Canadian business risk is rising as tariffs, cyber fraud and benefits costs converge

Trade disruption, AI-enabled fraud and rising benefits costs are converging to reshape the risk environment for Canadian business owners.

Lockton Canada, the Canadian arm of the world's largest privately held, independent insurance brokerage, has released its inaugural Lockton Canada Market Update, aimed at senior leaders and risk managers. It examines a Canadian operating environment where, as the report puts it, "a decision or disruption in one part of the business can quickly change the organization's exposure elsewhere."

Real GDP grew at an annualized rate of 3.3 per cent in the second quarter of 2026, with gains in consumption, housing, exports and business investment, but that momentum is now being tested by escalating trade conflict and broader structural pressures.

Trade risk is no longer a macroeconomic abstraction

The most urgent theme for advisors with manufacturing, wholesale or export-oriented business clients is trade disruption. In late August 2026, the United States imposed 50 per cent tariffs on $27.6 billion of Canadian goods. Canada responded on September 8, 2026, with counter-tariffs of 15, 25 and 50 per cent on matching value of U.S. imports.

The Canada–United States–Mexico Agreement (CUSMA) remains in force, but the U.S. declined in July 2026 to extend the agreement for a further 16-year term, shifting the parties into an annual review cycle that substantially shortens the planning horizon for Canadian businesses.

The Lockton report makes clear that insurance values - including property, cargo and business interruption coverage - may no longer reflect the real replacement costs of inventory once duties are factored in. A business that insured its stock last year may find, after a loss, that it faces a shortfall because tariffs have increased the cost of replacement goods since the policy was last reviewed.

The report is also frank about counterparty risk. U.S. business bankruptcy filings rose 16.9 per cent in the 12 months ending June 30, 2026, according to the Administrative Office of the U.S. Courts. In Canada, total insolvencies increased 4.9 per cent in the 12 months ending July 31, 2026, per the Office of the Superintendent of Bankruptcy and those figures predate the August tariff escalation.

For advisors whose clients hold significant receivables from U.S. customers or depend on U.S. suppliers, the report recommends monitoring payment behaviour and covenant pressure, not waiting for insolvency data to confirm deterioration.

Cyber fraud is accelerating - and AI is making it worse

The Lockton report's cyber findings carry immediate implications for advisory practices as well as their business-owner clients.

Canadians reported more than $188 million in fraud losses to the Canadian Anti-Fraud Centre in the first three months of 2026 alone - a pace that, if sustained, would exceed the $704 million reported for all of 2025. The true scale is far larger: the Competition Bureau Canada has noted that only five to ten per cent of frauds are ever reported.

Perhaps more alarming for advisors helping business clients assess their risk profiles: a 2026 survey of 251 Canadian companies by KPMG Canada found that 81 per cent of those that had been defrauded said generative AI was used in the attack. Nearly a quarter of respondents had faced voice-clone calls impersonating an executive. The implications for firms handling large financial transactions - including many clients of wealth managers - are significant.

Canada's federal cyber framework is also changing. Bill C-8 received Royal Assent on June 15, 2026, introducing cybersecurity obligations for designated operators in federally regulated sectors, including supply-chain and third-party risk requirements and incident reporting obligations, according to the Lockton report.

A second piece of legislation, Bill C-36 - the proposed Protecting Privacy and Consumer Data Act - remains before Parliament but would modernize Canada's federal private-sector privacy framework if enacted. For Canadian business owners already navigating elevated operating costs and trade uncertainty, the dual burden of cyber compliance and fraud prevention represents a growing overhead that advisors should factor into business valuations and succession planning conversations.

Benefits costs add another layer of pressure

The report's People Solutions section is likely to resonate with advisors whose business-owner clients carry group benefits programs. Drug costs remain a material pressure, with Alberta Blue Cross projecting that GLP-1 therapies - a class of medications used for diabetes and weight management - along with other high-cost specialty drugs, will continue driving plan costs higher in 2026, according to the Lockton report.

At the same time, employer adoption of GLP-1 coverage is expanding: a 2026 survey by the International Foundation of Employee Benefit Plans found that 37 per cent of Canadian employers covered GLP-1 drugs for both diabetes and weight loss, up from 17 per cent in 2024.

There is, however, a notable development for cost management. Canada became the first G7 country to authorize a generic version of semaglutide - the active ingredient in widely used GLP-1 medications - in April 2026.

Workforce pressures extend beyond drug costs. A TELUS Health survey cited in the Lockton report found that one in five Canadian workers say financial stress has affected their productivity, while nearly two-thirds want more support with retirement planning, pensions and savings.

What this means for wealth managers

The Lockton report's core argument - that risk management must evolve with the business, not lag behind it - applies with equal force to the financial plans advisors build for business-owner clients. Reviewing sector concentration and stress-testing cash-flow assumptions has become baseline advice, but the Lockton findings suggest advisors should go further: prompting clients to audit insurance values for tariff-adjusted replacement costs, assess counterparty creditworthiness, and understand how cyber and fraud losses interact with their existing policy structures.

Stéphane Lespérance, CEO of Lockton Canada, said in the report that organizations best positioned to navigate uncertainty "will be those that regularly reassess their exposures, challenge assumptions and take a proactive approach to risk management."

For financial advisors, that challenge now sits squarely in the client conversation.