How proper risk management can set middle market businesses up for success
To learn more about Zurich North America’s risk and insurance solutions for the middle market, visit zurichna.com/brokers/middlemarkets.
As middle market businesses grow, their risk profiles expand. And many face the same primary vulnerabilities as large enterprises. The difference? The impact these risks can have on midsize companies’ bottom lines and long-term viability could have devastating consequences.
The risk landscape for middle market businesses is dynamic and evolving. Labor, technology, and resources can all be distinct challenges for this segment, which often does not have the sophisticated risk management departments to handle these risks. Zurich’s size and global strength, combined with in-depth knowledge of industries and local markets, benefit midsize businesses and can help them identify and mitigate these risks holistically.”
Alex Wells, Head of U.S. Middle Market, Zurich North America
Middle market businesses are the backbone of the U.S. economy, accounting for one-third of total jobs and 40% of GDP. Despite their market strength, their size exposes them to risks and potential setbacks. Yet, as business leaders start to understand and manage these threats, they can go from merely avoiding pitfalls to proactively seizing opportunities.
As businesses continue to undergo digital transformations, cyberattacks on midsize companies are escalating. The lack of dedicated cyber risk departments and fewer resources make middle market companies prime targets as hackers often see them as gateways to larger organizations.
Primary risks middle market businesses face
Executives juggling multiple roles
Lack of specialized and sophisticated risk management departments
Limited financial and human resources
Outsourcing of cybersecurity functions
Because of their flat organizational structures, middle market businesses are agile and can effectively respond to customer needs and market opportunities. But this same flat structure can also make them more susceptible to threats due to:
A challenging landscape for middle market businesses
61%
of midsize businesses do not have dedicated cybersecurity experts in their organizations.
47%
of middle market business leaders listed cyberattacks as a threat to their businesses in 2023.
Source: The State of Cybersecurity for Mid-Sized Businesses in 2023, Huntress
Source: “Three Threats the Mid-market Saw Coming in 2023— and One That Most Didn’t,” Grant Thornton
Continued uncertainty around inflation, interest rates, and geopolitical conflicts pose significant concerns for middle market businesses, potentially impacting their ability to maintain operations during downturns.
66%
of middle market chief financial officers (CFOs) say economic volatility poses the same or a greater threat now than it did one year ago.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
47%
of CFOs from smaller middle market firms face considerable levels of uncertainty.
Source: The 2024 Certainty Project Report, PYMNTS
35%
of middle market firms say uncertainty led to missed opportunities last year.
Workforce shortages and evolving skill requirements demand a renewed focus on recruiting, retaining, and developing skilled talent. Without strong talent, middle market businesses face decreased productivity, innovation, and competitiveness.
36%
of CFOs plan to increase monetary compensation for their employees.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
29%
of CFOs plan to enhance nonmonetary benefits in 2024.
Complex and global supply chains expose middle market businesses to disruptions, customer dissatisfaction, reputational damage, and loss of market share. Robust supply chain risk management and contingency plans are key to mitigating these issues.
63%
of middle market companies are prioritizing improving manufacturing and supply chain visibility.
Source: 2023 State of Manufacturing Report, Fictiv
55%
of middle market companies are prioritizing improving supply chain resilience and agility.
CYBERSECURITY
Economic volatility
Labor issues
Supply chain disruptions
Industry-specific solutions for the middle market
Technology has become a fundamental part of our everyday lives. For that reason, hardware, software, and technology service providers are exposed to several risks—such as security and privacy, economic, legal, and regulatory—that can impact their brands and bottom lines. It’s critical that these companies work with brokers and carriers that understand how technology risks related to property, casualty, and technology errors and omissions can impact a middle market enterprise.
Recognizing the diverse needs across industries, Zurich North America created multiple specialized industry practices, each with an insurance and risk management team that understands unique industry and customer demands. These include:
Technology
Learn more about technology insurance.
Risk management leaders at technology companies cite these primary challenges:
71%
Data security and privacy
57%
Business interruption—digital
51%
Technology errors and omissions
44%
Regulatory compliance
34%
Supply chain disruption
Source: 2023 Global Technology Risk Study, MarshMcLennan
“
Risk transfer is a key component for technology companies, but the deep involvement of their products in societies’ daily lives means they need to do more. Zurich’s dedicated technology underwriters deliver solutions by marrying market-leading risk transfer with risk mitigation strategies, such as network testing and monitoring and supply chain health checks.”
