <a href="https://www.securityweek.com/vendor-email-compromise-latest-identity-deception-attack" target="_blank" style="background-color: #ffffff;" rel="noopener">Vendor Email Compromise is Latest Identity Deception Attack.</a> Retrieved March 11, 2020

Understanding Vendor Email Compromise Attacks

Speeding, collisions, distracted driving, mechanical failure, cargo shifts, taking a curve or sharp bend in the road too quickly &ndash; these are just some of the common reasons for trucking accidents that take place on our roads every day. With over 300,0001 truck drivers in Canada, there are bound to be accidents.&nbsp; Consider the following tips to help your fleet reduce the potential for accidents and respond appropriately if an accident does occur. Prevention &amp; Preparedness
Naturally, prevention is the best policy. To mitigate risks, driver training and safety technology play key roles. At a recent virtual panel discussion hosted by U.S.-based Federal Motor Carrier Safety Administration (FMCSA), Brett A Sant, SVP &ndash; Safety and Risk Management, Knight-Swift Transportation Holdings Inc. outlined four areas safe drivers will focus on when operating a commercial truck: managing vehicle speed for proper traffic and weather conditions; managing the space around the vehicle, such as following distance; avoiding distractions; and managing fatigue. 2 On the technology front, innovations have the potential to improve driver performance and vehicle safety. Among the latest technologies that are being touted to reduce accidents are: eyelid-monitoring devices, radar activated braking systems, electronic stability control, and telematics. 3 However, as everyone knows, accidents do happen. Being prepared and knowing what to do is so important before an accident occurs. Truck drivers need to check their vehicle for proper emergency equipment, including warning devices and fire extinguishers; be knowledgeable about their company&rsquo;s accident reporting procedures; and be able to locate their insurance information.&nbsp; What To Do On The Scene 4 Drivers should be trained on what steps to take after an accident occurs, starting with securing the scene. (Ability to carry out these steps will, of course, depend on any injuries sustained by the driver.) First, drivers should immediately shut down the engine, turn on four-way flashes, and notify the authorities, calling 911 and/or the police. To prevent further collisions, drivers should set out triangles in proper locations. Next, drivers should report the accident to their fleet manager or company at the earliest opportunity. Fleet operators must ensure their drivers know who to call at their company, how best to reach them, and if there is another contact number after hours.&nbsp; It&rsquo;s critical that fleet managers contact the company&rsquo;s insurance broker as soon as possible. Your broker will work with your insurance company to make a claim as needed and help to ensure that any time-sensitive procedures are followed. That being said, it&rsquo;s important that fleet managers, and to some extent drivers, are familiar with their insurance policy requirements so that they may be followed accordingly.&nbsp;&nbsp; Proper documentation about an accident is vital for both insurance and legal purposes. Drivers should always have an <a href="https://www.sovereigninsurance.ca/advice-and-tools/tools/automobile-accident-reporting-kit" target="_self" rel="noopener">accident reporting booklet</a> with them and be familiar with what information is required. Accident reports typically include the names and contact information for each driver involved; a detailed description of the accident; weather conditions; names of witnesses; and any injuries and property damage. The report should be filled out as soon as is practical, in order to gather key information while it&rsquo;s fresh in the driver&rsquo;s mind. Drivers should also be trained on correct photo documentation of the scene and property damage. They should take pictures of the general area of the accident, the vehicles or objects involved, both up close and at a distance; license plates of vehicles involved; and anything else that might be relevant. 5 What Not To Do On The Scene &nbsp; What not to do on the scene of an accident is also important. Drivers should be instructed to not take photos of injured people, or post information or photos of the accident on social media. Drivers should not apologize or admit liability on the scene, or discuss the accident with anyone other than the police and their own company, insurance broker, authorized insurance representative, or claims adjuster. And even if an accident seems minor, reporting to the insurance broker should not be delayed.6&nbsp; Timely reporting is critically important. Not only timely reporting from the driver to their company, but by the company to their insurance broker. This provides the insurer with the best opportunity to retrieve information in a timely manner to effectively manage the claim.&nbsp; What To Do After An Accident &nbsp; For fleet companies, the employee&rsquo;s health and well-being will be a top priority. Not only should companies help drivers get the medical care they need, they can also connect them with disability or mental health support programs and services. If possible, employers can allow for modified duty to help drivers get back to work.&nbsp; Going forward, companies can learn from accident experiences to prevent future collisions. In looking at data over time, companies may notice trends or patterns. If certain types of accidents seem to be recurring, they can take preventative action such as additional employee training or changing the way certain tasks are performed. 7 Accidents are never good news, but they can be made worse by a lack of preparedness. With the right preparation, training and knowledge, drivers will be equipped to both prevent and appropriately respond to accidents.&nbsp; 1 E. Mazareanu. Statistica. <a href="https://www.statista.com/statistics/947317/canadian-trucking-industry-total-drivers/ " target="_blank" rel="noopener">&ldquo;Total number of Canadian truck drivers 2000-2018,&rdquo;</a> Aug 11, 2020 2 <a href="https://www.fleetowner.com/safety/article/21138592/fleets-talk-safety-and-initiatives-that-work " target="_blank" rel="noopener">&ldquo;Fleets talk safety initiatives that work,&rdquo;</a> FleetOwner, Aug. 7 2020 3&nbsp; <a href="https://www.tmcnet.com/topics/articles/2019/09/26/443359-technology-used-the-prevention-truck-accidents.htm" target="_blank" rel="noopener">&ldquo;Technology used for the prevention of trucking accidents,&rdquo;</a> TMCNet.com, Sept. 26 2019 4 <a href="https://www.fleetowner.com/safety/article/21138592/fleets-talk-safety-and-initiatives-that-work" target="_blank" rel="noopener">&ldquo;Post Accident Procedures for CMV Incidents,&rdquo;</a> EHS Daily Advisor, April 30, 2012 5 <a href="https://www.hubinternational.com/blog/2018/07/fleet-accident-best-practices/" target="_blank" rel="noopener">&ldquo;What to do before and after an after and accident: fleet manager best practices,&rdquo;</a> Hub International, July 26, 2018&nbsp; 6 <a href="https://www.truckinginfo.com/153349/5-things-drivers-never-should-do-at-the-scene-of-an-accident" target="_blank" rel="noopener">&ldquo;5 things drivers should never do at the scene of an accident,&rdquo;</a> Trucking Info, Nov. 6 2013 7 <a href="https://www.fleetowner.com/industry-perspectives/ideaxchange/article/21702473/what-to-do-after-an-accident" target="_blank" rel="noopener">&ldquo;What do to after an accident,&rdquo;</a> FleetOwner, May 15 2018

What to do in case of a truck accident

Product liability is the legal responsibility a business has for manufacturing or selling dangerous or defective products&mdash;and it&rsquo;s one of the biggest concerns for manufacturers and distributors. Faulty or dangerous products can harm or injure consumers, lead to costly lawsuits and cause reputational damage.&nbsp;&nbsp; Product liability claims generally fall into three categories:&nbsp; Design defect: This refers to a flaw or error in the design itself, making the product inherently dangerous despite being manufactured as intended.&nbsp; Manufacturing defect: This is when a product is designed correctly, but a flaw in the production process causes the product to be defective.&nbsp; Failure to warn: This refers to failing to adequately warn consumers about any known or suspected risks of using the product that would not be obvious to the end user, or failing to supply adequate instructions for the proper use of the product.&nbsp; In product liability claims, it&rsquo;s not just manufacturers that are on the hook: importers, wholesalers, distributors, retailers and others along the chain of distribution can be held liable when a product is defective or causes injury. While the legal environment is complex and no two claims are the same, here are a few things to be mindful of:&nbsp; In Canada, product liability is governed by common law in nine of the 10 provinces and all three territories. The exception is Quebec, where product liability is governed by civil law. In common law cases, product liability claims are based on case law precedents and are assessed against a negligence standard, which means the plaintiff must establish that the defendant owed a duty of care, the defendant breached that duty, and the plaintiff suffered damages because of that breach.1 In Quebec, civil law consists of a set of rules that are applied to the given circumstances based on looking at the civil code first and then to prior decisions. The laws are especially favourable to consumers, which often means a more difficult defense of claims.2 For example, it&rsquo;s presumed that a product has a defect and the onus is on the seller of the product to rebut this presumption. In the U.S., there is no federal product liability law. Claims are typically based on state laws and brought under the theories of negligence, strict liability, or breach of warranty.3&nbsp;The U.S. is one of the most litigious legal climates in the world and laws and regulations can vary drastically by state. Awards for damages can be significantly higher than in Canada.&nbsp;
In product liability claims, it&rsquo;s not just manufacturers that are on the hook: importers, wholesalers, distributors, retailers and others along the chain of distribution can be held liable when a product is defective or causes injury.
How can manufacturers and distributors protect themselves? <a href="https://sovereign-nextjs.vercel.app/our-team/toronto/will-killen" target="_self" rel="noopener">Will Killen, Senior Underwriting Specialist</a>, National Underwriting, at Sovereign Insurance, outlines some key risk management measures:&nbsp; Start with prevention: &ldquo;Design with safety in mind, considering who the end users are, how the product will be used (or misused) and any hazards that could result,&rdquo; says Will. In addition, products should be designed and manufactured to meet or exceed applicable standards and regulations. Consult with legal experts to ensure labels, warnings and instructions conform to applicable laws and regulations. Another preventative measure Will recommends is to develop a quality assurance (QA) program, which is a proactive strategy to help prevent product defects, and a quality control (QC) program, which helps identify product defects and ensures product quality is maintained or improved. &ldquo;Incorporate customer feedback into the process and regularly review and adjust your QA/QC program,&rdquo; he says. Manage imported supplies, materials and components: Raw materials or parts can come from all over the world. However, different countries have different product safety regulations and standards. Will notes that manufacturers and distributors that import products or materials may be responsible for verifying the product is compliant with applicable standards and confirming that proper warnings are provided to the end user. &ldquo;They should select and manage their suppliers of imported goods carefully, ensuring the proper product quality and safety standards are in place,&rdquo; he says.&nbsp; Create a product recall plan: &ldquo;While prevention is key, so is preparation,&rdquo; says Will. In the event of a product failure, having a formal product recall plan in place can help ensure consumers&rsquo; health and safety, as well as help limit financial losses or reputational damage.&nbsp; Keep detailed records: Manufacturers should create documentation and record-retention policies to meet regulatory requirements and business objectives. These records can include manufacturing processes, inspection and testing records, customer designs and sign-offs. &ldquo;Retaining records for a long period of time is important to help defend against a product liability claim that can arise years down the road,&rdquo; says Will.&nbsp; While every manufacturer and distributor wants to ensure its products are safe, there is a chance a product liability claim will arise. Defending against product liability lawsuits can be costly, so the need for insurance coverage is critical. Contact your broker to find out if your business has the right plan in place.&nbsp; 1 &ldquo;<a href="https://www.torys.com/insights/publications/2019/04/product-liability-in-canada" target="_blank" rel="noopener">Product liability in Canada</a>,&rdquo; Torys LLP, Aug. 10 2019&nbsp; 2 &ldquo;<a href="https://www.fasken.com/en/knowledge/2020/09/15-what-you-need-to-know-about-product-liability-laws-quebec?utm_source=Mondaq&amp;utm_medium=syndication&amp;utm_campaign=LinkedIn-integration" target="_blank" rel="noopener">What lawyers, manufacturers and sellers need to know about product liability laws in the province of Quebec,</a>&rdquo; Fasken, Sept. 15 2020.&nbsp; 3 &ldquo;<a href="https://injury.findlaw.com/product-liability/what-is-product-liability.html" target="_blank" rel="noopener">What is product liability?</a>&rdquo; FindLaw, July 2 2019.&nbsp;

