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Risk complexity is up, but preparedness is down

Study of mid-sized companies shows room to improve risk management

By Lucas Prahl | Senior Vice President, Head of Middle Market, QBE North America

A recent QBE North America report shows mid-sized companies are most concerned about macro financial, digital and organizational risks, among others. Unfortunately, for most macro risks, fewer than half of respondents have a mitigation plan in place. This contrast represents an important opportunity for insurance brokers and carriers to better serve  the needs of mid-sized companies.

In the 2023 Mid-Sized Company Risk Report, QBE North America found financial, digital and organizational risks were consistently among the top three concerns of mid-sized businesses, dating back to 2020. In addition to these, other concerning macro risks include business interruption risk, macroeconomic risk, regulatory/legislative risk, reputational risk, and liability risk.

Notably, few of these top risk concerns are directly insurable. Digital risks, such as cyberattacks and breach liability, are, and so are business interruption and liability risk, of course. But, financial (e.g., fraud, operational performance and liquidity), organizational (e.g., talent recruitment and retention), macroeconomic and regulatory risks are largely outside the scope of existing insurance products. This reality makes effective risk management programs even more critical for mid-sized organizations.

Another significant finding in the report is a decline in the percentage of businesses reporting a risk mitigation plan for each macro risk area. In 2023, 43% of mid-sized companies said they had a mitigation plan, down from 46% in 2022 and 45% in both 2021 and 2020. In a landscape of complex risks, a lack of preparedness is a big problem.

Meeting mid-sized company needs with customized solutions

What can the insurance industry do to better serve the risk needs of mid-sized companies? Brokers and insurers are important risk management partners for businesses, and the more we understand the dynamics of mid-sized organizations and the risks those organizations face, the better partners we can be.

It starts with the realization that mid-sized companies in any vertical industry – whether it’s manufacturing, professional services, construction, retail stores, or another sector – are all focused on running their businesses, as they should. Unlike those of us in risk management, they aren’t consumed with thinking about what happens if they experience a fire, or a new pandemic emerges, or how macroeconomic shifts might interrupt their day-to-day operations.

Another interesting finding in the Mid-Sized Company Risk Report is a near-universal desire by companies for personalized risk management solutions, with tailored advice and products. Thanks to Amazon.com and others, the era of mass customization of products and services is here, and the insurance industry will have to continue developing innovative ways to meet each customer’s unique needs.

We, as an industry, and QBE specifically, can step in where mid-sized businesses need more help. We also can assist them in understanding that managing risk is not a one-time or two-time event. It’s an ongoing conversation between the insured, broker and insurer. The nature of mid-sized business risks requires that all parties in that conversation evolve and adapt to find solutions.

Successful insurers and brokers do much more than deliver policy limits for a price. We strive to be a partner and add value every day, without being disruptive to what our customers are trying to do in their businesses.

One way we do that is by bringing attention not just to everyday exposures but also risks that might have fallen off the radar. “Black swan” events may be rare, but they do occur, and their impact can be severe. For example, a winter storm in February 2021 plunged the entire state of Texas into a deep freeze lasting more than eight days, claiming 200 lives and causing more than a billion dollars in losses. This was a very low-probability event that left many ill-prepared for the massive disruption it caused. Severe weather is far from the only challenge for mid-sized businesses. A diverse set of macro and micro risks is weighing on them, and we can help mitigate those concerns.

At QBE, we want to help mid-sized businesses prepare for and become resilient to the risks they face. We’re committed to relentless execution and service at a high level, and to being a consistently great partner for our clients and brokers.

For more information, visit qbe.com/us.


Lucas Prahl is Senior Vice President, Head of Middle Market at QBE North America. In this role, he is responsible for building and executing the middle market business plan, delivering innovative and tailored solutions to diverse customers across a range of industries, and supporting QBE North America’s strategy and priorities. His career experience includes leadership roles in underwriting as well as property/casualty insurance consulting, delivering comprehensive strategies for growth and profitability.

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