“
Erin Terpack, Head of Manufacturing and Technology, Zurich U.S. Middle Market
Learn more about professional services insurance.
Professional services firms—such as legal, advertising, public relations, management consulting, and accounting—provide invaluable expertise to other businesses. Yet, they are also susceptible to unexpected vulnerabilities that impact their operations and customers, especially if sensitive customer data is exposed. These firms require a range of property and casualty products and services, coupled with risk management insights, to reduce the effect of these occurrences.
Professional Services
Cyber attack or data breach
Top risks for professional services firms:
Failure to attract and retain talent
Damage to brand or reputation
Economic slowdown
Failure to innovate
Reputation is a key component of a professional services firm’s value proposition, and threats related to cybersecurity and international operations can have an adverse impact. Zurich’s ability to deliver insights specific to the professional services industry can help our clients close coverage gaps and mitigate risks so they can focus on what they do best, leveraging their expertise to provide value to their customers.”
“
Stan Bernard, Head of Financial Institutions and Professional Services, Zurich U.S. Middle Market
Source: Top Risk Facing Professional Services Firms, Aon
Learn more about insurance for life sciences.
At the forefront of innovation, life sciences companies drive advancements in research, pharmaceuticals, and medical devices. But innovation can also mean heightened exposure, from employee safety to research protection and manufacturing challenges. Effective, comprehensive risk management strategies are imperative to navigate these unique exposures successfully.
Life Sciences
Industry leaders cite the following as trends to watch in 2024:
67%
48%
expect more merger and acquisition activity.
will invest in research and development with their additional budgets.
Source: U.S. Healthcare & Life Sciences Industry Outlook 2024, FTI Consulting
When these developments occur, products and workforces can be impacted, valuations and replacement costs can change, and supply chains can become strained. Zurich’s experienced, dedicated life sciences underwriters and risk engineering specialists can help identify exposure changes unique to the client and help mitigate the new exposures that arise for products liability, research operations, business continuity, and beyond.”
“
Linda Schultz, Head of Life Sciences, Zurich U.S. Middle Market
Effective risk management is more than just risk transfer. It’s about proactively avoiding and managing exposures so you can get your business back up and running faster. Regular assessments and proactive strategies for reducing these risks can be essential for the long-term success of these businesses.
Preventing risks is as important as managing them
Strategies middle market business leaders can use to manage risk:
Engaging an insurance provider with local knowledge, tailored insurance coverage, a strong global footprint, and deep risk management expertise can help develop a holistic management solution and remove obstacles to growth.
1.
Make sure to understand the company’s and geography’s specific vulnerabilities and have an actionable plan in place.
2.
As the business grows or changes, understand how this impacts the company’s exposures and coverages.
3.
Proactively prioritize and manage exposures, such as cyber, supply chain, and business continuity by investing in risk mitigation services.
4.
Through a combination of industry-leading insurance products and robust risk management services, Zurich empowers middle market companies to focus on what matters most: their business.
The Zurich difference
Zurich solutions are backed by:
Deep industry expertise with specialized underwriting teams
A community-focused, local presence with a vast global footprint covering more than 200 countries and territories
Valuable insights and tools provided by Zurich Resilience Solutions
Financial strength
Digital tools, integrated medical management and Staff Legal Services available to manage claims
How proper risk management can set middle market businesses up for success
Middle market businesses are the backbone of the U.S. economy, accounting for one-third of total jobs and 40% of GDP. Despite their market strength, their size exposes them to risks and potential setbacks. Yet, as business leaders start to understand and manage these threats, they can go from merely avoiding pitfalls to proactively seizing opportunities.
The risk landscape for middle market businesses is dynamic and evolving. Labor, technology, and resources can all be distinct challenges for this segment, which often does not have the sophisticated risk management departments to handle these risks. Zurich’s size and global strength, combined with in-depth knowledge of industries and local markets, benefit midsize businesses and can help them identify and mitigate these risks holistically.”
Executives juggling multiple roles
As middle market businesses grow, their risk profiles expand. And many face the same primary vulnerabilities as large enterprises. The difference? The impact these risks can have on midsize companies’ bottom lines and long-term viability could have devastating consequences.
