Business risk is identified as any exposure that can negatively impact your organization’s finances. While numerous factors can cause business risks, an effective and comprehensive risk management plan accurately identifies potential risks and creates a strategy to manage these exposures.

Protect Against Trending Business Risk Exposures

Commercial Property Market Challenges

Extreme natural disaster seasons and high inflation rates have led insurance carriers to raise premiums and impose stricter coverage terms. Business owners are facing challenges with devalued properties and increased repair and replacement costs. Consult with a trusted risk advisor for a risk management strategy that appeals to underwriters and protects your property. Owners should reassess their property valuations and review current property insurance coverage for adequate protection.

Unplanned Business Interruptions

The U.S. Department of Labor estimates that 40% of businesses never reopen after a disaster, and The Allianz Risk Barometer reports business interruption as a major global concern. Traditional property insurance doesn’t cover temporary relocation or loss of income. Unprepared businesses face operational stoppage during repairs, causing irreparable brand damage and unemployment.

Consider business interruption coverage, which compensates for operating expenses and lost income during closures and repairs. It helps maintain payroll and reallocate employees for cleanup. Implement a business continuity plan to stay operational and reduce damages during and after unforeseen events.

Extreme Weather Events

Extreme weather events like hurricanes and wildfires continue to cause devastating and costly impacts, urging a closer look at their implications. Notable events, such as record-breaking snowfall in the Northeast, the Hawaii wildfires, tornado outbreaks and heat waves, have led to widespread destruction and financial losses in the billions. Given the rising concerns over secondary risks and more frequent severe weather events, experts stress the importance for the insurance industry to adapt to these new patterns and adequately respond to weather-related damages. Evaluate your business’ property exposure to natural disasters and implement measures to protect them (e.g., install storm shutters, utilize fire-resistant roofing).

For additional guidance to protect your business from a disaster, Download our Disaster Preparedness Guide. 

Social Inflation

Rising social inflation is driven by factors such as higher litigation, broad insurance policy interpretations and inflated jury awards. Safeguard your assets with general liability insurance, which covers bodily/physical injury, personal injury (libel or slander), advertising injury and property damage related to your business. This policy allows you to continue normal operations while addressing negligence or misconduct claims, covering defense and settlement costs.

Artificial Intelligence (AI) Use & Threats

AI transforms industries by imitating human intelligence processes, driving the market to surpass $60 billion by 2025. Businesses must grasp its advantages and implications. In commercial insurance, AI enhances risk management by streamlining claims, reducing risks and detecting fraud. However, constant vigilance is crucial due to potential errors, ethical concerns and legal compliance.

Cyberthreats from the misuse of AI heighten the need for cyber resilience in insurance coverage amidst geopolitical instability and war-related exclusions. Protect your organization with adequate security protocols and review employment practices that align with AI to ensure potential discriminatory practices are prevented. Cyber liability and employment practices liability insurance coverages can add further safeguards.

Workplace Employee Injuries & Illnesses

Understanding employee health and safety obligations includes providing support for injured or ill workers. Workplace accidents have greater impacts than often realized, affecting insurance premiums and production downtime. Businesses can control workers’ compensation costs by managing risks and prioritizing safety. Proper accident protocols can drastically reduce claim severity while a comprehensive safety program can lower accident rates and lead to substantial savings.

Electronic Data & Network Breaches

A well-structured IT department and internet security measures can deter unscrupulous cybercriminals searching for an easy target. Data breaches, which can cost over $200 per compromised record, have the potential to cause considerable damage when multiplied by hundreds/thousands of customer records. It’s vital to have strong security protocols in place for storing electronic customer records. Consider investing in cyber liability insurance to safeguard your business against cyberthreats, data breaches and other online risks.

Don't leave your data open to cyber criminals! Download our Ransomware Survival Guide 

Environmental, Social & Governance (ESG) Exposures

Socially conscious investors often scrutinize ESG factors when evaluating companies on sustainability and social conscientiousness. While ESG metrics can be hard to measure, associated risks are on the rise. Notably, most commercial insurance policies exclude pollution incidents, but environmental insurance can protect against significant environmental loss exposures. To mitigate ESG risks:

• Remain transparent in reporting
• Stay compliant with emerging regulations
• Conduct a risk assessment to identify ESG-related risks
• Implement sustainable practices and initiatives to reduce environmental footprint
• Foster a diverse and inclusive workplace culture

Deficient Employment Policies & Procedures

Your business is at risk from the pre-hiring process to the exit interview. An astonishing 60% of employers face lawsuits from prospective, current and former employees. While many lawsuits are groundless, defending can be expensive and time-consuming. Partner with legal counsel to ensure your employment policies and procedures are compliant and make necessary updates. Consider employment practices liability insurance to protect against wrongful termination, discrimination (age, sex, race, disability) or sexual harassment lawsuits.

Supply Chain Exposures

Since the pandemic's onset, global businesses have faced supply chain disruptions from heightened demand, production slowdowns and closures, worsened by international issues like port delays and geopolitical conflicts. Despite efforts to address challenges, 60% of businesses still report abnormal supply chain disruptions. Companies are adopting proactive measures such as ordering inventory six months in advance to prevent operational delays. However, building material disruptions have led to prolonged claims processes and significant business interruptions, impacting financial stability and increasing vulnerability to coverage gaps and rising premiums. To mitigate risks, businesses are urged to embrace innovation by:

• Automating supply chain technology
• Updating contingency plans
• Cultivating strong vendor relationships
• Prioritizing domestic supply chain solutions
• Monitoring inventory trends
• Exploring eco-friendly options

We're Here to Help Protect Your Business from Risk

Insurance is a key component of any comprehensive risk management plan, but successful risk management also involves prevention, training and contingency planning. Connect with a member of our team to learn more about the tools and resources we offer to help you manage risks, control workers’ compensation costs, advance safety and boost employee morale.