American business leaders worry about the same major risks as they did in 2014; however rising levels of concern over cyber risks and the ability to attract and retain talent have shifted the ranks in some subtle and not-so-subtle ways.
According to the Travelers 2015 Business Risk Index, businesses are most worried about:
- Medical Cost Inflation. Medical cost inflation still leads the list of top perceived risks despite a nearly 10 percentage point drop in general concern from 67 percent in 2014 to 60 percent in 2015.
- Cyber Risks. Making the greatest leap from fifth in 2014 to second this year, concern over cyber risk has grown considerably, particularly among large businesses. In fact, nine out of all 10 industries surveyed report cyber risks and data breaches among their top five concerns.
- Increasing Employee Benefit Costs. Closely related to concerns over medical cost inflation, worry over increasing employee benefit costs, has also fallen, from 62 percent to 56 percent since last year.
- Legal Liability. Although general concern over legal liability has decreased only 2 percent since last year, its ranking has dropped to fourth from third in 2014.
- Attracting and Retaining Talent. U.S. businesses are increasingly worried about the challenge of finding and retaining skilled labor, with a 3 percent increase since last year resulting in a jump from last to fifth on the list of top risk concerns.
- Regulatory Compliance. Nearly unchanged since last year, among the 51 percent of all businesses concerned about complying with laws and regulations, 29 percent worry a great deal.
- Broad Economic Uncertainty. U.S. business owners showed a slight reprieve from worry over the economy, with concern about broad economic uncertainty down in level (by 6 percent) and ranking (by four places) since 2014.
What Worries Contractors?
The most worrisome risks in the construction industry relate to their employees, including attracting and retaining appropriately skilled labor (67 percent), employee safety (63 percent) and increasing employee benefit costs (63 percent). When asked what specifically concerns them about their skilled labor worries, many said they find it hard to replace retiring baby boomers (57 percent). Data also showed that the most frequent risk-prevention measures include employee safety training (71 percent) and secure premises (58 percent). Other concerns included employee injury (63 percent worry about this), rising workers’ compensation costs (55 percent), driving accidents caused by employees (54 percent) and OSHA compliance (50 percent).
Despite that the majority of U.S. businesses surveyed worry about cyber risks and data breaches, only 7 percent of construction companies currently buy separate coverage for cyber risks. And, astonishingly, only one-third (33 percent) of construction businesses have written business continuity plans, compared to 50 percent of all companies surveyed report having a written business continuity plan.
Many U.S. Businesses Still Feel Unprepared for Top Risks
While the ranking of top concerns may have slightly shifted, the gaps between how much U.S. businesses worry versus how prepared they feel to manage these risks remains large. In fact, the top risk concerns are often among the three to five risks businesses feel the least prepared to handle.
More than half of all business surveyed (52 percent) believe the frequency of severe weather events has increased during the past few years. More importantly, one-third believe these increases in extreme weather also increase the threat of damage to company property and equipment.