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American businesses large and small say medical cost inflation, legal liabilities and technology risks are among their top concerns, according to the baseline findings of a new annual Business Risk Index from Travelers.The survey polled more than 1,100 business decision-makers in the construction, health care, manufacturing, financial services, technology, professional services, wholesale and retail/food industries to better understand what they believe poses the biggest threat to their business. Many leaders said the risks they identified as their biggest concerns are also the issues their businesses are least prepared to address.

“While the new Business Risk Index revealed some typical risks for businesses, it also uncovered some uncertainties that are indicative of the times, including medical cost inflation and technology risks,” said Bill Cunningham, executive vice president of business insurance at Travelers. “Many respondents believe their businesses are least prepared to handle these risks. The good news is that many of these risks can be mitigated and there are resources available to help businesses of any size stay protected.”

Amidst a rapidly changing health care landscape and recent, highly publicized cyber breaches, the top risks identified by those polled included:

  • 67 percent thought medical cost inflation was a leading risk for their business;
  • 58 percent cited legal liability issues, such as omissions and errors;
  • 53 percent were concerned about technology issues, such as hacking and viruses; and
  • 52 percent reported concerns with understanding and complying with U.S. government laws and regulations that may affect their business or industry.
Construction businesses face major physical risks. However, in ranking risks, contractors feel that health care costs pose the most potential risk and the general business environment poses nearly as much perceived threat.

[caption id="attachment_3379" align="alignleft" width="395"]Greatest Risk Concerns by Construction Businesses Greatest Risk Concerns by Construction Businesses[/caption]

When ranking the top eight concerns, nearly three-quarters (73 percent) of construction business decision-makers reported that legal liability worries them a great deal or somewhat. Construction companies are twice as likely (25 percent) to worry a great deal about employee safety than businesses overall. However, the top concerns for construction companies, like most companies, are medical cost inflation and the ability to attract and retain talent (27 percent). Construction executives worry a great deal about rising workers' compensation claims (32 percent) and complying with OSHA requirements (31 percent). In addition, 29 percent worry significantly about complying with laws and regulations.

While employee safety is a major concern for 39 percent of all executives, 59 percent of construction executives worry about it. Employee injury concerns 48 percent of all executives, but 72 percent of those in construction. Errors and omissions are a concern for 17 percent of construction businesses.

Different industries prevent and mitigate risk using a variety of tested methods and strategies. Seventy-one percent of construction professionals say their company conducts a periodic review of insurance with a broker or agent to ensure that all coverage is adequate.

Construction companies are more likely to provide employee safety training than other industries (71 percent compared to 60 percent). Construction companies also are more likely to have consulted with a safety, loss control or risk specialist from their insurance company (49 percent), or their insurance agent or broker (47 percent).

[caption id="attachment_3378" align="aligncenter" width="511"]Risk Mitigation Actions Taken – Construction Risk Mitigation Actions Taken – Construction[/caption]

Despite the fact that 48 percent of respondents in all industries believe the world is growing riskier, only about one in four (24 percent) business decision-makers say that preventing, preparing for and responding to risk is a strategic priority. Of this group, small businesses were least likely to name risk management as a strategic priority or an important management activity compared to large and medium-sized companies.

Medical Cost Inflation

When asked how much they worry about certain risks affecting their business, medical cost inflation was the leading risk. While many business decision-makers are concerned with this issue, and 60 percent of respondents identified this risk as increasing, it is the risk that executives believe their business is least prepared to manage.


Computer, technology and data-related risks, particularly computer viruses and hacking, are of major concern to business decision-makers. In fact, 59 percent of respondents worry about their systems being infected with a virus and being susceptible to a security breach. Additionally, 44 percent worry about losing control of customer records and 50 percent are worried about the company computers becoming damaged or going down.

Legal Liability 

Legal liability-related risks are another significant source of concern for business decision-makers. These risks include professional mistakes, which worry 44 percent of respondents; driving accidents, which are a concern for 33 percent of those surveyed; and lawsuits brought on by employees, which concerns 35 percent of business decision-makers.

Small Businesses at Risk

Small business decision-makers do not appear as worried as their counterparts from mid- to large-sized companies about the issues identified as the top risks in the Travelers Business Risk Index. While they have indicated less concern, a damaging event could have an even greater long-term impact on a small business, which generally has less access to capital. The Business Risk Index identifies that only about half (55 percent) of small business owners rely on risk management guidance from their insurance carriers.

Additional Concerns 

Sixty percent of respondents believe that extreme weather events are happening more frequently, and 37 percent believe the increase in severe weather frequency and severity poses an increased risk of damage to their business (e.g., damage to property, equipment, facilities or vehicles). About half (55 percent) of those surveyed have a business continuity plan in place, but only 30 percent of small business decision-makers reported having a business continuity plan. Access to capital and financial issues worry 47 percent of respondents; risk to corporate reputation is also a mid-level concern (42 percent). Concerns about employee safety and global economic risk were cited by 39 percent and 40 percent of American business executives, respectively.

Full results, including industry-specific information, are in the Travelers Business Risk Index. Hart Research conducted the national online survey of 1,166 business decision-makers from Feb. 10, 2014, to Feb. 27, 2014.

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