Product liability: Business risks and responsibilities

The demands on today&rsquo;s manufacturer are significant: innovations are challenging conventional methods of doing business; worldwide supply chains are becoming ever more complicated; and the competition from foreign manufacturers grows stronger every year.
In this ever-evolving industry, insurance coverages must become more sophisticated and adapted to the specific needs of the client.
Historically, a manufacturer could rely on the standard insurance coverages like liability, property and equipment breakdown for protection. But times have changed. In today&rsquo;s market, these coverages are just the beginning &ndash; there are even more common insurance risks manufacturers need to mitigate.
Here are four key coverages that every manufacturer should consider:
<h4>1. Errors and Omissions (E&amp;O) coverage</h4>
Errors and Omissions (E&amp;O) protection isn&rsquo;t just for professional services. Manufacturers face significant errors and omissions risks with every product, project or part they create. In fact, courts are now offering more recourse for faulty product designs, which means that a product manufacturing mistake that causes downtime for your customer could result in a lawsuit against you for the financial loss your customers face.
There are three key reasons manufacturers should carry E&amp;O insurance:
<ul>
<li>Protect yourself against costly disputes arising from an accusation that you failed to deliver on designed product specifications</li>
<li>Protect yourself against a client&rsquo;s alleged financial loss due to the failure of a products intended design</li>
<li>Show customers that you stand behind your product and will protect their interests in the event of a design flaw</li>
</ul>
&nbsp;In order to help mitigate an Error &amp; Omissions claim, manufacturers should begin by <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/how-to-develop-a-quality-management-plan" target="_blank" rel="noopener">creating a quality control plan </a>that is reviewed and updated periodically along with the written records on design process and standards.
<h4>2. Supply Chain coverage</h4>
The North American manufacturing space has changed drastically in the last 50 years with the increased dependency on foreign products and outsourcing of work. In today&rsquo;s global economy, handing responsibility for your product over to another company is a big decision, but likely one every manufacturer will face.
While outsourcing can be a great way to cut costs, it can also bring new challenges like: limited control over the manufacturing process, complicated inventory management, greater quality control requirements, complex delivery timelines and new security and cyber risks. Experiencing any one of these issues within your supply chain can lead to significant and sometimes unexpected costs.
The ideal Supply Chain protection includes three key coverages:
<ul>
<li>Contingent Business Interruption &ndash; lost profits and expense coverage for supply chain locations that directly deliver your products, materials or services.</li>
<li>Unspecified Locations Contents&ndash; coverage for your stock and equipment situated at unspecified non-owned locations.</li>
<li>Worldwide Territory Coverage &ndash; protection that reimburses expenses resulting from an interruption of a member of your supply chain at a location outside of North America.</li>
</ul>
&nbsp;There are many risks to be mindful of, but fortunately, there are steps a manufacturer can take to <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-ways-to-mitigate-supply-chain-risks" target="_blank" rel="noopener">mitigate supply chain risks</a>, including:
<ul>
<li>Prioritize the impact and probability of a disruption in your supply chain</li>
<li>Research your potential suppliers thoroughly</li>
<li>Determine your new suppliers&rsquo; risks</li>
<li>Diversify suppliers or use multiple suppliers</li>
<li>Review all the above periodically</li>
</ul>
<h4>3. Product Recall coverage</h4>
A product recall is a daunting scenario for any manufacturing company particularly in a Canadian marketplace where nowadays there are hundreds of recalls both voluntary and federally mandated per year1.
Product recalls can be quite costly. In addition to the time required to identity the problem, fix it, and then replace faulty products, the manufacturer is also often forced to pull staff from their core duties to assist in the recall process. Even the most solid business can be saddled with costs resulting from pre-recall expenses or alleged product tampering, even before they contemplate the costs of the actual product recall.
Unfortunately, not all product recall coverage offerings are built the same. Adequate product recall coverage will look to pick up the costs associated with:
<ul>
<li>Product tampering - or even a suspected product tampering that could cause consumers harm</li>
<li>Pre-recall expenses - like inspection and/or crisis management costs</li>
<li>Replacement value expenses coverage &ndash; to replace the recalled product</li>
</ul>
&nbsp;In order to mitigate the damage caused by a product recall, manufacturers should <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/how-to-create-a-product-recall-plan" target="_blank" rel="noopener">create a solid recall plan</a>. Developing strategies and processes, and pre-assigning duties in the event of a recall, could significantly lessen the impact should a product recall ever occur.
<h4>4. Worldwide Non-Owned Locations coverage</h4>
The globalized nature of today&rsquo;s world means that a manufacturer has potential customers anywhere in the world. Ignoring these opportunities isn&rsquo;t an option for manufacturers in a world where online retailers and marketplaces, like Amazon, are redefining retail.
Many standard insurance policies limit insurance coverage to a manufacturer&rsquo;s non-owned locations within Canada and the United States. At one time this coverage stance was adequate, however, in this expansive global economy, where conducting business in multiple countries is no longer a challenging feat, today&rsquo;s manufacturer must consider how their stock, and even equipment, can be affected in international non-owned locations.
For example, a Canadian manufacturer may have a custom mould stored at their contracted manufacturer in China. Should a loss occur at the Chinese plant resulting in the destruction of the custom mould, the Canadian manufacturer would be required to replace it to get the manufacturing process back up and running. Having the cost to replace the mould covered would bring about some much-needed peace of mind.
For manufacturers it&rsquo;s vital that they have at least a basic understanding of their suppliers&rsquo; worldwide locations. While they may not have much control over the operations from a risk management perspective, a thorough understanding of the exposures at these worldwide non-owned locations can help alleviate potential product delivery issues and save the manufacturer from costly business interruption expenses.
While these key coverages should be top of mind for manufacturers, every business is unique. That&rsquo;s why it&rsquo;s so important to consult with your broker to determine your business protection needs for today and as your business grows and expands.
&nbsp;
1 Government of Canada, <a href="https://www.canada.ca/en/public-health/services/publications/healthy-living/how-healthy-canadians.html">&ldquo;Healthy Canadians&rdquo;, </a>accessed June 25, 2019.

4 insurance coverages every manufacturer should consider

It may be called &ldquo;silent cyber,&rdquo; but the topic is generating a lot of noise in the commercial insurance sector.&nbsp; What is silent cyber?&nbsp; Silent or &ldquo;non-affirmative&rdquo; cyber refers to potential cyber-related insurance losses arising from insurance policies that weren&rsquo;t specifically designed to cover cyber risks. The policies don&rsquo;t explicitly include or exclude cyber risk, which creates ambiguity and can leave coverage open to interpretation. A standalone cyber insurance policy, on the other hand, clearly outlines what is covered (aka affirmative coverage), such as privacy, business interruption and extortion coverage, to name a few.&nbsp; Why is silent cyber a rising concern?&nbsp; While silent cyber isn&rsquo;t a new concept, it&rsquo;s getting more attention with the rise of cybercrime and the cost of attacks. Simply put, businesses can&rsquo;t afford to have inadequate or ambiguous cyber protection.&nbsp; According to the 2019 &ldquo;Cost of Cybercrime&rdquo; study by Accenture and the Ponemon Institute, the average cost of cybercrime to a Canadian company was $12.1 million in 2018.1 Globally, six in seven companies (85%) experienced phishing and social engineering cyber attacks in 2018, and three-quarters (76%) suffered web-based attacks. Cybersecurity Ventures projects that the global cost of cybercrime will hit $6 trillion by 2021, up from $3 trillion in 2015.2 Furthermore, PwC&rsquo;s latest Global Economic Crime and Fraud Survey found that cybercrime features in the top three most disruptive crimes experienced in almost all industries reported in the survey.3 &ldquo;Within the last 10 years, we&rsquo;ve seen a massive upsurge of cyber events and losses,&rdquo; says Al Recio, Regional Manager, Technology &amp; Cyber, Quebec &amp; Atlantic Canada, at Sovereign Insurance. &ldquo;In the beginning, attacks centered on obtaining personal information on a company&rsquo;s client database. Now, the attacks are more sophisticated and create major disruptions and economic issues for businesses as well as other sectors within our community. We all need to understand what&rsquo;s on the horizon and how we can mitigate these issues that may arise from cyber events.&rdquo; As the frequency, scale and cost of attacks continue to rise, so too does the concern around silent cyber. It&rsquo;s more important than ever that policyholders understand their coverage so they&rsquo;re not stuck in a position of believing they have adequate coverage when in reality, they may not. A stand-alone cyber policy helps ensure that they reduce possible gaps in protection. Are there regulations around silent cyber? The U.K. was the first major market to take a tough stand on silent cyber. Last year, the Prudential Regulation Authority (part of the Bank of England) called on Lloyd&rsquo;s of London and the wider insurance sector to ensure the management of affirmative and non-affirmative cyber risk exposures. Following that, Lloyd&rsquo;s announced that it&rsquo;s mandating that all non-affirmative policies provide clarity regarding cyber coverage by either excluding or providing affirmative coverage.&nbsp;&nbsp; &ldquo;A mandate like Lloyd&rsquo;s is beneficial to clients because it puts an end to the ambiguity and uncertainty regarding what&rsquo;s covered and what&rsquo;s not,&rdquo; says Al. &ldquo;As an industry, we need to do more to be clear and have affirmative language with regards to cyber risks. Within the last 6 months, we are now experiencing a market trend where certain insurers are placing cyber related exclusions on their non-cyber policy forms.&rdquo;&nbsp; Similarly, on the policyholder side, global ratings agency A.M. Best announced it &ldquo;expects companies to be proactive and forthcoming with their own evaluation and measurement of the exposure and accumulation of their cyber liability exposure.&rdquo;4 While regulations in Canada have yet to be tabled, insurers, including Sovereign Insurance, are reviewing how coverages can be placed through all policies&mdash;not just dedicated cyber policies.&nbsp; What can an insurance company do to prevent potential gaps in coverage?&nbsp; Both brokers and commercial property underwriters need to become more aware of the issues relating to cyber events. That starts with detailed risk assessments to clearly understand the specific cyber vulnerabilities of an organization.&nbsp; For example, an industrial plant might be aware of its risk of a boiler explosion, but this type of event could also happen in a cyber-attack. A plant could be targeted by a cyber virus that disables the critical safety control systems relating to a boiler&rsquo;s operational procedure, exposing the plant to a possible explosion. This could result in a major disruption in the plant&rsquo;s daily operations &ndash; not to mention a serious public safety risk. &ldquo;The cost of the disruption will play heavily on the economic outlook for the plant,&rdquo; says Al. &ldquo;The property damage and the business interruption loss will be costly. A property underwriter may not contemplate the additional cyber exposures relating to this risk.&rdquo;&nbsp; Education is a key factor for all brokers and underwriters, whether they specialize in property liability, or other risks ranging from D&amp;O, crime, environmental and other commercial divisions.&nbsp; &ldquo;There should be communication between the various departments and the cyber specialist, so underwriters are aware of these new exposures that were not common in the past,&rdquo; says Al. &ldquo;For brokers, education is the primary goal. They need to understand where the coverages lie as it relates to cyber and ensure clients are adequately protected.&rdquo; As cyber risks continue to rise, so too does the need for explicit coverage. Stand-alone cyber policies help reduce possible gaps in protection. If you&rsquo;re unsure as to whether your operations are fully covered, contact your broker today. 
1The Ninth Annual Cost of Cybercrime Study 2019 by Accenture and Ponemon Institute&nbsp; 22020 <a href="https://www.herjavecgroup.com/the-2019-official-annual-cybercrime-report/">Official Annual Cybercrime Report</a> by Cybersecurity Ventures, sponsored by Herjavec Group 3PWC&rsquo;s<a href="https://www.pwc.com/gx/en/services/advisory/forensics/economic-crime-survey.html " target="_blank" rel="noopener"> Global Economic Crime and Fraud Survey 2020&nbsp;</a> 4Moorcraft, B. (2018, November 26). <a href="https://www.insurancebusinessmag.com/ca/guides/what-is-silent-cyber-risk-117152.aspx" target="_blank" rel="noopener">What is silent cyber risk? </a>Retrieved May 19, 2020,&nbsp;

