Canada: Risky Business: BLG Sees Cyber Risks Underlining Challenges To Canadian Businesses

Last Updated: December 17 2014

Article by Eusis Dougan-McKenzie, Lisa Bodnar (Environics Communications Inc.) and Carolyne Lord (Capital Image)


Toronto (December 16, 2014) — Cyber risks will be a dominant issue for Canadian businesses in 2015, according to Borden Ladner Gervais LLP (BLG) in its 2015 Top 10 Business Risks report. Following a Statistics Canada report that 14 per cent of large enterprises experienced an Internet security breach in 2013, BLG predicts Canadian companies will continue to face legal fall-out from data breaches, employee misconduct and reputation risk on social media.

"This is the fifth year we have looked at the risks that challenge our clients and are part of larger trends, and regardless of the industry or workplace everyone has to address cyber risks. Although data breaches and social media issues have made the list before, the increase in data breaches and recent cases of employee breaches of privacy indicate a growing challenge for all sectors," stated Sean Weir, national managing partner and CEO, BLG. "2015 will be a time for businesses to prepare to deal with legal challenges ranging all the way from the municipal level to international levels. In addition, last year saw landmark court decisions and regulatory changes that require careful consideration to avoid impacting business operations."


Digital Resilience: From Data Breaches to Social Media Fall-out

All organizations in all industries have digital risk. As criminal capabilities intensify and the public voice grows louder via social networks, organizations have too much at stake to ignore the risks. And, the potential for risk has increased exponentially. The risks of regulatory actions, class actions, and the preservation of the organization's reputation – and, in some cases the organization's very existence – depend on the steps taken in the first few hours, not days, to contain the situation, mitigate the damage that has been done, fix the problem and get the organization up and running again. These issues cannot be seen as just a problem for the IT department. Management of the issue includes every facet of the organization and the following points are critical to consider:

  • Are You Ready? In spite of robust systems, it is likely that an organization could experience a data breach at some point whether from outside hackers or from persons within the organization. This is why organizations need to be prepared to react quickly to protect their customers and employees confidential information and trade secrets, uphold confidence in their brand and maintain their bottom line. Organizations should ensure they follow the latest cyber best practices, which include assessing the risk, being aware of the regulatory requirements and privacy laws, and having a data breach plan to be able to react quickly when it happens.
  • The Myth of Being Cyber Secure Cyber security has become a growing concern for both public and private sector organizations, with of the majority of information created today being stored electronically. The disclosure of confidential data, breaches of privacy and infringement of intellectual property rights can have devastating consequences. Even as organizations invest millions to protect their data, the question is unfortunately when and not if it will happen. Today's cyber criminals have goals that go well beyond mischief to include corporate fraud, espionage, piracy and terrorism.
  • Social Slander In the early days many business leaders wanted to distance themselves and their companies from the phenomenon of social media. Now customers are using it, detractors are using it, and employees cannot be stopped from using it, so looking the other way is not an option. While many of the same laws that governpublished statements apply to social media, the environment comprises a whole new set of risks ranging from HR practices and defamation, to avoidance of copyright laws and electronic discovery that make organizations vulnerable to attack and legal consequences as a result of their own actions.

Aboriginal Title Granted in British Columbia: Impact will be Far Reaching

In the precedent setting case, Tsilqot'in Nation v. British Columbia, the Supreme Court of Canada made a concrete finding of First Nations title for the first time in Canadian history. This decision is likely to have significant and far reaching impact for the development of natural resources throughout most of British Columbia, and those areas of Atlantic Canada, Québec, and the North where aboriginal title has not been extinguished by historic treaties or defined by modern land claims agreements. Courts could potentially suspend or even force companies to cease operations altogether unless Aboriginal consent is obtained.

Anti-Corruption & Foreign Corrupt Practices: Internal Investigations and Compliance Reviews

It is becoming a fact of life for companies, both public and private, that many directors, officers or senior executives could be involved in a white collar investigation and/or prosecution during the course of their professional career. Some proceedings will be anticipated; others will come as a surprise. With the report from the Charbonneau Inquiry into corruption due to be released in April 2015 and the significant increase in investigations into foreign corruption by Canadian corporations, every sign points towards escalating enforcement activity in the coming year at home and abroad. Board members and senior management who remain unprepared will be particularly ill-equipped to explain real or perceived shortcomings to increasingly aggressive law enforcement authorities.

Thirty Years of Untested Infrastructure Deals

The refurbishment of aging infrastructure and the development of high profile infrastructure projects have awakened public interest and become a focus of many governments, not only to address the infrastructure deficit, but also as a means to bolster the economy.

However, the pace and complexity of infrastructure renewal is giving rise to new and innovative approaches and methodologies that haven't been tested over the long term. For both governmental authorities and private organizations, there is a need to anticipate the high risk elements of these deals by looking at granular details that may cause future issues.

EU Agreement Presents New Era of Trade Agreements

In September 2014, Canada and the EU signed the Comprehensive Economic and Trade Agreement (CETA). The agreement represents the first of a new era of trade agreements signed by Canada and will have a greater economic impact on the competitive landscape within Canada than any free trade agreement signed since NAFTA. It reaches beyond federal jurisdiction unlike any other trade agreement, requiring an unprecedented level of participation by provincial governments during the negotiations.

