Risk Managers Have Spoken: They Need Support from Brokers and Carriers to Tackle These 3 Pressing Risks

As cyber, natural catastrophes and other perils pose risks to business, they’re turning to their insurance partners for support and guidance.
By: | April 5, 2023

Risk managers have experienced their fair share of disruption over the past few years. From the pandemic and cyber attacks to natural catastrophes, talent challenges and looming recession, risk professionals have had a lot on their plates.

To get a sense of risk managers’ views of the industry, Risk & Insurance® surveyed 156 risk managers.

They shared insights on their most concerning exposures, what lines they’re having difficulty securing coverage for, what they’re looking for in their brokers and carriers and how technology is helping them manage evolving risks.

Surprisingly, trending issues like inflation remained less concerning to risk managers (only 9.62% named it a top concern), while issues like property and cyber that have been challenges for years remain top priorities. Here’s a look at their top three concerns and what they’re doing to manage those exposures.   

What Exposures Are Risk Managers Most Concerned About?

1) Cyber Risk: Nearly 30% of risk managers surveyed named cyber as the most worrisome risk their organization faces. Over the last few years, cyber attacks have increased in frequency and severity, with health care, public sector and manufacturing sectors particularly vulnerable.

In addition to concerns over cyber risks, many risk managers surveyed expressed difficulty to find insurance coverage for these exposure. Over 30% of risk managers said that cyber was the most difficult insurance line for them to bind economically.

2) Talent Shortages: Talent shortages are still top of mind for employers, even as more companies are announcing layoffs and economists predict a recession. In the survey, 26.28% of respondents named talent shortages as one of their biggest concerns.

Talent gaps can have ripple effects for workers’ compensation risks, says Donald Noel, ARM-E, CEBS, risk & safety manager, The School District of Palm Beach County. Newer employees are at greater risk of being injured on the job. If an employee gets injured at a firm that’s short staffed, it can put additional strain on the organization.

“Safety is a priority to us so as to keep the personnel we do have from losing time due to injuries,” Noel said.

And they’re a problem for risk management, too: 36.30% of survey respondents said they do not have the staff to act on their departmental goals.

 3) CAT Exposures: CAT exposures came in as the third most worrying risk, with 13.46% of respondents naming it a top concern. Storms like hurricanes have occurred with greater frequency in recent years, causing repetitive losses.

Property coverage was the second most difficult coverage to bind, risk managers who responded to the survey said, with 25.34% calling it their most challenging line.

To manage these exposures, many risk managers are updating their properties to make improvements that protect them against severe weather conditions.

 “Our district is investing in modernizing our older facilities including new roofing, waterproofing, as well as upgraded mechanical, electrical and plumbing systems,” Noel said.  “These investments help our buildings stay drier and provide healthy learning environments for our students.”

What Do Risk Managers Look for In Their Carriers and Brokers?

In tackling these complex exposures, risk managers are looking to their insurance agents and carriers for support.

The survey found that industry knowledge and underwriting expertise were the most important qualities risk managers looked for in their brokers and carriers respectively.

Carriers and brokers with strong knowledge can help craft creative insurance solutions for their clients and offer some advice for reducing vulnerability for particular exposures.

Of respondents, 34.62% said they valued industry knowledge in their broker and 25.64% said they were looking for strong underwriting expertise from their carrier.

After those qualities, risk managers prioritized strong customer service, competitive pricing and ease of doing business.

Price and ease of doing business tied as the second most important quality risk managers look for in a carrier, with an even 20.51% of respondents naming both as a top priority. On the broker side, 28.21% of risk manager respondents said that customer service was an important quality to look for in their broker.

How Is Technology Helping Manage These Risks?

In addition to relying on carriers and brokers for their expertise in navigating these exposures, risk managers are also turning to technology to help reduce and manage a variety of perils.

Almost 30% of risk managers said they are prioritizing investments in technology. These tools can range from sensors that help detect potential claims from things like water intrusion, cybersecurity controls and AI and predictive analytics systems.

On the cyber end, Noel says he sees organizations using tools like multi-factor authentication to help protect against cyber attacks.

Turning to predictive analytics, 42.47% of respondents said that predictive analytics have been somewhat helpful in managing risks, and 12.33% said they’ve been very effective. Over ten percent said they’re experienced no benefits from predictive analytics, and 23.29% said they have yet to use them.

The School District of Palm Beach County uses predictive analytics through their TPA to determine which claims need greater attention from adjusters.

“In predicting the severity, we can assign more seasoned adjusters to initial claims that PA [predictive analytics] determines will result in an expensive or litigated claim,” he said.

Prioritization of both knowledgeable insurance teams and technology investments show that risk managers understand that they’ll need to take a multi-pronged approach to tackling exposures in today’s shifting world. &

Courtney DuChene is a freelance journalist based in Philadelphia. She can be reached at [email protected].

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