HARTFORD, Conn., May 14, 2014 – 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 (NYSE: TRV). The survey polled more
than 1,100 business decision makers 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 business is 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 healthcare 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 including data risks, 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.
Despite the fact that 48 percent of respondents 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.
Technology
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 largesized
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 carrier.
Additional Concerns
American business executives worry about numerous other risks. 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, and only 30 percent of small business decision makers
reported having a business continuity plan. Access to capital and financial issues worry 47 percent
and, at 42 percent, risk to corporate reputation is also a mid-level concern. Concerns about employee
safety and global economic risk were cited by 39 and 40 percent of American business executives,
respectively.
For full results, including industry-specific information, please visit www.Travelers.com/
BusinessRiskIndex.
About the Survey
Hart Research conducted a national online survey of 1,166 business decision makers from Feb. 10,
2014 to Feb. 27, 2014. Small businesses are defined as those having 2 – 49 employees, mid-sized
businesses as having 50-999 employees and large businesses as having 1,000+ employees. The survey
was commissioned by Travelers and has a statistical margin of error of +/- 2.9 percentage points.
