As 2017 winds down and 2018 is practically knocking at the door, it has been a year resulting in much economic prosperity for many, but also has presented many corporations with large windows of risk. Some of these risks are common from year to year and ebb and flow due to economic conditions. However, some risks, like cybersecurity, seem like they are nasty viruses that are constantly morphing and evolving to their environment, always staying one step ahead.
Operational risks are always at the forefront of C-suite executives’ worries, task lists and are at the core of maintaining their positions within their corporations. Ironwood Insurance Services specializes in working with large corporations, mitigating their liability and business risks by ensuring they have the correct policies in place. We have identified what we believe to be some of the top operational risks as we close out 2017 and ride swiftly into 2018.
- Cybersecurity and Data Breach Threats
Cybersecurity has topped the list of operational concerns which has been the theme for several years now and there is no sight of it becoming less of a concern anytime soon. With large security breaches recently experienced by Equifax and more recently, Uber, it serves as a reminder that no one is exempt from a possible attack, no matter how secure a corporation may think they are. Ransomware has introduced itself as the cyberthreat that has changed all of the data breach and hacking rules, causing company’s files and information to be held hostage through encryption until monetary demands have been met. If there is no back-up file source available, even upon meeting the demands, it can result in empty promises made from corrupt hackers and result in substantial financial losses for the company on a variety of levels. Despite their best efforts to protect themselves and their stakeholders from these threats, corporations are finding themselves constantly one step behind hackers. Many CEOs, CFOs, COOs and CIOs are placing their time and efforts into creating solid crisis response plans if there was to be an attack or breach rather than chasing the impossible goal of making their system breach-proof. A customized plan of action paired with a strong cyber liability insurance policy can help ensure that a company will not suffer financial losses if, or better when, an attack occurs.
- Geopolitical Risks
Politics certainly plays a role in gauging business risks with many economic factors weighing in at the scales. With world powers like the United States having changed its highest position of command in 2017 and the United Kingdom in the process of succeeding from the European Union, many are uncertain about how political regulations, trade and global relations will impact the global economy. Brexit is already having some effects with many banks already beginning their move out of London this year and more will do so until the official exit in 2019. This opens the door for operational risks to take hold since Brexit is certain to bring about business change, economic change and also changes in regulations. Paired with uncertainly from China slowing production, it creates what some see as a very worrisome economic environment.
- Regulatory Laws
As mentioned above, Brexit will naturally cause regulatory law changes, but regulatory laws are ever-changing across the globe on a daily basis. When President Trump was elected into office, there were promises of lessening corporate regulations which appears to be an ongoing battle thus far. Growing in number, industry regulations cause large opportunities for risk and liability for corporations who do not adhering to such laws. Not only are C-suite executives constantly having to familiarize themselves with the changes and make sure they are in compliance, they also face the pressure of making sure operational tasks are adjusted in cost-effective ways to incorporate each change so their bottom lines see little to no impact. Corporations find themselves facing hefty fines and penalties for not following regulations; therefore, the need to understand their operational risks and possible financial impact is more important than ever in this changing environment.
- Employment Risks
As if finding qualified employees is not hard enough, retaining them and providing them with a competitive benefits package is another daily obstacle facing corporations. When businesses were asked what their top concerns are today, the survey results found that, “…finding qualified workers (47%) and retaining them in a competitive labor market (43%). These concerns worsen among midsized and larger companies.”1 Rising health care costs have made offering employees competitive medical benefits costlier than in previous years with no relief in sight, which adds to the costly operational risks of employment.
There is no doubt that 2018 will present itself in its own unique way with its own unique set of risks, forcing C-suite executives to think outside of the box to find ways to reduce their operational risks. One thing is certain, Ironwood Insurance Services is partnering with their clients to take this burden off of them; providing assistance to determine the best course of action to ensure the business is positioned to manage and overcome operational risks they will face.
- Ling, PropertyCasualty360.com Danielle. “The Top 5 Risks Businesses and Consumers Worry about Most.” PropertyCasualty360, 2 Nov. 2017, www.propertycasualty360.com/2017/11/02/the-top-5-risks-businesses-and-consumers-worry-abo?slreturn=1511815683&page=2.