Mid-sized companies’ prime threat issues revealed

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Financial, digital, business interruption, and pandemic concerns are the top macro risks facing midsize executives, according to a new report from QBE North America and the Association for Corporate Growth (ACG). When analyzing specific risks or micro-risks, employee-related issues were a common theme, with six of the top 10 micro-risks affecting employees being identified.

“In today’s environment, it is not surprising that the executives we interviewed expressed various concerns about their employees,” said Tom Fitzgerald, president of QBE North America’s Specialty and Commercial Insurance. “They are concerned about how to attract and retain talent, how to stay healthy and safe, how to pay the rising cost of benefits, and how to combat internal bias and a lack of framework for diversity. They are also concerned about the increased fraud and cybersecurity risks with so many employees working from home. “

The second annual risk report for medium-sized companies surveyed executives in various risk management roles in companies with revenues of $ 200 billion to $ 3 billion. The report discusses the macro and micro risks that most affect medium-sized business executives, whether companies have risk management plans to address these risks, and their key needs to reduce risk exposure.

When respondents were asked about their key risk reduction needs, “risk management advice tailored to my industry or business” ranked highest at 56%, followed by “insurance products that are more tailored to my company’s needs” at 48 %. The proportion of medium-sized companies that stated that they have an unmet need in terms of understanding and reducing their risk exposure increased this year from 58% in 2020 to 67% four out of five respondents “very interested” in it.

“Small and medium-sized businesses operate in one of the most challenging risk environments in recent history, and their leaders are increasingly demanding in their approach to risk management,” said Fitzgerald. “They are looking for tailor-made solutions, a better understanding of their needs and more interaction with their insurers. We strive to help our medium-sized business customers and broker partners to predict, prepare and hedge risks with tailor-made solutions. “

The main findings of the report include:

  • While COVID-19 is still viewed as the top risk by business leaders, only 46% of companies surveyed have a containment strategy for pandemic-related risks.
  • Concerns about climate change as a macro problem have increased significantly since last year. The study found that concerns about behavior change and pressure from environmentally friendly stakeholders have increased significantly. However, climate change is still at the bottom of the list of concerns and is the least likely to have a mitigation strategy.
  • Two-thirds of medium-sized companies reported unmet need for reducing risk. “Protection / coverage of digital assets” tops the list with 17%, followed by “Industry risk management expertise” with 15%. Both have improved significantly compared to the previous year.
  • In the middle to lower third of the most worrying macro risks, there is a gap between the level of concern and the existence of a mitigation strategy. There are few or no gaps in key respondent concerns, suggesting that midsize businesses may not have the resources to address just their most pressing risks.
  • Overall, there has been an increase in business interruption concerns this year, with “fragile supply chain risks” and “plant closures” identified as the top macro risks in this category.
  • Regulatory / legislative risk saw the largest increase of all macro risks, climbing from eighth last year to sixth in 2021. “Regulatory changes” topped the list of regulatory / legal concerns this year by 40%, climbing to second highest macro score on overall risk.
  • In terms of process risks, the issue of “wage / hourly violations” increased significantly, possibly due to the increased demands placed on existing employees by companies during the labor shortage.

Read next: QBE North America and Flyreel Team Up to Help Home Owners

“By documenting the risks midsize businesses face and gaps in mitigation efforts, this study highlights areas where companies can benefit from outside capital and expertise,” said Kathryn Mulligan, content director, ACG Media Group. “ACG members are committed to driving growth in the midmarket and the findings of this report underscore the critical role investors, insurers and advisors play in helping businesses cope with an increasingly complex risk environment.”

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