Top ten risks in North America
- Data fraud or theft
- Terrorist attacks
- Critical information infrastructure breakdown
- Failure of critical infrastructure
- Fiscal crises
- Failure of national governance
- Failure of climate-change adaptation
- Extreme weather events
- Natural catastrophes
As cyberthreats proliferate and more individuals experience personal data breaches, these risks remain the top concerns of business leaders in North America.
For business executives in both Canada and the United States, “cyberattacks” are once again – by a large margin – the number one risk to doing business. This is a top risk in Europe and East Asia and the Pacific as well, where it now ranks first and second, respectively. The persistence of this risk at the top of mind for business leaders in these regions highlights the growing sophistication and proliferation of cyberattacks, and the corresponding exposure businesses are facing.
In the United States in 2019, ransomware attacks incapacitated municipalities across Texas and Florida as well as major cities, including Baltimore and Atlanta, exposing technological vulnerabilities in local governments. At the national level, politicians and high-level government officials have warned that the US is still underprepared to confront major cyberattacks,57 and the government plans to launch a programme to protect voter-registration databases ahead of the 2020 presidential election.58 In Canada, 76% of businesses have reported an uptick in cybersecurity breaches in the past year.59 Canada’s national cybersecurity agency also predicted that it will be “very likely” that Canadian voters will encounter foreign cyber influence before and during the autumn 2019 federal election.60
The closely related risk of “data fraud or theft”, ranked number two by business leaders in the region, may also be explained by the increase in cyberattacks on municipalities and businesses alike, as hackers have been able to unlock and hold hostage large swathes of personal data held by these entities. In July, Capital One announced that the personal information of more than 100 million individuals, including Social Security numbers and accounts, was compromised in a massive data breach. Far from being the only target, as of August 2019, there had already been 3,494 successful intrusions against US financial institutions.61 While banks and other businesses are increasingly savvy in fighting cybercrime – in many cases enlisting the help of former government cyber-spies, soldiers and counter-intelligence officials – resilience is still a concern.
“Terrorist attacks” are again a top risk for business executives in the US. The ranking could reflect the increasing incidences of state-sponsored cyberattacks as well as large-scale gun violence. In October 2018, a man opened fire on a synagogue in Pennsylvania, taking 11 lives; just a few weeks later, 13 more were killed in a California bar by a lone gunman. Most recently, in August, unrelated and consecutive mass shooting incidents in Texas and Ohio left a total of 32 fatalities.
“Critical information infrastructure breakdown” and “failure of critical infrastructure” round out the top five risks for doing business in North America. As noted in the 2019 Global Risks Report, in the United States, overall investment needs are relatively low compared to other economies, but the shortfall in spending is twice as large.62 The latest American Society of Civil Engineers (ACSE) report card rated the US “D+” on its infrastructure stock, only slightly better than “unfit for purpose”. Cyber-related threats are also likely to contribute to concerns about critical information infrastructure, as these systems become increasingly connected to the internet of things (IoT).
Business executives in the US also ranked “fiscal crises” and “failure of national governance” highly. An August 2019 report by the Congressional Budget Office projects that public debt will rise from 79% of GDP this year to 95% in 2029, its highest since just after the Second World War.63 Combined with an expected slowdown in economic growth, conditions are ripe for increased fiscal risks. “Failure of national governance”, moving up six places in the rankings, is particularly striking this year, with national elections on the horizon in 2020 and a seemingly widening political divide both between and within the two national parties.
In Canada, business executives also ranked highly the twin pressures of “extreme weather events” and “failure of climate-change adaptation”. Extreme weather has plagued the region once again this year, as many Canadians confronted “polar vortex” temperatures and one of the snowiest Januaries on record, while the coasts experienced unusually moderate weather. The country is also warming twice as fast as the rest of the world, with damaging impacts on physical infrastructure, coastal and northern communities, human health, ecosystems and fisheries. One recent study found that Canada could lose more than 13% of its GDP by 2100 due to climate change.64 In the US, these two risks also broke into the top ten this year.
Despite business concerns about climate change mitigation and extreme weather, the Canadian economy is still heavily reliant on its carbon-based energy sector. In the midst of low oil prices65 and foreign divestment from the sector, Canadian companies are nevertheless expanding production. Business leaders could perceive this trend as exposure to an “energy price shock” – another top five risk for the country.