Being prepared for risk is 'now a more complex undertaking'
A new survey by Hub International Limited (HUB) has found a discrepancy between organizations' perceived and actual risk preparedness. According to the 2024 HUB Outlook Executive Survey, these gaps leave organizations vulnerable when it comes down to financial stability, the health of their workforce, and business resilience.
“In today's world, risk is ever-present and constantly evolving, and being prepared is now a more complex undertaking,” says Marc Cohen, president and CEO at HUB.
While 75 percent of organizations claim preparedness for critical risks, the survey found a significant gap, with 76 percent lacking sufficient insurance for maintaining profitability, and 20 percent implementing property loss prevention measures only when mandated by local regulations.
The survey findings recommend that companies leverage insurance as a strategic financial tool to minimize financial risk. Companies can use insurance effectively to reduce earnings volatility and improve their overall resilience.
The survey found that 72 percent of organizations have not explored the concept of utilizing insurance as contingent capital. In practice, only a limited number of organizations (27 percent) have taken advantage of the opportunity to use insurance strategically for managing risks related to profitability.
Currently, 68 percent of organizations identify employee wellbeing as a top strategy, yet only 36 percent consistently focus on it. The survey suggests that businesses place an emphasis on employee wellbeing for a stronger workforce vitality. Tailored wellbeing solutions are key.
“Employee wellbeing goes beyond physical and mental health. Organizations must consider other aspects like career growth, positive social interactions, financial management, retirement planning, and more,” the HUB survey states.
Only 53 percent of US companies leverage data analytics to enhance individual outcomes in their benefits programs. The survey emphasizes the need for a comprehensive approach to data analytics.
“Invest in advanced data analytics to meet employees’ needs. Organizations that invest in advanced data analytics are better equipped to understand and respond to employees’ current and future needs at an individualized level. Those that collect the relevant data points by asking the right questions and look at the data holistically are better able to drive down costs by reallocating resources to focus on the benefits most desired by the workforce,” the survey states.
While 45 percent of organizations conduct frequent enterprise risk management (ERM) assessments, with 28 percent doing so quarterly and 17 percent on a monthly basis, a mere 12 percent have developed business continuity plans. Furthermore, nearly half (43 percent) acknowledge a misalignment between the objectives set by the C-suite and the strategies in place to manage risks.
“In a highly volatile risk environment, rethinking ERM is paramount to ensure current plans are thorough and to implement more creative strategies like the use of insurance captives to support resiliency...C-suite alignment with the management of risk, insurance and employee wellbeing, along with efficient business continuity planning, are also critical for building resilience,” the survey states.
The 2024 HUB Outlook Executive Survey gathered data from 900 business leaders across various functions and sectors in the US and Canada.