The Rise and Risks of Silent Cyber

A car part designed to reduce a vehicle&rsquo;s trail of pollutants is a hot target for those who don&rsquo;t want to leave behind any trail at all: thieves.&nbsp; Catalytic converters, which form part of a vehicle&rsquo;s exhaust system, convert harmful fumes into less harmful gases before releasing them into the atmosphere.&nbsp; The part is tempting to thieves for three key reasons1:
<ol>
<li>Catalytic converters are made with trace amounts of precious metals such as platinum, palladium and rhodium, which makes them valuable to sell to scrap metal dealers.</li>
<li>Most catalytic converters are unmarked, so they can&rsquo;t be easily traced to an individual vehicle.</li>
<li>They&rsquo;re relatively easy to steal, as they can be unbolted or cut out from a vehicle&rsquo;s underside in a matter of minutes. Trucks and SUVs are preferred targets because they&rsquo;re higher off the ground and easier to crawl under. </li>
</ol>
What&rsquo;s the going rate for this precious part?&nbsp; Thieves can typically get $150 to $200 for the scrap metal, but the part can cost up to $2,000 for owners to replace. What&rsquo;s more, thieves often damage other parts of the vehicle in the process of removing the catalytic converter, resulting in additional costly repairs.2 
Catalyst converter theft is on the rise Although catalytic converter theft isn&rsquo;t new, by many accounts, it&rsquo;s on the rise. In Canada, several cities have been hit by a string of thefts over the past year, as the price of precious metals has soared. For instance:
<ul>
<li>In Calgary, there have been 280 reported incidents of catalytic converter thefts so far in 2020. That&rsquo;s up from 200 through the entirety of 2019 and 48 in 2018.3</li>
<li>In Hamilton, 66 thefts were reported in just two months: December 2019 and January 2020. That&rsquo;s more than the 61 stolen converters that were reported stolen over six months in 2019.4</li>
<li>In Edmonton, there have been 792 catalytic converter thefts reported to police since October 2019.5 </li>
</ul>
It&rsquo;s also been reported that during the COVID-19 pandemic, thieves in the Greater Toronto Area and Niagara, Ont. are targeting commercial-use vehicles at businesses that have been idled by lockdown rules.6 Pandemic or not, corporate fleets are highly vulnerable because thieves can hit multiple vehicles in a single location. If that happens, businesses suffer loss of revenue, vehicle downtime and the cost of hiring replacement vehicles.7&nbsp; Victims of catalytic converter theft are able to tell something is wrong when they start up their vehicle because it makes a loud muffler-related noise.4
How to prevent catalytic converter theft&nbsp;
<ul>
<li>Where possible, corporate fleets should be parked in locked, well-lit areas. Vehicle alarms and security cameras can also act as a deterrent to thieves.&nbsp;</li>
<li>Vehicles can be parked in a way that makes it harder to access their underside, for example, against a wall or by other lower vehicles.&nbsp;</li>
<li>Make use of products designed to deter and prevent catalytic converter theft. For example, a wire cage can be installed around the converter, and welded and bolted to the underside of the car. Another product is a strap made of Kevlar fabric with steel cables running through it, which is installed under the vehicle and is difficult to cut through.&nbsp;</li>
<li>A mechanic can etch a license plate number or vehicle identification number into the device as a deterrent. That can make it harder for thieves to sell to some scrap yards.1, 8, 9 </li>
</ul>
When it comes to commercial auto insurance, businesses need to make sure they&rsquo;re in the driver&rsquo;s seat. Consult with your broker to find out if your existing policy covers catalytic converter theft.&nbsp; 1 Motoring Research: <a href="https://www.motoringresearch.com/advice/stop-catalytic-converter-theft/" target="_blank" rel="noopener">&ldquo;How to stop catalytic converter theft,&rdquo;</a> May 11, 2020 2 Forbes: <a href="https://www.forbes.com/sites/joshmax/2019/04/02/catalytic-converter-thefts-continue-to-plague-car-owners-at-every-income-level/#7c12ade9564f" target="_blank" rel="noopener">&ldquo;Catalytic converter thefts continue to plague car owners at every income level,&rdquo;</a> April 2, 2019 3 CTV News Calgary: &ldquo;<a href="https://calgary.ctvnews.ca/2-calgary-salvage-yards-charged-after-buying-stolen-catalytic-converters-1.4905932?cache=yes%3FclipId%3D89830" target="_blank" rel="noopener">Two Calgary salvage yards charged after buying stolen catalytic converters,&rdquo;</a> April 21, 2020 4&nbsp;CBC: <a href="https://www.cbc.ca/news/canada/hamilton/catalytic-converter-thefts-hamilton-1.5454268" target="_blank" rel="noopener">&ldquo;66 catalytic converters stolen in Hamilton over two months: police,&rdquo;</a> Feb. 6, 2020&nbsp; 5 Edmonton Journal: <a href="https://edmontonjournal.com/news/crime/three-charged-in-connection-to-catalytic-converter-thefts/" target="_blank" rel="noopener">&ldquo;Three charged in connection to catalytic converter thefts,&rdquo;</a> March 3, 2020 6 London Free Press: <a href="https://lfpress.com/news/local-news/catalytic-converter-thefts-costing-london-nonprofits-big-money">&ldquo;Catalytic converter thefts costing London non-profits big money,&rdquo;</a> Feb. 20, 2020 7 Commercial Fleet:<a href="https://www.commercialfleet.org/news/2013/5/31/fleets-offered-protection-against-catalytic-converter-theft/47200/" target="_blank" rel="noopener"> &ldquo;Fleets offered protection against catalytic converter theft,&rdquo;</a> May 31, 2013&nbsp; 8&nbsp;Honest John Kit: &ldquo;10 ways to prevent catalytic converter theft,&rdquo; 9 Total Landscape Care, <a href="https://www.totallandscapecare.com/green-industry-news/catalytic-converters/" target="_blank" rel="noopener">&ldquo;Thieves target trucks for catalytic converters,&rdquo;</a> Jan. 13, 2016

Catalytic Converter Thefts are Revving Up, but they can be Prevented

Internal steps are the first line of defense for businesses to mitigate a multitude of risks. If you&rsquo;re a manufacturer, for example, it&rsquo;s up to you to keep your plant clean, your machines running smoothly, and your staff trained properly &mdash; all elements you can control.&nbsp; The problem is that no manufacturer is an island. As part of a complex supply chain, your business is exposed to risks when your suppliers are exposed to risks. In 2019, more than half companies (51.9%) experienced a supply chain disruption over the last 12 months.1 As supply chains increasingly go global, few manufacturers have visibility into their supply chains, which makes risk mitigation even more challenging. In a global survey, 77% of manufacturers said they had no visibility or a restricted view of their supply chain, with only 6% saying they had complete visibility.2 While many supply chain disruptions are beyond your control, that doesn&rsquo;t mean it&rsquo;s impossible to protect your business. What you can do is get informed about all your suppliers along the chain and be aware of where your supply chain is vulnerable. Then, you can create a plan to mitigate those vulnerabilities and risks. Here&rsquo;s a look at 5 supply chain disruptions, followed by some key ways to help you prepare for the unplanned &ndash; and even the unexpected:&nbsp;
<ol>
<li>Adverse weather events: Extreme weather and natural disasters such as floods, blizzards, hurricanes and wildfires, can wreak havoc on supply chains. Impacts include damage to facilities, resulting in temporary shutdowns; inventory damage; power failure and data loss; and blocked transportation routes. For example, the recent California wildfires shut down rail lines and trucking routes leading from major ports, causing logistics problems.3</li>
<li>IT/telecoms outages: Unplanned IT and telecommunications outages, which can be caused by weather, human error, power failures or other events, were the number-one supply chain disruption in 2019, accounting for 44.1% of disruptions.4 Supply chains are increasingly reliant on technologies such as GPS tracking and wireless sensor networks to help deliver information that&rsquo;s essential to decision-making. A disruption in access to real-time accurate data can cause a loss of time, profits, and customers.5</li>
<li>Transportation network disruption: Whether caused by a natural disaster, a pandemic or a political issue, transportation network disruption can stop your supply chain in its tracks. The risks include interruption due to delay; damage, contamination, or loss of goods; customer service failures, and even regulatory compliance violations6&mdash;all of which can damage your corporate reputation and negatively impact profits.</li>
<li>Cyber security: Your suppliers could be the weak link in your cyber security efforts. Research shows that 80% of organizations have suffered a breach that was caused by a third-party vendor in the past 12 months, and 77% have limited visibility into those vendors.7 Some other concerns include risks from poor information security practices by lower-tier suppliers, counterfeit hardware, and software security vulnerabilities in supply chain management or supplier systems.8</li>
<li>Outsourcer service failure: As your company grows, you may choose to outsource work to an external service provider. Outsourcing can be an effective way to meet increased labour needs while maintaining lower costs, however, it&rsquo;s not without its challenges. Some of the risks include low quality work because of a lack of direct oversight; lack of communication, for instance, there could be confusion over the requirements; and an inability to meet high expectations/standards because a service provider overstated their capabilities.9 </li>
</ol>
In a global survey, 77% of manufacturers said they had no visibility or a restricted view of their supply chain, with only 6% saying they had complete visibility.
How to protect your business <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/5-ways-to-mitigate-supply-chain-risks" target="_self" rel="noopener">Mitigating supply chain risks</a> is complex and multi-faceted, but there are a few key tactics to consider. They include: conducting a supply chain vulnerability audit that identifies where the weak links are in your supply chain; diversifying supply chains from a geographic perspective rather than relying on a single geography or single supplier; making it a priority to have strong relationships and communications with suppliers; and evaluating alternative routes and logistics options.10, 11 While insurance coverage should be considered as part of your risk mitigation strategy, it&rsquo;s important to note that supply chain disruptions are often not covered by your property policy. Specialty insurance coverages, such as Contingent Business Interruption or Product Recall, may be necessary to protect your business against supply chain risk. Your broker can help evaluate your supply chain risks and determine which coverages are appropriate for your risk exposures.&nbsp; Sources 1,4 <a href="https://www.commercialriskonline.com/bci-survey-paints-a-mixed-picture-for-supply-chain-risk-management/" target="_blank" rel="noopener">&ldquo;BCI paints a mixed picture for supply chain risk management,&rdquo;</a> Commercial Risk, Nov. 7, 2019 2&ldquo;GEODIS unveils its 2017 supply chain worldwide survey,&rdquo; GEODIS, Nov. 5, 2017&nbsp; 3&ldquo;<a href=" https://www.ibm.com/blogs/supply-chain/mitigate-extreme-weather-on-your-supply-chain/" target="_blank" rel="noopener">Mitigate extreme weather effects on your supply chain,&rdquo;</a> IBM Supply Chain Blog, Dec. 2019 5 <a href="https://www.businessinsider.com/sc/supply-chain-risks-and-threats-2017-1" target="_blank" rel="noopener">&ldquo;These everyday disruptions could put your supply chain at risk,&rdquo;</a> Business Insider/UPS, Jan. 9, 2017.&nbsp; 6<a href="https://www.jdsupra.com/legalnews/mitigating-supply-chain-risk-effective-79988/" target="_blank" rel="noopener"> &ldquo;Mitigating supply chain risk: effective transportation and logistics provider diligence and management practices,&rdquo;</a> JD Supra, Sept. 18, 2017&nbsp; 7 <a href="https://www.csoonline.com/article/3191947/supply-chain-attacks-show-why-you-should-be-wary-of-third-party-providers.html" target="_blank" rel="noopener">&ldquo;Supply chain attacks show why you should be wary of third-party providers,&rdquo;</a> CSO, Oct. 29, 2020 8 <a href="https://csrc.nist.gov/projects/cyber-supply-chain-risk-management" target="_blank" rel="noopener">&ldquo;Cyber supply chain risk management,&rdquo;</a> National Institute of Standards and Technologies, Updated June 22, 2020&nbsp; 9 <a href="https://blog.flatworldsolutions.com/five-causes-outsourcing-failures/" target="_blank" rel="noopener">&ldquo;Five causes of outsourcing failures,&rdquo;</a> Flatworld Solutions,&rdquo; Oct. 5, 2015&nbsp; 10<a href=" https://www.bigcommerce.com/blog/supply-chain-disruptions/" target="_blank" rel="noopener">&ldquo;Combatting Ecommerce Supply Chain Disruptions and Steps You Can Take to Minimize Impact,&rdquo;</a> BigCommerce&nbsp; 11 <a href="https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/finance/Supply-Chain_POV_EN_FINAL-AODA.pdf" target="_blank" rel="noopener">COVID-19: Managing supply chain risk and disruption</a>

Where is your supply chain most vulnerable?

