Mid-Market Businesses Grapple with Growing Risks, Nationwide Survey Reveals
According to a recent survey by Nationwide, almost half of mid-market businesses are not adequately prepared for the risks they face, even though they are investing in risk management. The ‘Agency Forward’ survey underlines the pressing concerns of mid-market business owners regarding economic and financial risks, the need to adapt to regulatory changes, the impact of technological disruption, and workforce shortages. Only 54% of the survey respondents reported feeling sufficiently protected against these threats.
The survey included 400 middle-market business owners. Mark McGhiey, leader of risk management and client services at Nationwide, shared insights with Digital Insurance on how these businesses can enhance their resilience and address these challenges.
Key Concerns for Mid-Market Businesses
One of the most significant findings of the survey is the level of unpreparedness among mid-market businesses. The most pressing concerns include economic downturns, supply chain disruptions, cybersecurity threats, and evolving regulatory changes. Economic uncertainty is at the forefront, with 43% of business owners prioritizing navigating economic challenges in their risk management programs.
Additionally, 42% of businesses are still dealing with supply chain vulnerabilities and cyber security threats, which often do not have simple solutions due to their inherent complexity. Regulatory changes also remain a challenge as businesses must constantly adapt to new compliance requirements, with one in five business owners stating they are not prepared to do so.
Navigating Regulatory Changes
Mid-market businesses are navigating a shifting regulatory landscape, particularly in taxes, data protection, environmental impacts, and labor laws. Staying compliant with current regulations is a primary concern, with 78% of owners noting that regulatory changes impact their risk management needs and initiatives. Many companies are turning to technology to help keep up with these changes, with 76% utilizing technology in specific areas or comprehensively. Consulting with legal and risk management professionals is also crucial for staying ahead of new laws.
Insurance carriers are also key resources, providing specialized risk management experts who offer guidance on industry-specific changes.
Innovative Risk Management Strategies
While innovation is valuable, not all effective risk management strategies need to be expensive or complicated. McGhiey explained that experts regularly identify practical, cost-efficient solutions that achieve the same safety outcomes while seamlessly integrating into daily operations. The focus should be on tailoring risk management efforts to a business’s unique needs rather than adopting costly, one-size-fits-all approaches.
For middle market businesses, working with the right risk management partner is critical. A knowledgeable partner—one who understands the industry, operational challenges, and specific exposures—can help navigate complex risks with efficient, targeted solutions.
The Role of Insurance Carriers and Brokers
Insurance carriers and distribution professionals play a critical role in helping businesses mitigate risks and navigate future challenges. Specialized carriers offer industry-specific expertise, resources, and services, assisting companies in understanding their unique exposures and cost-effective ways to address them. Furthermore, carrier-provided risk management experts, along with agents/brokers, can help review clients’ risk management policies to identify potential gaps.
This is especially important, given that one in five middle market businesses lack a business continuity plan, leaving them vulnerable to costly disruptions. By leveraging the insights and resources from their insurance carrier or agent partner, businesses can implement stronger risk management strategies tailored to their operations and business goals.
Impact of Workforce Challenges
Workforce challenges are an increasing concern in risk management, particularly in industries like construction, manufacturing, and healthcare, which are facing talent shortages due to an aging workforce. Operational inefficiencies and safety risks can grow as employees take on more responsibilities. Furthermore, the retirement of experienced employees results in a loss of institutional knowledge, creating gaps in expertise.
Addressing these challenges through workforce development programs and knowledge-sharing initiatives is crucial. Maintaining rigorous hiring and training standards is equally important to ensure new workers are sufficiently prepared, preventing unnecessary safety risks and costly mistakes.
Climate Change and Risk Management
Climate risk presents significant hurdles for businesses, regardless of location. Extreme weather events, such as hurricanes, wildfires, and flooding, can damage or destroy property or assets critical to operations. Severe convective storms have also increased in frequency, making it important to plan for weather impacts even in areas traditionally unaffected by natural disasters.
Businesses must have robust business continuity plans and integrate climate resilience into their risk management strategies.
Conclusion
The key takeaway is that mid-market businesses must adopt a proactive approach to risk management. By collaborating with the right experts and implementing tailored risk mitigation strategies, businesses can enhance their resilience to risks and take advantage of growth opportunities.
