Today’s organizations in Canada face unique pressures on multiple fronts, including:
Escalating risks around financial fraud and cybersecurity
Balancing sustainability commitments with financial pressures
With that in mind, the theme of BMO’s 3rd Annual Public Sector Symposium was “Driving Progress in a Changing World.” Bernardo Arreaga, Managing Director, Corporate Finance, BMO, served as the emcee. Recognized as a market leader in the public sector space, Arreaga’s leadership was instrumental in bringing this event together to showcase the wide scope of this vital industry.
As Arreaga noted, “It’s an interesting time to be in the public sector. There are a lot of headwinds in the form of tariffs, interest rates, foreign exchange, and escalating fraud and cyberattacks that are being empowered by advances in artificial intelligence. These shifts highlight the evolving pressures our clients are facing.”
The following is a summary of this sector-leading commercial event for the B.C. Region.
Protecting your organization in the digital age
Charles Matu, Director, Treasury & Payment Solutions (TPS), was instrumental in organizing the event. As a leader in our TPS team in British Columbia, he’s heard from clients about the challenges they face in fraud prevention, particularly when it comes to modernizing their systems. All the while, fraudsters are constantly updating their methods for accessing sensitive data. It was against this backdrop that Sue Witteveen, Senior Vice President & Head, Treasury & Payment Solutions, BMO moderated a discussion on cybersecurity and fraud mitigation.
After outlining high-profile cyberattacks from state actors over the past few years, Larry Zelvin, who leads BMO’s Financial Crimes Unit, said it’s imperative that organizations anticipate how they’ll respond to an attack.
“How are you going to assess the public’s needs? How are you going to prioritize scarce resources to get to where they are really needed?” Zelvin said. “If Canada or British Columbia has a major cyberattack, where are you going? What information are you seeking? What assistance do you need?”
In such a scenario, Zelvin said the main concerns will likely be around housing, food distribution and emergency services. “Waiting until the moment you’re in a crisis, when you and your families are also being impacted, that’s not the time to say, ‘we should have had a plan.’”
Erik Berg, Partner, Digital Government, Privacy and Cybersecurity Services at KPMG, noted that public sector finance and IT leaders need to understand how their systems are protected at the infrastructure layer. “The technology is changing and evolving,” he said. “Artificial intelligence is adding a new layer of complexity. And the combination of the spread of on-premises and cloud technology and the use of third-party vendors is becoming more complex.”
Berg added that he’s noticing more organizations adopting a “resiliency-by-design” approach to fraud prevention. “It goes beyond cybersecurity and privacy,” he said. “As you’re moving through a digital transformation, ask how are you fortifying and monitoring those critical processes and technologies to make sure you can maintain your services.”
Sustainability in an evolving world
The B.C. public sector is at the forefront of investments in sustainability in Canada. Nonetheless, organizations are facing challenges around sustainability efforts. Stephen Uwazota, BMO’s Director, Sustainable Finance and Clean Energy, moderated a discussion about finding the right balance between sustainability commitments and fiscal pressures, and opportunities to generate revenue from sustainability related investments.
Patrice Impey, Chief Financial Officer of TransLink, metro Vancouver’s transportation network and previously the City of Vancouver’s CFO, noted that her organization has a mandate to fulfill the region’s environmental goals. She said CFOs can be the driving force behind integrating sustainability into an organization’s financial structure.
“The CFO role is about more than just finance,” she said. “It’s about making sure the organization can achieve its goals, and sustainability has to be part of that discussion. When we were refreshing our climate plan at the City of Vancouver, our finance team worked closely with sustainability to ensure the plan was going to achieve its goals and that there was a tangible way to get there.”
She added that municipalities focus on three pillars for driving change:
Investing in sustainability projects such as electric buses
Regulations, including building codes, charging stations or other efforts that impact long-term sustainability
Advocating for change through working with provinces and the Federal Government to create sustainability programs that have an impact.
Doran Hoge, Director of Energy and Environmental Sustainability, University of the Fraser Valley, said integrating sustainability as a core element of your business practices can be the key to balancing short-term financial needs with long-term environmental goals.
“We’re saying we’re going to invest in sustainability professionals, we’re going to integrate sustainability into our budget processes, our procurement processes, and treat that as an investment with the expectation that there’s going to be a return on our investment.” Hoge said. “For us, the return on investment could be infrastructure focused. And because we’re walking the talk and making this work as part of our public identity, more students are enrolling in our institution.”
In a capital environment marked by scarcity, B.C. Public Sector organizations remain committed to achieving net zero. That’s why it’s important for finance leaders to make the case that sustainability investment isn’t just a cost, it’s an opportunity to achieve a positive return of investment through carbon credits. The obstacle many organizations come across is scaling their carbon credit program enough to generate real returns.
“One of the things we hear at times is that someone has multiple years generating credits, and every year wondering when they’ll have enough to sell them,” said Jason DeJong, Director, Environmental Commodities, Carbon Structuring, BMO Capital Markets. “In B.C., the purchasers are large oil refineries or fuel suppliers looking for large volumes. A trading relationship with an international oil and gas company is not something that most public sector companies have at their disposal. BMO has the ability to aggregate client credits together and pass them on to buyers. So, you’re able to deal directly with your [BMO] representatives and see that return on investment much sooner and streamlined with your existing relationships.”
Strategies for mitigating funding challenges
Cornell Tanaka, BMO’s National Market Leader, Public Sector, hosted a presentation by Sadiq Adatia, BMO Global Asset Management’s Chief Investment Officer, on how a prudent investment strategy can help mitigate the funding challenges that public sector organizations face.
Tariffs and geopolitical tensions have led to volatility in North American markets. While public sector companies typically take a bond-heavy approach to investing, Adatia noted that fixed-income markets have not been the safe haven they’ve typically been during periods of volatility in equity markets. That’s why he said it’s important to have a diversified portfolio of equities, bonds and international investments.
“You’re losing out on a tremendous upside if you don’t have a balanced portfolio across the board,” Adatia said.
Adatia added that many companies are still expressing uncertainty about how the interest-rate environment and shifting trade landscape will impact their near-term guidance. “This is an economy that is not, at the moment, driven by pure fundamentals,” Adatia said. “That’s why you have to weed out the noise that’s there and think about investing from a long-term perspective.”
The event made clear just how many issues impact the public sector while also highlighting the opportunities in the space. As BMO’s Bernardo Arreaga recognized, the audience included representatives from municipalities, agencies and crown corporations, as well as not-for-profit and Indigenous organizations. Attracting so many clients from such a broad cross-section of organizations motivates us to continue hosting events like this to provide our clients with the opportunity to share ideas that can help them thrive in a dynamic environment.
While there are some challenges facing leaders in the public sector, our panelists and clients are optimistic and we are excited to continue to provide the solutions and insights to the sector to help our clients drive progress for our communities.