If you haven&rsquo;t yet calculated how much Business Interruption (BI) coverage your business needs, it&rsquo;s time to do the math. Because this equation can help keep the lights on while your business is recovering (or rebuilding) from a covered loss.
<h4>What is Business Interruption insurance?</h4>
First, what it&rsquo;s not. When you experience a covered loss, like a fire or natural disaster, BI insurance isn&rsquo;t the coverage that helps you replace equipment or fix damages to your property. What it can do is cover your expenses for the period following the loss, when your business can&rsquo;t generate income.
&ldquo;Business Interruption insurance is a type of insurance coverage that replaces lost income and helps pay for extra expenses when your business operations have been interrupted by a covered loss,&rdquo; says Peter Makinson, Senior Property Casualty Underwriting Specialist at Sovereign Insurance. &ldquo;This insurance allows a business to remain in business while repairs or the replacement of damaged property is being completed.&rdquo;
BI is important protection, but it&rsquo;s only valuable if you have the right amount of coverage.
Picture the scene: your company experiences a major fire loss and needs to close operations for 20 days to clean up the mess, fix the damage and replace costly equipment. Your lost income amounts to $600,000 and the expense to relocate to a new temporary location costs $650,000. You&rsquo;re looking at a grand total of $1.25 million. It can add up quick, and if your BI coverage is anything less than that, you&rsquo;re left paying the difference.
"Some businesses can restart the next day after a short stop at an office supply store and renting a temporary location. Other businesses may be out for more than a year if they need to reconstruct their premises or replace specialized equipment."
<h4>How much coverage do you need?</h4>
Being able to calculate business interruption helps you ensure your company has enough protection to cover a period of downtime for your business &ndash; from a short interruption to your worst-case scenario.
Your coverage needs will depend on your projected loss of income and any extra expenses you&rsquo;ll incur as a result of the loss.
Calculating lost profits could include analyzing whether there are any growth opportunities that could impact your revenue projections during the period of time in which your benefits are payable under your insurance policy.
Calculating extra expenses could include costs to relocate your business.
You also need to determine how long you need your BI indemnity period to be. An indemnity period is the length of time your benefits are payable under your policy. This period needs to cover the time frame to get your business back to normal operations. It should take into account a loss of customer base or resources like employees (especially if they&rsquo;re highly specialized or skilled), inventory, or your building or equipment.
Makinson explains how this can vary significantly depending on the nature of your operations: &ldquo;Some businesses can restart the next day after a short stop at an office supply store and renting a temporary location. A short indemnity period might suit this sort of risk. Other businesses may be out for more than a year if they need to reconstruct their premises or replace specialised equipment. A larger more complex risk could require a 12, 18, 24 months, or longer, indemnity period.&rdquo;
<h4>How do you calculate your BI limit?</h4>
In theory, business interruption coverage is a fairly straightforward concept: the company owner expects to be reimbursed for the revenue they missed out on when their organization is unable to operate. Simple, right? Not always. That&rsquo;s why it&rsquo;s so important to work closely with your broker, accountant and even your insurance provider to make sure you&rsquo;re calculating your BI limit correctly.
Unfortunately, there&rsquo;s no simple formula as every business has unique exposures that can influence the amount of business interruption coverage they need. Sovereign provides our brokers and clients with a BI worksheet to help them in their calculation.
Being prepared for the worst-case scenario is a must for any savvy business owner because an accident that brings operations to a halt can happen at any time. However, businesses that have the proper coverage in place - with the right limit - should be well-positioned to come through any unexpected event or accident with no long-lasting financial impact.

What you need to know about business interruption coverage

If you&rsquo;re still skeptical of romaine lettuce, then you know the impact a product recall can have on a business&rsquo; bottom line and reputation. And as businesses change and evolve, so does the product recall landscape.
For instance, today, manufacturers are working with longer supply chains, which means less control and more opportunities for issues to arise and mistakes to be made. In addition, advances in technology have enabled companies, governments and regulators to discover problems and take action more quickly. And with richer information at their disposal, there&rsquo;s the opportunity to take greater precautions than were perhaps deemed necessary in the past.
With product recall risk mitigation practices in place, hopefully you&rsquo;ll never have to issue a recall, but if you do, you don&rsquo;t want to be caught flat footed. The best way to handle a product recall is to have a solid plan already in place.
Gerry Lawrie, Underwriting Manager, Commercial Solutions, Central Operations at Sovereign Insurance, outlines the key elements to include in a product recall plan:
<h4 class="serif">Appoint a recall coordinator and committee members</h4>
To get started, appoint a recall coordinator and clearly define their role and responsibilities. A recall coordinator is typically tasked with forming a recall committee, making decisions about the recall on behalf of the company, documenting all decisions and actions, managing and coordinating the implementation of the recall, and ensuring that management is informed at all stages. The product recall committee should represent the various departments in your company, and each member must have clearly designated responsibilities.
<h4 class="serif">Create a contact list (and keep it up to date!)</h4>
Quickly notifying all affected parties is critical for reducing the impact of a recall. Your product recall plan should include an accurate and up-to-date contact list for key internal and external stakeholders, including your recall coordinator and committee members, public relations team, regulatory agencies, retailers, distributors and suppliers. Other external partners might include your legal counsel and crisis management agency.
<h4 class="serif">Document your recall procedures</h4>
The recall procedure describes all the activities you&rsquo;ll take to manage the recall. This is typically carried out in four steps:
<ol>
<li>Evaluate the complaint: Receiving, processing and evaluating a complaint comes first in the recall process. Start by providing the complaint to your recall coordinator for an initial evaluation. If that assessment indicates a recall may be necessary, the recall coordinator should assemble the recall committee for a full evaluation. The evaluation stage includes determining the safety concerns with the product, developing a product removal strategy, contacting the appropriate regulatory authorities, and notifying your legal counsel and insurance company.</li>
<li>Identify implicated products: Your company must be able to identify all products and quantities of products implicated in the recall. Prepare a distribution list that identifies information such as the account name that received the recalled product, their contact information, and type of customer (e.g. manufacturer, distributor, retailer). Additional information may include the amount of product received, ship date and the amount of product consumed.</li>
<li>Notify all affected parties: Regulatory agencies should be notified at the earliest opportunity once you&rsquo;ve decided to conduct a recall. After the initial notification, the regulatory authority should be updated throughout the recall process. And of course, you must notify your suppliers and clients (by phone, email, etc.), and consumers by the most effective means available, whether that&rsquo;s by email, your website, press release, advertisements, posters in stores, radio etc. Your communications should provide instructions for consumers on how to return the products and get a refund or replacement.</li>
<li>Monitoring the efficiency and status of the recall: The procedure for product removal can be divided into five steps: removal, control, disposal, termination of the recall, and recall effectiveness. To determine the effectiveness of the recall, verify that all business partners have received the notification and have taken appropriate action. If the response is less than 100%, or any number of recalled products is not accounted for, you&rsquo;ll need to reassess your recall strategy. It&rsquo;s also important to determine how to prevent a recurrence and put this plan in motion.</li>
</ol>
<h4 class="serif">Create preauthorized communication templates</h4>
Create templates for press releases, social media posts, or other communications, that are vetted by your company&rsquo;s marketing and legal teams. By having prewritten communications, with gaps to be filled in, your team can get your message out quickly and efficiently.
Once your product recall plan is in place, an important mantra that comes into play is: &ldquo;practice makes perfect.&rdquo; It&rsquo;s a good idea to perform a mock recall either annually or whenever there are big changes to the plan or personnel. Test your plan and make modifications needed to correct any problems that arise. When your plan passes the stress test, you can be confident that you&rsquo;re ready.

How to create a product recall plan

If your business is interrupted by a loss, you&rsquo;ll need more than just a strong insurance policy. You&rsquo;ll need a plan. Developing a solid business continuity plan (BCP) is a great way for any organization to successfully minimize disruptions and navigate an unexpected or unfortunate event. That could include anything from losing an important team member, being affected by a flood or falling victim to a cyber breach or attack. Regardless of the industry or size of company, a well thought out BCP helps ensure key functions of your business can continue even if the worst happens.&nbsp;
Here are five key steps to help you build your organization&rsquo;s business continuity plan:
<h4>Step 1: Analyze your risks</h4>
This crucial first step involves thoroughly evaluating all the risks and hazards that could disrupt the business. In fact, the BCP should be developed around a &ldquo;worst case scenario&rdquo; with the understanding that the response can be scaled appropriately to match the actual incident. So go ahead and start by identifying all potential risk scenarios, however unlikely they may initially sound. Then, focus on scenarios that are most relevant to your business. For example, extreme weather risks tend to be geographical and not applicable to all firms, but emerging risks like cyber-attacks are relevant for all organizations, so reviewing the security of your computer network and the effectiveness of any firewalls is an important consideration in step 1.
And don&rsquo;t make the mistake of overlooking your business&rsquo; more mundane, everyday risks, such as any physical or security hazards.
<h4>Step 2: Business impact analysis</h4>
In step two, assess the business impact of the disruptive scenarios that were brought to light in the initial risk analysis and calculate the various costs related to these risks. This enables you to quantify how each risk will impact your company&rsquo;s service delivery and whether / for how long you can continue to operate without certain services. The business impact analysis allows organizational leaders to develop objectives and priorities by examining potential disruptions to the company&rsquo;s people, technology, infrastructure and vendors. This impact analysis can go hand in hand with calculating your company&rsquo;s business interruption limit &ndash; another important calculation we recommend your business stays on top of.
<h4>Step 3: Create a detailed response and recovery plan</h4>
Your company has already been disrupted, now it&rsquo;s about protecting your organization and staff from further damage. Based on the findings from the business impact analysis, you&rsquo;re now ready to create a thorough response and recovery plan. This involves implementing procedures and measures that help your business to both prevent and recover from a disruptive event. Your plan should address all the goals of your BCP, which are to:
<ul>
<li>Safeguard lives and reduce the chance of (further) injury</li>
<li>Protect assets</li>
<li>Restore critical business processes, systems and activities</li>
<li>Reduce the length of the interruption of business</li>
<li>Protect your business&rsquo; reputation</li>
<li>Control media coverage</li>
<li>Maintain customer relations.</li>
</ul>
&nbsp; For example, in order to achieve these goals, the plan would include a strategy for accessing key business and customer information, handling payroll, and explaining where employees should congregate or work from if the business location is inaccessible. It would also include a roadmap of alternative ways to handle daily operations if computer systems, equipment, suppliers, employees, etc. are unreachable or unavailable. You should also develop and print a list of important contacts in case the disruption affects computers, the network or your customer-relationship management (CRM) system. This list should include employees, clients, vendors, emergency response services, suppliers, your insurance broker and your accountant. Once you&rsquo;ve created the plan, you need to assemble a BCP team to learn it, test it and roll it out when it counts. At this stage, a BCP Coordinator should be identified. This person is not only responsible for overseeing and facilitating the coordination of the BCP upon activation of the plan, but also for ensuring that:
<ul>
<li>The plan has been created and adheres to the company&rsquo;s standard</li>
<li>Advanced preparations have been completed</li>
<li>The plan is regularly tested (step 4)The plan is regularly maintained (step 5)</li>
</ul>
<h4>Step 4: Test the plan</h4>
Great, so you have a plan and everyone knows their role should disaster (or interruption) strike. But implementing the plan in the event of an unexpected incident is something altogether different. That&rsquo;s why testing the plan is so important. You should create a simulated scenario in which one of your highest risk disruptions actually happens and then analyze how key stakeholders execute the plan. It gives teams and leaders great insight into the effectiveness of the plan and will highlight any hiccups or steps that need reworking. It&rsquo;s much easier to spot problems in real time rather than in a Word document or PowerPoint presentation. The plan should be tested at least once a year.
<h4>Step 5: Maintain the plan</h4>
It&rsquo;s no good sitting back and admiring your work. Your organization is constantly evolving and therefore, so is your risk. If you move offices or change computer systems, your risk profile is going to change significantly and your plan will have to be tweaked and tested accordingly. Even having a high turnover of staff in a short period of time could render parts of your original plan obsolete.
Analysis should be ongoing and you should bring stakeholders together at least once a year to review the plan and talk about any sections that might need updating. At this stage it&rsquo;s as much about your attitude to risk as it is the risk itself. Having gone through the process of creating and testing the plan, you have a solid understanding of where your company may be susceptible. Now it&rsquo;s all about being switched on to organizational changes as and when they happen and thinking about how they affect your risk exposures. Preventing unexpected events is tough but planning how to react when they do happen is something that every company should do.