The CETA will affect Canadian and EU participants in the Canadian market as well as participants from third countries that compete in the Canadian market against Canadian and EU participants. All stakeholders are or should be considering the impact of the CETA on their commercial activities in Canada.

The CETA will immediately eliminate customs duties on approximately 98 per cent of the EU goods imported into Canada. The combination of the duty reductions and the rules of origin could create interesting opportunities for suppliers of input materials to the EU from third countries. For example, on the date of entry into force of the CETA, duties on textile and clothing products from the EU will go to zero from approximately 18 per cent. This is a substantial reduction. It is expected that this will increase the EU's garment exports to Canada by more than 91 per cent.

Mental Health in the Workplace: It's no longer don't ask, don't tell

Despite research indicating that almost one in five Canadian adults will experience a mental health issue in any given year, the stigma attached to mental health means many employees are afraid to disclose their issue to management. Likewise, many employers avoid addressing issues with employees due to the uncomfortable nature of broaching the subject. These questions continue to preoccupy employers. This is especially top of mind in jurisdictions like Ontario which have adopted policies that impose an obligation on the employer to inquire as to an employee's mental health.

Product Recall

Since the implementation of the Canada Consumer Product Safety Act (CCPSA) in June 2011,product recalls have appeared to be on the rise and so have the risks to the bottom line of consumer product and manufacturing companies. The most high profile risk to these businesses is a class action suit but Canadian companies face challenges even in addressing product recalls. At the onset of the recall, the leadership team is taken off day-to-day operations to find solutions. This has a cost to business operations, as does the cost of publicizing the recall, creating incentives for customers to respond and implementing processes to receive the recalled product and provide an alternate. During this time, operations are halted and the business process may have to be changed, for example the manufacturing line might have to design and implement new moulds. There also has to be a quarantine of the recalled product. In addition, there is the risk to the brand and long term revenue. A company dealing with a recall often loses the public's trust in the brand and current market share and it could take years to return to the pre-recall status.

Prolonged Hostilities: Hostile Takeovers will become Marathons not Sprints

With the stated objective of rebalancing the current dynamic between hostile bidders and target boards, the proposed extension of the minimum bid period to 120 days from the current 35 is set to make hostile takeovers lengthy affairs in Canada. Hostile bids will undoubtedly become materially more challenging to win, with target boards afforded more time to respond, seek alternatives and implement defensive measures. However, one of the net results of the new regime may be that securities regulators will be unlikely to allow a poison pill to remain in place past the 120 day period. Canadian directors may find that art still trumps science when fending off hostile bidders and ‎will need to be carefully prepared for long and drawn-out battles which consume substantial management and board time, effort and resources.

Gaining Social License and Implications for Energy Development

In 2012, the federal government introduced environmental assessment (EA) reform intended to aid in timely permitting and development of energy and other projects. These changes have impacted projects and resource development across the county but not necessarily in the manner intended. More certain (and shorter) EA process milestones have helped provide some procedural certainty around permitting of resource development. Historically EA has also played an important part in the obtaining of social license or community buy-in.

This year there has been a significant amount of federal energy regulatory reform aimed largely at Canada's pipeline industry. The common thread which weaves its way throughout the reforms appears to be a move away from the previous self-regulating model, into a much more prescriptive regulatory regime. While this regulatory shift may have been prompted largely by government's intention to silence those critics who suggested that regulatory oversight of the industry was lacking, the reforms were also intended to assist industry in gaining the required social license to develop Alberta's vast natural resources. While arguably these federal reforms serve to assist industry in this regard, effectively gaining social license for energy and other developments remains a challenge and one of the major risks facing investors, government, and Canadians.

These recent changes to federal EA process have been scrutinized by those from whom social license is being sought. The result has been a fair bit of criticism of the changes that has been reflected in public and other demonstrations by those who are critical of the proposed development. As such, social license will continue to be a significant factor for Canadian resource projects. The Northern Gateway, Keystone, and the Kinder Morgan pipeline in British Columbia are prime examples of projects that have seen delays and rising costs in the face of continuing opposition. In order to minimize risk and build necessary energy infrastructure, companies need to obtain regulatory approval as well as social license from the affected communities. However, competing interests and the lack of clarity around what constitutes social license makes securing it very challenging. And without social license, companies will continue to face increasingly organized campaigns aimed at terminating their efforts.

Unsettling Revisions for Investors

Numerous international tax rules and investment structures in place for decades are being revised in ways that aren't yet settled,creating risks for businesses and investors. With Canada's proposed anti-treaty shopping rule from the 2014 federal budget and the OECD's BEPS (Base Erosion and Profit Shifting) initiatives being prime examples, both Canadians investing outside of Canada and non-residents investing in Canada (including collective investment vehicles) will need to deal with the resulting uncertainty as to what constitutes acceptable tax planning as well as new compliance and financial reporting obligations.

"Providing clients with the best legal advice means you have to look at all possible outcomes, which is why BLG believes it is important to identify and assess key risks and map out a strategy to either avoid them altogether or address them when they occur," stated Weir. "By addressing the possible risks, we can help clients to keep focused on their core business goals."

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions