Business owners have a lot of risks on their minds these days. Complying with regulations, holding on to their best workers, the constant threat of computer hackers, increasingly unpredictable weather – all of these have businesses worried.
According to the “2016 Travelers Risk Index” from the Travelers Companies, fewer business leaders saw the world as riskier than they did the year before. However, they expressed concern about the following factors:
Medical/employee benefit cost inflation. The rising cost of medical care is the top concern for all businesses. This worry is rational: Government data shows that medical costs rose by nearly 20% between 2010 and 2016, almost twice as fast as the general inflation rate.
Workforce issues. Finding and keeping skilled employees is the second greatest area of concern. Retaining their best workers is the top workforce issue, followed by finding and hiring qualified employees and the cost of training them.
The Congressional Budget Office forecasts that the percentage of the population older than 16 participating in the labor force will decline for the foreseeable future as the baby boom generation retires.
Legal liability. Business owners worry that professional errors and omissions will land them in court. They also worry that their own employees will sue them for discrimination, harassment, wrongful termination, or other employment practices. These worries are well-founded, as law firm Seyfarth Shaw reported that the value of employee lawsuits over wage and hour law violations tripled between 2014 and 2016.
Liability for auto accidents and faulty products are also concerns.
Cyber and data breach risks. Large businesses are particularly worried about cyber risks, with 23% of them having suffered external data breaches and cyber attacks. Malicious cyber attacks and criminal activity are seen as the biggest threats, while human error and poor system performance are lesser concerns. The FBI has reported that cyber crime jumped 24% in 2016.
Automobile risks. Two-thirds of businesses have employees using their personal vehicles for work. They are particularly worried that their employees are looking at their smartphones instead of the road in front of them. The U.S. Centers for Disease Control and Prevention has found that nine Americans are killed and more than 1,000 injured daily in distracted driving incidents.
Supply chains. Businesses worry about being unable to ship products to customers; being unable to obtain materials from suppliers; receiving poor quality goods; and having goods damaged while in transit.
Weather. Half of all businesses believe that severe storms are becoming more frequent, while a minority have observed changes in their own geographic areas.
Regulations. Nearly half of businesses worry about complying with new laws and regulations. Many are concerned about complying with the Affordable Care Act and the costs that come with it.
Some of these issues – such as weather, liability, driving and supply chains – can be insured. Others, like keeping a skilled workforce, are not insurable. In either case, business leaders are right to worry about these risks. The search for solutions is time and money well spent.