5 steps for developing a business continuity plan

Cyber attacks are a growing concern for organizations across all sectors&mdash;and with good reason. Globally, the average number of security breaches experienced by a company in the last year grew by 11% from 130 to 145, according to 2019 &ldquo;Cost of Cybercrime&rdquo; study by Accenture and the Ponemon Institute.1 As the number of attacks increases, so too does the cost: CyberSecurity Ventures predicts that global losses related to cyber attacks will reach US$6 trillion by 2021, up from US$3 trillion in 2015. 2 A new report from Aon, &ldquo;Prepare for the expected: Safeguarding value in the era of cyber risk,&rdquo;3 notes that business face financial loss in the form of immediate crisis expenses, regulatory fines and lost revenue from disruption to the business. There&rsquo;s also reputational risk, as an attack can erode a company&rsquo;s market value, destroy brand loyalty and limit a company&rsquo;s digital transformation, notes Aon. Businesses are wisely investing in cyber security&mdash;CyberSecurity Ventures predicts more than US$1 trillion will be spent from 2017 to 2021&mdash;but no measures are 100% effective. That&rsquo;s why it&rsquo;s also critical to have a cyber resilience plan in place, which covers how your organization withstands, responds to, and recovers from a cyber attack or data breach. While cyber resilience plans will look different at every organization, one commonality is the importance of testing those plans. A stress test allows organizations to see how quickly and effectively they react and respond to any given cyber risk. As Deloitte notes in the report, &ldquo;Five essential steps to improve cyber security,&rdquo;4 most organizations have a security management process in place, but few have tested it. Globally, the average number of security breaches experienced by a company in the last year grew by 11% from 130 to 145, according to 2019 &ldquo;Cost of Cybercrime&rdquo; study by Accenture and the Ponemon Institute.1
The report outlines key questions organizations should ask, such as &ldquo;Who should be contacted during and after an incident?&rdquo; and how quickly can you contain a security breach and restore your organization to normal operation?&rdquo; &ldquo;But answering the questions is just part of the equation,&rdquo; Deloitte states. &ldquo;Testing your answers is critical.&rdquo; Here are four best practices for testing your cyber resilience plan: 
<ul>
<li>Get everyone on the same page: As with any large undertaking, C-suite support is the first&mdash;and most essential&mdash;step in creating and testing a cyber resilience plan. As one cyber-security expert notes, without C-suite support, it&rsquo;s impossible for cyber-security leaders to effectively plan for and defend against threats.5 And since cyber security affects every employee, everyone in the organization needs to be aware of the plan and understand their roles and responsibilities.</li>
<li>Conduct a vulnerability scan: In the computing world, a vulnerability is a weakness in a device or system that can be exploited by cyber attackers. A vulnerability scan (or assessment) allows businesses to identify which parts of their system are the weakest and most likely to be targeted, and therefore the most relevant to the cyber resilience plan.6</li>
<li>Carry out cyber simulations: As Deloitte notes, cyber simulations are interactive techniques that immerse participants in a simulated attack scenario to help organizations evaluate their response and preparedness. Some specific attacks organizations may want to test for are phishing emails&mdash;fraudulent emails designed to get people to unwittingly share passwords or financial information, or malicious attachments&mdash;documents that appear to be legitimate, but are actually a virus or malware.</li>
<li>Review and make improvements to your plan: &ldquo;There&rsquo;s absolutely no point running simulated attacks if they&rsquo;ll play no role in optimizing the incident response processes,&rdquo; says another cyber-security expert.7 Determine what worked well and what didn&rsquo;t in your response plan. Identify areas for improvement and adjust the necessary processes.</li>
</ul>
&nbsp;
If you&rsquo;ve followed these steps but feel like you still need some support or guidance, your insurer may be able to help. At Sovereign Insurance, insurance is just one strategy within our broad risk management solutions that can help you protect your business&rsquo;s bottom line and reputation in the event of a cyber attack. For example, in addition to the financial protection typically provided by technology or cyber policies, Sovereign will provide you with access to breach preparation and crisis management services to help you navigate the complexities of data security. The possibility of a cyber attack doesn&rsquo;t have to be overwhelming when you&rsquo;ve stress tested your plan and know it stands up.
&nbsp;
1 Research Report: "Ninth annual cost of cybercrime study." Accenture, March 6, 2019 2 <a href="https://cybersecurityventures.com/cybercrime-damages-6-trillion-by-2021">"Global Cybercrime Damages Predicted to Reach $6 Trillion Annually By 2021". </a>Cybercrime Magazine, December 7, 2018 3 Media Release <a href="https://aon.mediaroom.com/csuitecyberreport">"Aon report shares C-suite insights as losses from cyber attacks set to reach all-time highs"</a>,&nbsp;accessed December 4th, 2019 4 <a href="https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/risk/ca-en-risk-cyber-5-steps.pdf">"Five essential steps to improve cybersecurity",</a>&nbsp;Deloitte, accessed December 4th, 2019 5 Burley, Ron "<a href="https://www.cpomagazine.com/cyber-security/how-cybersecurity-leaders-can-best-navigate-the-c-suite/">How Cybersecurity Leaders Can Best Navigate the C-Suite"</a> CPO Magazine, September 13, 2019 6 "<a href="https://blog.rsisecurity.com/best-practices-for-testing-your-cyber-incident-response-plan">Best Practices for testing you Cyber Incident Response Plan"</a> RSI Security, February 8, 2019 7 Reichenberg, Nimmy "<a href="https://www.siemplify.co/blog/testing-incident-response-processes/">Putting Your Incident Response Processes to the Test"</a> Siemplify, July 8 , 2018

How to stress test your business for cyber resiliency

Every business strives to meet quality standards. If quality slips, there can be a range of consequences, from customer dissatisfaction and product recalls to business interruption and legal liabilities.
With upgrades to processes, the introduction of new suppliers, new equipment or the integration of technology into your operations, risks to quality are always popping up. The best way to minimize risks and deliver a consistently high-quality product is to develop and implement a quality management plan.
A quality management plan documents all the information regarding a company&rsquo;s quality policies, procedures, roles and responsibilities.
There are two main elements:
<ul>
<li>Quality assurance: the process that ensures the preferred level of quality is fulfilled in the product or service at each phase of the process</li>
</ul>
<ul>
<li>Quality control: the process that ensures the product quality matches the requisite standard</li>
</ul>
&nbsp; While the former is proactive and focuses on preventing defects, the latter is reactive and concentrates on identifying defects.
&ldquo;Quality is important in every aspect of life. For example, we all go to the doctor to take preventative health measures or receive treatment if there is a problem,&rdquo; says Michael Reich, Manager of Technical Risks &amp; Solutions at Sovereign Insurance. &ldquo;Businesses also need checkups, in the form of ongoing quality testing, checklists and inspections. If there&rsquo;s a product failure or a spike in customer complaints about quality, how did that product leave the plant? Where and why did the system fail? You have to look at every aspect of your business, put the right standards and controls in place, and put it all on paper. Organizations that do so will reap the benefits.&rdquo;
According to Michael Reich, there are three main benefits of developing and implementing a quality management plan:
<ul>
<li>Customer Satisfaction: By standardizing the steps necessary to make a consistent, high-quality product, a quality management system benefits both the company and the customers who buy and use the product. Customers will see the difference in the products the company offers and in the customer service it provides. In turn, satisfied customers reward the company with repeat business, long-term loyalty and sincere referrals.</li>
</ul>
<ul>
<li>Waste Reduction: Even though it may take significant resources to design and use, a successful quality management plan cuts costs. If procedures are followed to create a consistent, effective product, money will be saved by eliminating waste and cutting out the need for refunds and damage control.</li>
</ul>
<ul>
<li>Fewer Legal Liabilities: Quality management processes help companies avoid situations that cause harm to customers and lead to expensive liability claims and lawsuits. Not only is proactively protecting customers the ethical thing to do, ensuring customer safety also saves companies money and averts damage to its reputation.</li>
</ul>
&nbsp;
While every business will have its own unique quality management plan, the main components generally include:
<ul>
<li>Company Policy &amp; Organization: describes your organizational structure and your policy on quality assurance and control. It also includes product descriptions and customer profiles.</li>
<li>Engineering &amp; Design: includes a hazard analysis for your products and identifies safety requirements and compliance procedures.</li>
<li>Purchasing: describes your main vendors and subcontractors, as well as purchasing procedures and practices.</li>
<li>Manufacturing Process: includes the origin of raw materials, critical component suppliers, supply chain traceability, manufacturing environment and controls, and inspection and testing procedures.</li>
<li>Product Management: outlines your safety/quality policy, sales force training and education, complaint-handling process, warrantees and guarantees, and legal review process. Quality Control: covers your overall quality policy, including roles and responsibilities, inspection and testing, third-party certification and auditing, management leadership and document control.</li>
<li>Marketing: describes how your product is represented and promoted in the marketplace, and includes sales training for staff to ensure they describe products correctly, understand safety issues and report problems.</li>
<li>Completed Operations: identifies any work done outside of the plant, including product installation, maintenance and repairs.</li>
</ul>
&nbsp;
Whichever elements are the right fit for your business, just remember that the objectives of your quality management plan are to ensure that:
<ul>
<li>Quality standards are met at every stage</li>
<li>The right procedures are implemented and continuously improved</li>
<li>Problems are promptly identified and corrected</li>
</ul>
&nbsp;
Creating a quality management plan requires considerable thought and resources, but it&rsquo;s well worth the effort.

How to develop a quality management plan

Chances are that in the last decade your business has experienced one or more of the following: the effects of globalization, the need for outsourcing, the rise of eCommerce, increasing consumer demands and expectations, the impacts of climate change, a merger and/or acquisition or the integration of new technology into your operations. These factors have opened up a world of opportunities for businesses, some have challenged the way they operate, and others have posed significant threats. All of them introduce a number of supply chain risks that historically weren&rsquo;t prevalent. In this challenging environment, it&rsquo;s critical for businesses to develop plans to manage and mitigate supply chain risks. &ldquo;A well-managed supply chain is a competitive advantage,&rdquo; explains Sovereign&rsquo;s VP Product Management, Tina McAvella. &ldquo;It allows companies to get their products to market faster, more efficiently and more cost-effectively than their competitors.&rdquo; Tina takes us through five ways businesses can mitigate supply chain issues: 1. Vendor Management: &ldquo;A thoughtful vendor procurement process ensures that supply partners provide the desired balance of cost, quality of product/service and timing of delivery,&rdquo; says Tina. And vendor management best practices include stress-testing the relationship from time to time. &ldquo;The practice should include understanding what redundancy the supplier has in their business model, their financial health, indemnity agreements, insurance requirements, and more,&rdquo; Tina explains. &ldquo;You want to do business with suppliers that have a well-established approach to risk management, so testing alignment should include a discussion around their risk management approach.&rdquo; 2. Contract Management: &ldquo;Building trusting supplier relationships is important, but it&rsquo;s no longer enough to do business on a handshake,&rdquo; says Tina. &ldquo;If a relationship breaks down, for example, the lack of a contract outlining an exit plan can be a serious impediment to your business.&rdquo; She goes on to explain how non-standard contracts that are not well understood can also cause issues. And these issues can become heightened when working with international trade partners where jurisdictional differences, language and cultural impacts are also in the mix. By having strong contact management practices, you&rsquo;ll ensure all parties meet their obligations, including payment terms, quality of goods, level of service, and delivery. 3. Business Continuity Plan: A well-designed business continuity plan helps companies minimize risk in the event of a disaster or disruption. &ldquo;5 steps for developing a business continuity plan&rdquo; offers a step-by-step guide for business continuity planning so you&rsquo;ll know what to do if a supplier&rsquo;s business is disrupted. &ldquo;Companies can also review their suppliers&rsquo; business continuity plans to help them determine what they&rsquo;ll do if disrupted,&rdquo; says Tina. 4. Diversification Strategy: &ldquo;Where possible, don&rsquo;t rely on a single supplier for any aspect of your supply chain,&rdquo; Tina advises. Having diversified suppliers in different geographic areas will enable you to mitigate risk if a supplier experiences disruption or goes out of business. &ldquo;Supply chain redundancy&mdash;meaning having backup resources&mdash;will allow you to quickly adjust when there&rsquo;s a disruption to the supply of a critical product or service.&rdquo; 5. Insurance Protection: &ldquo;Insurance protection is available for certain aspects of supply chain risk, but not all,&rdquo; says Tina. &ldquo;For instance, interruption to your business caused by a fire at a key supplier can be covered whereas interruption caused by strike is not readily insured.&rdquo; A knowledgeable insurance partner can guide you through the complexity and help you understand how your business can be protected. Following the tips above will not only help you mitigate risks to your supply chain but can also help you optimize it &ndash; and this in turn can help you strengthen your business.

