Board Governance Part 2 - Cybersecurity and Managing Digital Risk
This is the second article in our series of board governance. Catch up by reading the first here.
You’re sitting in the boardroom. Coffee in hand, agenda in front of you. Everything seems routine. Until the CEO’s face goes pale mid-meeting. She just received a message: the company’s servers are locked, customer data has been compromised – and the attackers are demanding $2 million in cryptocurrency.
Unfortunately, this is not a drill from the IT department. It’s a genuine, real-world ransomware attack. And as a board member, you’re going to be held accountable.
This is happening across Canada with alarming frequency. From healthcare institutions in Ontario to mid-sized manufacturers in Alberta, no one is immune to these types of attacks.
Boards can no longer treat cybersecurity as an IT issue. It’s a governance and legal issue that must be addressed with a clear, thought-out strategy. Here’s what you need to know (and do) now to effectively manage digital cybersecurity risks if you’re on the board of an organization in Canada.
Why cybersecurity is a boardroom responsibility
Cyber threats are no longer isolated to tech companies or government institutions. Every business, no matter how big or small, is a digital business to some extent.
Boards have a fiduciary duty to ensure that the companies they oversee are resilient, compliant and operating in the best interests of stakeholders.
Failing to address cyber risk could result in a range of dire consequences. This can include anything from severe business disruption and the loss of customer trust, to penalties and personal liability exposure for directors.
In 2023, the average cost of a data breach in Canada was $6.94 million CAD, among the highest globally, according to IBM’s Cost of a Data Breach Report.
Key cyber threats Canadian boards must understand
Cyber risks are dynamic and complex, but here are some of the most pressing ones affecting Canadian businesses.
Ransomware attacks
Threat actors lock down systems and demand payment. Even if ransom is paid, there’s no guarantee data will be restored or not leaked.
Global ransomware attacks have surged dramatically in recent years. In Canada alone, one estimate recorded by Canada’s Cyber Threat Assessment 2025-2026 put the 2023 average payment at $1.13 million CAD, marking a nearly 150% increase since 2021.
Phishing and social engineering
Cybercriminals often target personal, financial and corporate data through social engineering techniques such as phishing. These are emails, texts and calls designed to trick employees (or executives) into revealing credentials or transferring funds.
In Canada, phishing ranks among the most frequently reported types of fraud, while spear-phishing incidents tend to inflict some of the greatest financial damage.
These targeted attacks can result in the exposure of sensitive information and substantial monetary losses for businesses.
Insider threats
Not every cyber breach is caused by an external hacker. Disgruntled or careless employees can do serious damage.
A person might attempt to access systems or carry out actions without permission for several reasons, such as seeking revenge over a perceived conflict in the workplace, acting under threat or coercion, or pursuing personal or financial benefits.
Insider threats can come from anyone with legitimate access to your systems or data, including staff, contractors or business partners.
What Canadian boards must do (now) to mitigate cyber risk
It’s not enough to leave cyber threats to the IT department. Boards must show leadership. Here’s how:
Include cybersecurity on the board agenda regularly
Many directors still see cybersecurity as something for the IT department to “handle,” rather than a core business risk that requires strategic oversight. Cybersecurity should be discussed at least quarterly, with metrics provided on current threats, risk posture and incident response readiness.
Ensure risk assessments are conducted and updated
Threats are never static when it comes to cybersecurity. New vulnerabilities, technologies and competitors emerge all the time.
Without updated assessments, boards and executives make decisions based on outdated risk profiles, which can leave the organization exposed.
Evaluate and test incident response plans
Evaluating and testing incident response (IR) plans is essential to ensure that an organization can respond quickly, effectively and in a coordinated way when a cyber incident occurs.
But a well-written incident response plan is useless if the people responsible for carrying it out don’t understand it or can’t act on it under pressure. Regular evaluation ensures the plan is clear, practical and aligned with the organisation’s capabilities.
Boards should run tabletop simulations of cyber incidents just as they would for natural disasters or financial crises.
Support a culture of cyber hygiene
Supporting a culture of cyber hygiene means embedding everyday security-conscious behaviours across the organization.
Most breaches have a human element. Clicking a malicious link, using a weak password, or mishandling sensitive data are all human errors. A strong cyber hygiene culture reduces these risks by making good security habits the norm.
Boards must set the tone from the top that security is everyone’s responsibility.
Understand the legal framework around cybersecurity
In Canada, the Personal Information Protection and Electronic Documents Act (PIPEDA) requires organizations to report breaches of security safeguards that pose a “real risk of significant harm” to affected individuals.
In these breach reports, organizations must include a wealth of information such as the details of the breach and when the breach occurred.
Review insurance coverage
Don’t assume your insurance policy includes cyber insurance. Many don’t or offer only minimal protection.
Cyber insurance policies can vary. Each is made up of different coverage agreements that define what risks are protected. Common coverages include security and privacy liability, network interruption and recovery, event support expenses, privacy regulatory defense, network extortion, and protections against electronic theft and social engineering fraud.
Since every business has unique risks, some coverages may be more important than others. Working with knowledgeable consultants ensures your policy aligns with your risk profile and provides the right protection without unnecessary extras.
Need advice on the right cyber insurance for your business?
Cybersecurity is complicated. But getting help doesn’t have to be. The brokers here at Axxima can help review cyber insurance solutions for Canadian businesses, from small enterprises to listed corporations.
Our experts work closely with boards and executive teams to assess cyber risk, source the right insurance coverage, stay ahead of emerging threats and build resilience into your governance framework
Don’t wait for a cyberattack to learn your vulnerabilities.
Contact a broker here in Axxima today to get strategic advice and comprehensive protection.
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