5 ways to mitigate supply chain risks

A new driver (Sandy) has just started work at a medium sized transportation company. Just two weeks in, she&rsquo;s overwhelmed by the new systems and routes that she needs to learn and, after a momentary lapse in concentration, Sandy collides with a stationery vehicle. Although she&rsquo;s not seriously harmed, she&rsquo;s shaken and will be kept off the road for a couple of weeks. Fortunately, Sandy will fully recover and there were no other injuries; the transportation truck on the other hand is badly damaged and the company is at risk of not being able to fulfill some critical service commitments.
Sandy&rsquo;s employer faces a slew of costs associated with the collision and finding a replacement driver to cover her routes while she&rsquo;s off recuperating. The insurance policy will cover some of the loss but without a doubt the company will be out of pocket. This is an unfortunate sequence of events to be suffered by a medium-sized transportation company.
It would be easy to conclude that this type of loss is just the cost of doing business for a transportation company. But it doesn&rsquo;t have to be. Sandy&rsquo;s employer could have reduced the potential of an accident happening by providing Sandy with more training, but they were short-sighted and eager to get her out on the road as soon as possible. Rather than spending time on new driver orientation training and activities, the management team wanted her clocking up the miles on the road. They didn&rsquo;t appreciate the importance of investing in their drivers to avoid this type of early employment accident.
&ldquo;Fleets with drivers that have the right training, tools, equipment, attitude and employer support positively impact their own on road performance. Automobile insurance pricing favors fleets that invest in these areas.&rdquo;
Experienced fleet managers know that their insurance policy, no matter how comprehensive, is a secondary line of defence. Being proactive and mitigating risks before they happen is how you build a resilient business. If Sandy&rsquo;s employer had taken such an approach, she likely would still be on the road, the vehicle would be undamaged and the company wouldn&rsquo;t be facing a potentially costly loss. In the transportation industry, we know it&rsquo;s so important to think ahead because you&rsquo;re dealing with situations like Sandy&rsquo;s every day.
&ldquo;One of the most effective measures is investing in your drivers,&rdquo; explains Boyd Cooley, Commercial Underwriting Manager at Sovereign Insurance. &ldquo;Carefully screening new driver hires is also critical. You want to have the right person with the right attitude behind the wheel.&rdquo;
Training drivers to operate vehicles as safely as possible - and providing guidance on defensive driving - is so important. Drivers may have a clean record with no prior collisions, but it&rsquo;s vital they receive ongoing training and education to enable them to perform at a higher standard.
&ldquo;A better prepared fleet operator is a better insurance risk,&rdquo; says Cooley. &ldquo;Fleets with drivers that have the right training, tools, equipment, attitude and employer support positively impact their own on road performance. Automobile insurance pricing favors fleets that invest in these areas.&rdquo;
The benefits for an organization that adopts a proactive approach to risk mitigation are clear. From improved driver morale and insurance savings to more miles being covered due to fewer accidents, forwarding thinking companies are better positioned to attract and retain good drivers and at the same time boost organizational profits.
For companies that don&rsquo;t invest their time in implementing risk mitigation best practices, the consequences are wide ranging. &ldquo;The risks are serious; from the safety of your employees and the public at large, to financial business risk threatening the viability of your operation,&rdquo; says Cooley. &ldquo;Fleets that don&rsquo;t invest in risk management may find insurance coverage prohibitively expensive or even unavailable. Fleet operators have a lot at stake and need to be proactively managing their risk. At Sovereign, our Fleet Underwriting and Risk Assessment Specialists are here to help.&rdquo;
Here are some helpful tips for creating a culture that promotes safe driving: 
<ul>
<li>Educate drivers on safe and defensive driving techniques from day one</li>
<li>Develop training materials on fatigue management</li>
<li>Create a buddy system in which newer drivers have an experienced person to turn to for advice</li>
<li>Place organizational emphasis on safety rather than hitting targets</li>
<li>Don&rsquo;t retain drivers who break the rules</li>
<li>Foster a culture of continuous learning and pride of workmanship</li>
</ul>
&nbsp;
We can work with your Broker to help you strengthen your current Fleet Safety Program. Contact your broker to learn more.

The Importance of investing in your drivers

Smaller fuel spills from tractor-trailers might not make the headlines like fuel tanker accidents do. However, they too can have a detrimental impact on the environment and the community, particularly if a spill occurs near a body of water; if it&rsquo;s not dealt with properly, even a small spill can lead to expensive cleanup costs.&nbsp; The trouble is, fuel tank spills aren&rsquo;t very common, so many operators don&rsquo;t train their drivers on how to contain spills. But as the saying goes, &ldquo;accidents happen,&rdquo; and drivers need to be prepared. A fuel spill can be caused by any number of reasons, for example, the tank could be punctured if the driver hits an object that isn&rsquo;t visible from the cab, or if they&rsquo;re involved in a collision.&nbsp; For fleet operators, providing their drivers training and resources is critical to help reduce the environmental and financial costs of a spill. What&rsquo;s needed is an emergency response plan (ERP) that details what drivers should do in the event of a fuel spill. Here&rsquo;s a general overview of best practices and tips developed by Canadian Fuels Association that should be included in the ERP for a fuel spill:&nbsp;
<ol>
<li>Train drivers: Before drivers set out on the road, they should be trained on how to use spill-kit equipment &ndash; it&rsquo;s also a good idea to include directions for use with the kit itself. While spill-kit equipment likely won&rsquo;t contain the entirety of a spill, it can assist in the initial response, acting like an emergency first aid kit.&nbsp;</li>
<li>Report the incident: A driver&rsquo;s first step is to report the incident to the authorities, calling the police and/or emergency responders, as well their employer. Drivers should be given information on who to contact and their daytime and after-hours phone numbers. They should have an understanding of the information they need to communicate about the incident (for example, the location of the spill and the nature of the emergency).</li>
<li>Secure the scene: The driver needs to assess the scene and plan a course of action if they are uninjured and it&rsquo;s safe to do so. The driver should secure the area, which could include traffic control measures (for example, putting orange cones out to stop other vehicles from driving through the spill), and ensuring people are in a safe location if authorities haven&rsquo;t yet arrived on scene.</li>
<li>Assess for hazards: As part of a training program, drivers should understand the basic fire hazards of petroleum and potential hazards from static electricity and how to minimize those hazards. For example, stepping into the fuel has the potential to provide static discharge that ignites the fuel, so the driver has to be extremely careful around the spill. Drivers should also understand the requirements for basic personal protective equipment (PPE).</li>
<li>Contain or confine the spill: Following the safety assessment, the driver should take action either to contain (keep fuel in its container) or confine (keep it in a defined area) using a spill kit and other equipment provided by their employer. Some key practices include:&nbsp; 
<ul>
<li>Protecting bodies of water such as a stream, river or lake by digging up dirt and creating a ridge or ditch to mitigate the spread of fuel.&nbsp;</li>
<li>Covering up storm sewer drains or manholes with a rubber mat provided in the spill kit, or any other covering such as a plastic bag.&nbsp;</li>
<li>Plugging the fuel tank to prevent more fuel from spilling out. There are various products on the market designed to plug damaged gasoline and diesel fuel tanks.</li>
<li>Soak up the spill using hydrophobic absorbent material such as hydrophobic booms, socks or pads. Hydrophobic absorbent material works best for fuel or oil spills because it only absorbs fuel or oil, not water.</li>
</ul>
</li>
</ol>
If you don&rsquo;t have one already, it is advisable to get started on creating an ERP and driver training program. Develop a list of companies that provide services such as fuel spill cleanup and environmental remediation and contact them to ensure they&rsquo;re a responsive partner if you need to call on them. Perform mock emergencies to put driver training into practice. Finally, contact your broker to find out if, and under what insurance policy, your business is covered in the event of a fuel spill arising from an automobile accident. A well-developed ERP, combined with insurance coverage suited to the needs of your business, is the best defense in the face of smaller fuel spills.&nbsp; 
Source: Canadian Fuels Association, Land Transportation Emergency Response Guideline for Petroleum Spills, Jan. 2013&nbsp;

How to contain fuel spills

Today, boilers and pressure vessels are ubiquitous in modern society and are used across many sectors, including power generation, manufacturing, agri-food, forestry and dry cleaning.1 But when it comes to managing the risks associated with them, many companies still aren&rsquo;t aware of the role their insurers play with regards to inspections, their responsibilities as owners and how inspections can be beneficial to their businesses. We break down three key reasons why you not only need a jurisdictional inspection, but how it can benefit your business.
<h4>It&rsquo;s the law!</h4>
First and foremost, regular inspection of boilers and pressure vessels is the law, and it&rsquo;s important for owners and operators to stay on top of any regulatory changes. In July 2018, The Technical Standards and Safety Authority (TSSA) introduced new regulations for boilers and pressure vessels in Ontario.2 Previously, the insurer would issue a Certificate of Inspection directly to the client. Now, boiler and pressure vessel (BVP) owners must work directly with the TSSA, which will issue a Certificate of Inspection after the device has passed a periodic inspection and the insurer submits a Record of Inspection. Owners are required to pay a fee to the TSSA to receive their Certificate of Inspection. Ultimately, the onus is on owners and operators to comply with the law. In Ontario, if it&rsquo;s determined that the boiler or pressure vessel falls under the regulations, the owner or user is responsible for having it inspected before being put into operation (by the TSSA) and on a periodic basis after being put into service (by their insurance company). Once in operation, the insurer or third-party inspector will inspect every one, two or three years as required by the regulations. Qu&eacute;bec has similar requirements, though differs slightly in inspection frequency. In Qu&eacute;bec, if it&rsquo;s determined that the boiler or pressure vessel falls under the regulations, the owner or user is responsible for having it approved before being put into operation by the R&eacute;gie du b&acirc;timent du Qu&eacute;bec (RBQ).3 After being put into service, the boiler or pressure vessel is then inspected on a periodic basis by a person or body recognized by the RBQ, which issues a periodic inspection certificate. The inspection frequency varies, and may be a one, two, three or four-year cycle depending on the type of boiler or pressure vessel. Insurance companies are valuable partners in this regard. They can help companies determine if their vessel falls under the regulations and what the inspection requirements are, as well as help them comply with the regulations.
<h4>It&rsquo;s a matter of safety</h4>
In any jurisdiction, the primary reason boilers are periodically inspected is to verify compliance with safety requirements. Boilers can explode, causing property damage, injuries and deaths4, so ensuring the safety of people who are in the vicinity of the unit &mdash;whether they&rsquo;re employees or members of the public &mdash; is job number one.
<h4>It can save you money</h4>
Beyond the critical importance of safety, regular inspections have bottom-line benefits for owners and operators. For example, a common discovery during inspections is the formation of scale on the heat transfer surfaces of the boiler.5 Scaling reduces the rate of heat transfer across boiler tubes, and the reduced efficiencies result in increased energy costs.6 &nbsp;While regular maintenance and proper upkeep is imperative, an inspector&rsquo;s expertise can help ensure efficient operation and extend the life of the equipment. Though explosions are rare considering the sheer volume of boilers in operation around the world, they can also be very costly to businesses. First, there&rsquo;s the damage from the explosion itself, and then there&rsquo;s the cost of replacing the units. Insurance is the obvious way to reduce financial impacts in the event of an accident &ndash; but you need the right coverages in place. For example, it&rsquo;s important to note that losses to equipment aren&rsquo;t always covered under Property policies and there are exclusions that Equipment Breakdown insurance is designed to fill.7
<h4>We can help</h4>
At Sovereign, we make every effort to determine &mdash; based on your type of business &mdash; whether you have boiler or pressure vessel equipment installed and can arrange a visit from our inspector as needed. We have extensive equipment inspection services and can provide jurisdictional inspections in both Ontario and Qu&eacute;bec through our trusted partners.
&nbsp;
1&nbsp;Ontario&rsquo;s Regulatory Registry:&nbsp;<a href="https://www.ontariocanada.com/registry/view.do?postingId=24227&amp;language=en">Boilers and Pressure Vessels Regulatory Review</a>&nbsp;June 2, 2017 2 TSSA:&nbsp;Amendments to Ontario&rsquo;s Boilers and Pressure Vessels Regulation&nbsp;February 2, 2018 3 B-1.1, r. 6.1 - <a href="http://legisquebec.gouv.qc.ca/en/pdf/cr/B-1.1,%20R.%206.1.pdf" target="_blank" rel="noopener">Regulation respecting pressure installations</a>&nbsp;Updated November 1, 2019 4&nbsp;Engineering 360: <a href="https://insights.globalspec.com/article/2044/training-and-vigilance-key-to-preventing-boiler-accidents" target="_blank" rel="noopener">Training and Vigilance Key to Preventing Accidents</a>&nbsp;February 2, 2016 5&nbsp;The National Board of Boiler and Pressure Vessel Inspectors: <a href="https://www.nationalboard.org/Index.aspx?pageID=164&amp;ID=224" target="_blank" rel="noopener">Water Maintenance Essential to Prevent Boiler Scaling</a>, accessed August 22, 2019 6 U.S. Department of Energy: <a href="https://www.energy.gov/sites/prod/files/2014/05/f16/steam7_surfaces.pdf" target="_blank" rel="noopener">Clean Firetube Boiler Waterside Heat Transfer Surfaces</a>, accessed August 22, 2019 7 Sovereign Insurance: <a href="https://www.sovereigninsurance.ca/Industries-and-Solutions/Equipment-Breakdown">Equipment Breakdown</a>

Why do you need a jurisdictional inspection?

Email encryption is the process of encoding your sensitive or private data so that it&rsquo;s scrambled or inaccessible to unauthorized users. Encryption helps ensure confidentiality, protect against unwanted access to your email account, and prevent the interception of sensitive or personal information. It&rsquo;s an important measure to put in place when communicating confidential information to help prevent a data breach. After all, if a hacker can&rsquo;t read contents of the email, they can&rsquo;t harm you with it. What type of information should you encrypt? Private, confidential information that should be encrypted may include bank and credit card details, financial statements, personal client information, passwords, security documents, and tax records &ndash; just to name a few. Unauthorized disclosure of this information could lead to financial loss or identity theft, so special care and preventive measures must be taken to protect it. How does it work?1 Encrypted data is scrambled so that it&rsquo;s illegible to anyone who doesn&rsquo;t have the decryption key or password to &lsquo;decode&rsquo; and access the information. &lsquo;Keys&rsquo; are the digital codes that allow you to encrypt and decrypt messages. The information is coded and decoded as follows:
<ul>
<li>A public key is a digital code used to encrypt the email. The sender uses the recipient&rsquo;s public key to scramble the email message. This key is stored on a key server that&rsquo;s accessible to anyone. You cannot send an encrypted email to someone without access to their public key.&nbsp;</li>
<li>A private key is a private digital code that the recipient uses to decode the email. It&rsquo;s stored on their private computer.</li>
</ul>
There are two main types of email encryption methods: S/MIME (Secure/Multipurpose Internet Mail Extensions) and PGP/MIME (Pretty Good Privacy/Multipurpose Internet Mail Extensions). Here&rsquo;s the difference:
<ul>
<li>S/MIME:&nbsp; 
<ul>
<li>relies on a centralized authority to pick the encryption algorithm</li>
<li>built into large web-based email companies such as Gmail and Outlook</li>
<li>key code is generated for you</li>
</ul>
</li>
</ul>
<ul>
<li style="text-align: left;">PGP/MIME:
<ul>
<li>relies on a decentralized authority to pick the encryption algorithm</li>
<li>offers more flexibility and control over how you want your emails to be encrypted</li>
<li>requires a third-party encryption tool </li>
</ul>
</li>
</ul>
In order for the recipient to decrypt an email encrypted by the sender, both parties must use the same encryption method.
How to encrypt your emails Before you send an encrypted email, be sure to let the recipient know in advance that you&rsquo;re initiating an encrypted email conversation. And once all sensitive information has been shared, it&rsquo;s important to close the confidential encrypted email thread by starting a new email conversation. This way future messages won&rsquo;t be encrypted automatically, and you won&rsquo;t inconvenience the recipient with the additional step of requesting a passcode.&nbsp; For details on how to encrypt your emails, refer to these resources for helpful instructions:
<ul>
<li><a href="https://support.microsoft.com/en-us/office/encrypt-email-messages-373339cb-bf1a-4509-b296-802a39d801dc" target="_blank" rel="noopener">Outlook</a></li>
<li><a href="https://support.google.com/mail/answer/6330403?hl=en" target="_blank" rel="noopener">Gmail</a></li>
<li><a href="https://support.apple.com/en-ca/HT202345" target="_blank" rel="noopener">iOS</a></li>
</ul>
Other cyber security considerations Email encryption is a great way to help protect the sensitive data you&rsquo;re sending back and forth, but it&rsquo;s just one tactic within a company&rsquo;s overall cyber security strategy. In addition, it&rsquo;s important to carry out robust cyber exposure analysis and work with your broker to implement proactive risk management solutions.&nbsp; 
1January 2, 2019. Panda Security Media Center.<a href="https://www.pandasecurity.com/en/mediacenter/panda-security/how-to-encrypt-email/ " target="_blank" rel="noopener"> &ldquo;How to Encrypt Email (Gmail, Outlook, iOS, Yahoo, Android, AOL)&rdquo;</a>. Retrieved October 26, 2020

How to encrypt email

Despite the rise of automation and artificial intelligence technologies, the vast majority of business that gets conducted relies on some sort of human interaction or connection. Employees are an organization&rsquo;s greatest asset, but also remain every organization&rsquo;s weakest link when it comes to defending against a cyber breach. You can implement the latest firewall technology and employ a genius Chief Information Officer, but if all staff members aren&rsquo;t aware of the types of scams that cyber criminals are trying to pull, then chances are your organization could fall victim to a social engineering attack.
<h4>What is social engineering?</h4>
Simply put, social engineering is a form of psychological manipulation that targets the user rather than the computer itself &ndash; and it&rsquo;s proving to be very effective for cybercriminals. It plays on our universal human traits of fear, trust and conformity to get access to information, all without hacking into a system or cracking a code or password.
Your first line of defense might be to invest in antivirus software and firewall (software and physical versions) with intrusion detection capabilities &ndash; and that&rsquo;s a great start. But that won&rsquo;t account for human weaknesses, like a lack of attention to detail or an all too trusting nature.
<h4>The impact on your business</h4>
If organizations don&rsquo;t take measures to educate and train their employees on social engineering tactics, it&rsquo;s more likely that they&rsquo;ll fall for scams, get hacked, experience a breach and become the victim of fraudulent wire transfers. Any of these events can be incredibly costly and could impact the company&rsquo;s reputation. And this can be repeated multiple times if the bad guys find a &lsquo;good victim&rsquo;. In addition to the monetary impact, being scammed doesn&rsquo;t feel good and can take an emotional toll on your employees.
<h4>Phishing tactics</h4>
Phishing is a technique where cybercriminals send fake emails, texts or websites that look like legitimate correspondence to manipulate employees into gaining access to corporate systems or information. It uses social engineering tactics by deceptively preying on employees&rsquo; emotions and relying on them to mistakenly hand over access to target information.
A phishing breach usually occurs when a hacker gets the structure of an organization&rsquo;s email addresses and then sources a list of names of company employees, usually from LinkedIn or the company&rsquo;s own website.
Similarly, a cybercriminal could get the log in details to a company executive&rsquo;s email address and send out emails to other employees directly from that account. They could then either request sensitive information or ask them to send wire transfers on behalf of the company. In many cases, the employee receiving that email will think the request is legitimate and provide the sensitive information or transfer the funds.
Another form of phishing sees hackers send out emails &ndash; again appearing to be from a legitimate email address &ndash; containing a link or attachment.
That link can do a couple of different things: it can send them to a web page with a form which asks them to provide personal information, it can include spyware to gather information on the company (and its employees and clients), or it can include a ransomware file attachment which activates when downloaded. That file will encrypt the files on the user&rsquo;s computer and only unencrypt them when a ransom is paid to the criminal&rsquo;s bank account.
<h4>Tips to protect your business</h4>
Social engineering is something that can be mitigated if employees are well educated. Your first line of defense might be to invest in antivirus software and firewall (software and physical versions) with intrusion detection capabilities &ndash; and that&rsquo;s a great start. But that won&rsquo;t account for human weaknesses, like a lack of attention to detail or an all too trusting nature. That&rsquo;s why it&rsquo;s so important to educate employees on social engineering and phishing, and the specific tactics they should look out for. This can help foster a culture in which employees are alert and cautious with information whether they&rsquo;re online or in-person.
Encourage employees to follow the steps below to reduce the chances of social engineering impacting your organization:
<ul>
<li>Avoid opening emails from unknown email addresses</li>
<li>Create better, stronger passwords &ndash; and change them regularly</li>
<li>Avoid less than reputable internet sites, web and smartphone applications</li>
<li>Cut down on the amount of biographically accurate information you divulge online (e.g. listing your birthdate on social media)</li>
<li>Only use trusted sites when online</li>
<li>Don&rsquo;t click on links you&rsquo;re sent. Instead, open the webpage on your own by typing in the URL yourself to make sure you&rsquo;re going to a legitimate site and not a phishing scam site</li>
<li>Log out of Facebook and other social media accounts when you&rsquo;re not using them and before you close your browser window</li>
<li>Don&rsquo;t choose &ldquo;save my password&rdquo; or &ldquo;remember me&rdquo; when logging onto any type of account, as these credentials can be stolen by hackers</li>
<li>Follow the company&rsquo;s &ldquo;new vendor/account change&rdquo; protocol to verify clients before sending wire transfers above a certain predetermined threshold. This could involve requiring employees to call vendors (using the phone number in your files, not the one in the email) before making the transfer.</li>
</ul>

Social engineering: your business is at risk from human blunders

In today&rsquo;s ever evolving cyber age, data has become one of the most valuable assets of every business. Cyber protection is essential for your business, but it&rsquo;s equally critical to reduce your cyber exposures and build resiliency to prevent, or at least minimize, a cyber-attack in the first place.
What are the implications for your business if it were to suffer a data breach? Could your business recover? These are the types of questions nearly 100 business owners and entrepreneurs faced while attending Startup Peel&rsquo;s #EmergingBiz Cyber Talk: Scaling Through Resiliency on July 24, 2019.
Based on the discussion, Sovereign offers four key take-aways that any business can use to help them manage their cyber exposures.
<img class="WACImage SCXW42399661 BCX0" unselectable="on" src="https://files.sovereigninsurance.ca/upload/blobid0_20240216103858.jpg?w=800" alt="A group of people standing and sitting next to a pop up banner that reads &quot;Cyber Talks scaling through resiliency&quot;" /> Participating in the #EmergingBiz Cyber Talk: Scaling Through Resiliency (top, left to right) Jean Nickerson, Silicon Halton; Charles Finlay, Rogers Cybersecure Catalyst; Daniel Bishun, Brampton Entrepreneur Centre; Melloney Campbell, Startup Peel; Julie Palacios, Sovereign Insurance; (bottom, left to right) Ajay K. Sood, Symantec Canada, and Takara Small, CBC Metro Mornings, Moderator. 
<h4>1. Inform and educate</h4>
"Education is key, and it&rsquo;s not only an IT responsibility and risk. It&rsquo;s everyone&rsquo;s responsibility.&rdquo;
Employee cyber security training is essential. In a corporate setting, human error is the weakest link in the security chain. Employers need to educate employees of impending risks and vulnerabilities and how to avoid them.
Cyber security should be a pillar of the corporate culture and this can be achieved in a number of ways:
<ul>
<li>Conduct regular sessions with your employees where you can discuss real world examples of security incidents and make it relevant to what people do</li>
<li>Incorporate cyber security best practices into the discussion and protocols when you&rsquo;re onboarding new employees</li>
<li>Train individuals on the actions they should take if they suspect a security threat, and don&rsquo;t forget to periodically test individuals to affirm that they truly understand what they should be looking out for &nbsp;&nbsp;&nbsp;</li>
</ul>
<h4>2. Mitigate cyber risks</h4>
Here are some mitigation strategies that businesses can use to protect their data:
<ul>
<li>Encrypt data: Encryption can be an effective cyber-crime prevention strategy, rendering data difficult to access if it falls into the wrong hands.</li>
<li>Back up data and store it separately: Backing up data and storing it separately strengthens your resiliency in the face of ransomware attacks, where attackers lock companies out of their own systems.</li>
<li>Use strong passwords: Using unique and complex passwords, changing them often and discourage password sharing</li>
<li>Restrict network administration rights: Employees can&rsquo;t mistakenly give away information they don&rsquo;t have access to. Use robust anti-malware and firewall software. While effective anti-malware tools catch and isolate software viruses when they hit, preventing these viruses from entering your database in the first place is most important.</li>
</ul>
<h4>3. Make a plan</h4>
If you collect or store data in the course of commercial activity, you as a custodian are responsible.
On November 1, 2018, important changes to the Personal Information Protection and Electronic Documents Act (PIPEDA) came into force . Both large and small businesses that are subject to PIPEDA must report material personal information breaches to the Privacy Commissioner and the individuals concerned, and keep records of all breaches. &ldquo;If you collect or store data in the course of commercial activity, you as a custodian are responsible&rdquo; said Julie.
Therefore, it&rsquo;s important for businesses to develop incident response plans and put procedures in place to minimize, contain, and recover from a data breach. Incident response plans act as a roadmap to be followed by response teams when a data breach is discovered. Effective plans require the organization to understand the quantity of sensitive data that&rsquo;s being stored, the type of data (personal data, customer data, intellectual property etc.), how it&rsquo;s being secured, and who has access to the information.
In the face of a breach, there are two things your company can do to inform how best to respond:
<ul>
<li>Identify a data forensics team: Independent forensic investigators can help determine the source and scope of the breach.</li>
<li>Consult legal counsel: They can advise on your responsibilities under applicable provincial and federal privacy laws.</li>
</ul>
<h4>4. Lean on experts</h4>
Some insurance policies include breach preparation and crisis management services and resources.
At Sovereign Insurance, for example, we offer access to breach preparedness resources that can help your business quickly develop and execute a breach response strategy or incident management plan.
These services can include:
<ul>
<li>Counseling</li>
<li>Crisis management</li>
<li>Notification assistance</li>
<li>Breach victim remediation planning</li>
<li>Media relations consulting</li>
<li>Regulatory communication</li>
<li>Personalized access to a breach preparedness website</li>
</ul>
Having the right type of expert to help you navigate the complexities and nuances of data security can make all the difference when you&rsquo;re preparing for or facing a breach.
To be resilient is to be informed, proactive, and supported. Talk to your insurance broker to ensure you&rsquo;re getting access to the resources and expertise you need to be just that.

4 ways to enable resilience in the cyber age

In today's highly competitive business environment, where a single equipment failure can cause significant damage, pose serious safety risks, and bring production to a screeching halt, you can&rsquo;t afford the reputational risks and business interruption losses associated with electrical equipment malfunctions &ndash; especially losses that can be avoided with routine maintenance. Property damage, equipment repairs, and production downtime are three common costly scenarios that every facility hopes to avoid. One way to minimize these types of issues is to implement a comprehensive Electrical Preventive Maintenance (EPM) Program at your facility.

Risk Resilient: Electrical Equipment Maintenance Programs

Truck Spotter Hand Signals

As burglars are becoming more sophisticated, premises security is more important than ever. Be aware of lock swaps; protect your business.&nbsp;

Be aware of lock swaps. Protect your business.

If you don&rsquo;t think your company has experienced a cyber attack, then your IT security team is doing a great job. The truth is, it&rsquo;s not a matter of &lsquo;if&rsquo; a company will be attacked, it&rsquo;s &lsquo;when&rsquo;. Cyber security doesn&rsquo;t rest solely on the shoulders of your IT team &ndash; it&rsquo;s everyone&rsquo;s responsibility. We&rsquo;ve put together a glossary of terms to help all employees brush up on their cyber security terminology. The more you know, the more you can do your part to mitigate cyber risks.

25 Cyber security terms not just your IT security team should know

One of the best ways to keep employees and business data protected is by having them connect via Virtual Private Network (VPN). Here are five ways VPNs can keep remote employees secure.

5 Reasons to Offer a VPN to Remote Employees

<div>
<div>Follow these six tips to help you select a safe video conferencing platform and secure your webcam.</div>
</div>

Cyber Spies: How to Safely Use Webcams and Video Conferencing

Phishing is a technique where cybercriminals send fake emails, texts or websites that look like legitimate correspondence to manipulate employees into gaining access to corporate systems or information.
Key characteristics include: &bull; Tries to trigger a quick reaction from you &bull; Provides a link to a separate website &bull; Typically asks you to "update", "validate" or "confirm" private information &bull; Often imitates an official sender (e.g. your company or government or financial institution)

Spot a phish, protect your business

Follow these&nbsp;five&nbsp;tips&nbsp;to&nbsp;help&nbsp;strengthen&nbsp;your company&rsquo;s cyber defences, protect&nbsp;your employees from receiving malicious content and toughen your defences with&nbsp;continually educating your employees about security best practices and scams.

5 ways to Bolster your IT Security Strategy with Employee Training

Considering the growing shift towards online business operations, it's becoming increasingly vital for small and medium-sized businesses to prioritize cyber security. Here are ten tips to enhance your business&rsquo; cyber security:

10 tips to enhance your business’s cyber security

Purpose And Impact

Tools

Broker Resources

Warehouses are the heart of the supply chain, ensuring that goods and materials are stored and handled correctly before being shipped to their next destination. As technology advances and customer demands change, warehouse operators must look for ways to stay ahead. Here&rsquo;s a look at five warehousing trends to watch this year and beyond.
<h4>Leaning into AI-driven data</h4>
Artificial intelligence (AI) is set to transform many aspects of warehousing. AI-powered systems can analyze large volumes of data collected from warehouses to enable better decision-making across their operations, from inventory management and demand forecasting to supply chain optimization. For example, insights can help to reduce stockouts, predict bottlenecks and optimize warehouse layouts, which can bring operational efficiencies and cost savings.1,2
AI can also help operators use labour and equipment as efficiently as possible. On the labour front, AI provides insights that lead to more efficient allocation of workers. The technology can also prevent equipment problems or failures by predicting when maintenance is needed.3
<h4>More robots, more efficiencies</h4>
While using robotics to automate warehouse tasks is nothing new, it&rsquo;s set for significant growth. Globally, the warehouse robotics market is to reach US$10.5 billion by 2028, growing at an annual rate of 11.4%.4 Among the factors driving growth are the e-commerce boom, rising labour costs, labour shortages and technological advances.5
While robots are traditionally used for tasks like sorting, picking, and packaging items, the latest models can plan their own optimal routes and picking sequences.6 More types of robotics are being introduced too, such as automated guided vehicles (AGVs), which help transport materials and supplies within a warehouse, and collaborative robots (or &ldquo;cobots&rdquo;) that work alongside employees.7
Although bringing robots on board has its challenges &ndash; high upfront costs and integration with legacy systems, for instance &ndash; the benefits are many.8 By automating tasks with greater precision, robotics help improve accuracy in order fulfillment. The technology also reduces time and resources spent on retrieving and transporting items around the warehouse.9
<h4>Worker health and safety levels up</h4>
By implementing more automation &ndash; thus relying less on humans to do strenuous or risky tasks &ndash; warehouse operators can reduce the risk of workplace accidents and injuries.10 At the same time, operators are turning to advanced technologies to keep workers on the floor safe.
One example is wearable technology such as smartwatches, safety vests, and helmets that monitor for health and safety issues. Some devices monitor workers&rsquo; heart rate and body temperature, triggering emergency alerts if fatigue or another health concern is detected. Additionally, some wearables have sensors that alert workers if they&rsquo;re in the danger zone of a moving vehicle. 10
Drones are another example. These aerial devices can be used to perform safety inspections rather than requiring workers to climb ladders and scaffolding, reducing the risk of falls and injury. Drones can also be equipped with sensors to detect gas leaks, fires, and structural damage. They can also use thermal cameras to locate workers in danger and quickly notify emergency services.11
<h4>The future is green and clean</h4>
The warehousing sector is primed for a green revolution. With large physical footprints, warehouses use vast amounts of energy for lighting, heating, cooling, and powering machinery, resulting in substantial carbon emissions. In addition, most warehouses use gas-powered forklifts, contributing to air pollution, while the large amounts of packaging used in warehouses often end up in landfills.12
To reduce their environmental impact, warehouse operators will increasingly look for green solutions. On the energy front, warehouses can switch to renewable energy sources such as solar, wind or geothermal power. They can also invest in energy-efficiency measures like LED lighting, which consumes less electricity and lasts longer than conventional lights. Automated control systems for lighting and temperature can be used to cut back on wasted energy, as they adjust based on real-time needs. When it comes to machinery, more eco-friendly options include electric or hybrid forklifts. To cut back on packaging waste, warehouses can move to recyclable, reusable or decomposable material.13
<h4>Supply chains go local</h4>
Manufacturers are increasingly realizing the importance of localized supply chains, especially given some of the challenges of globalization.
See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/hot-topics/is-deglobalization-the-answer-to-supply-chain-woes">Is deglobalization the answer to supply chain woes?</a>
As part of supply chain localization, companies place inventory in warehouses in the same country as their customers, allowing for faster delivery times, greater efficiencies, and cost savings. For example, a U.S. e-commerce company might place inventory in Canadian warehouses for customers in this market.14 There is also a growing trend toward nearshoring, a strategy in which a company moves all or part of its production closer to its main consumer market. Nearshoring can help companies save money and avoid some of the logistical challenges that can come with overseas supply chains.15
While it may not be realistic to embrace every trend today, staying on top of the shifts will help warehouse operators identify future opportunities and see where the competition might be headed. Expect to see more changes and opportunities in this exciting and fast-changing sector this year and beyond. Ensure your risk protection keeps pace with the advancements and changes being made.
&nbsp;
<h4>Sources</h4>
1 Warehousing Express Logistics Pvt. Ltd., <a href="https://www.warehousingexpress.com/blogs/warehouse-trends-in-2023-a-brief-guide">Warehousing Trends In 2023: A Brief Guide</a>
2 Warehousing Express Logistics Pvt. Ltd., <a href="https://www.warehousingexpress.com/blogs/warehouse-automation-trends-and-technologies-in-2024">Top Warehouse Automation Trends and Technologies in 2024</a>
3 ITS Logistics, &ldquo;<a href="https://www.its4logistics.com/blog/innovative-applications-of-ai-in-warehouse-management">Innovative Applications of AI in Warehouse Management</a>,&rdquo; Dec. 19, 2023
4 Markets and Markets, &ldquo;<a href="https://www.marketsandmarkets.com/Market-Reports/warehouse-robotic-market-128876258.html">Warehouse Robotics Market</a>&rdquo;
5 Bricz, &ldquo;<a href="https://bricz.com/robots-revolutionizing-warehouses-exploring-the-explosive-growth-of-warehouse-robotics/">Robots Revolutionizing Warehouses: Exploring the Explosive Growth of Warehouse Robotics</a>,&rdquo; Oct. 11, 2023
6 McKinsey &amp; Company, &ldquo;<a href="https://www.mckinsey.com/capabilities/operations/our-insights/getting-warehouse-automation-right">Getting warehouse automation right</a>,&rdquo; Dec. 1, 2023
7,9 6 River Systems, &ldquo;<a href="https://6river.com/what-is-warehouse-robotics/">What is warehouse robotics?</a>&rdquo; Jan. 18. 2023
8 Prime Robotics, &ldquo;<a href="https://www.primerobotics.com/the-top-4-challenges-every-warehouse-automation-project-must-overcome/">The Top 4 Challenges Every Warehouse Automation Project Must Overcome</a>,&rdquo; Sept. 11, 2023
10,11&nbsp; Optima Warehouse Solutions, &ldquo;<a href="https://www.optima-ws.co.uk/using-technology-to-improve-warehouse-safety">Using technology to improve warehouse safety</a>&rdquo;
12,13 GEP, &ldquo;<a href="https://www.gep.com/blog/strategy/green-warehousing-warehouse-sustainability-strategies">Rethinking warehousing: How green is your warehouse?</a>&rdquo;
14 SCI, &ldquo;<a href="https://www.sci.ca/insights/e-commerce/how-localized-and-cross-border-e-commerce-fulfillment-can-help-businesses-expand-into-new-markets/">How Localized and Cross-Border E-Commerce Fulfillment Can Help Businesses Expand in New Markets</a>,&rdquo; Aug. 16, 2023
15 Deloitte, &ldquo;<a href="https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/advantages-of-nearshoring-mexico.html">Nearshoring in Mexico</a>,&rdquo; July 13, 2023

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