Reputation is a key component of a professional services firm’s value proposition, and threats related to cybersecurity and international operations can have an adverse impact. Zurich’s ability to deliver insights specific to the professional services industry can help our clients close coverage gaps and mitigate risks so they can focus on what they do best, leveraging their expertise to provide value to their customers.”
At the forefront of innovation, life sciences companies drive advancements in research, pharmaceuticals, and medical devices. But innovation can also mean heightened exposure, from employee safety to research protection and manufacturing challenges. Effective, comprehensive risk management strategies are imperative to navigate these unique exposures successfully.
Engaging an insurance provider with local knowledge, tailored insurance coverage, a strong global footprint, and deep risk management expertise can help develop a holistic management solution and remove obstacles to growth.
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Cyber attack or data breach
Failure to attract and retain talent
Damage to brand or reputation
Economic slowdown
Failure to innovate
Zurich solutions are backed by:
Source: The 2024 Certainty Project Report, PYMNTS
As businesses continue to undergo digital transformations, cyberattacks on midsize companies are escalating. The lack of dedicated cyber risk departments and fewer resources make middle market companies prime targets as hackers often see them as gateways to larger organizations.
61%
of midsize businesses do not have dedicated cybersecurity experts in their organizations.
Source: The State of Cybersecurity for Mid-Sized Businesses in 2023, Huntress
47%
of middle market business leaders listed cyberattacks as a threat to their businesses in 2023.
Source: “Three Threats the Mid-market Saw Coming in 2023— and One That Most Didn’t,” Grant Thornton
Continued uncertainty around inflation, interest rates, and geopolitical conflicts pose significant concerns for middle market businesses, potentially impacting their ability to maintain operations during downturns.
35%
of middle market firms say uncertainty led to missed opportunities last year.
Source: The 2024 Certainty Project Report, PYMNTS
47%
of CFOs from smaller middle market firms face considerable levels of uncertainty.
Source: The 2024 Certainty Project Report, PYMNTS
66%
of middle market chief financial officers (CFOs) say economic volatility poses the same or a greater threat now than it did one year ago.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
Workforce shortages and evolving skill requirements demand a renewed focus on recruiting, retaining, and developing skilled talent. Without strong talent, middle market businesses face decreased productivity, innovation, and competitiveness.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
29%
of CFOs plan to enhance nonmonetary benefits in 2024.
36%
of CFOs plan to increase monetary compensation for their employees.
Source: 2023 State of Manufacturing Report, Fictiv
55%
of middle market companies are prioritizing improving supply chain resilience and agility.
63%
of middle market companies are prioritizing improving manufacturing and supply chain visibility.
Complex and global supply chains expose middle market businesses to disruptions, customer dissatisfaction, reputational damage, and loss of market share. Robust supply chain risk management and contingency plans are key to mitigating these issues.
CYBERSECURITY
Economic volatility
Labor issues
Supply chain disruptions
As businesses continue to undergo digital transformations, cyberattacks on midsize companies are escalating. The lack of dedicated cyber risk departments and fewer resources make middle market companies prime targets as hackers often see them as gateways to larger organizations.
61%
of midsize businesses do not have dedicated cybersecurity experts in their organizations.
Source: The State of Cybersecurity for Mid-Sized Businesses in 2023, Huntress
47%
of middle market business leaders listed cyberattacks as a threat to their businesses in 2023.
Source: “Three Threats the Mid-market Saw Coming in 2023— and One That Most Didn’t,” Grant Thornton
Continued uncertainty around inflation, interest rates, and geopolitical conflicts pose significant concerns for middle market businesses, potentially impacting their ability to maintain operations during downturns.
35%
of middle market firms say uncertainty led to missed opportunities last year.
Source: The 2024 Certainty Project Report, PYMNTS
47%
of CFOs from smaller middle market firms face considerable levels of uncertainty.
Source: The 2024 Certainty Project Report, PYMNTS
66%
of middle market chief financial officers (CFOs) say economic volatility poses the same or a greater threat now than it did one year ago.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
Workforce shortages and evolving skill requirements demand a renewed focus on recruiting, retaining, and developing skilled talent. Without strong talent, middle market businesses face decreased productivity, innovation, and competitiveness.
Source: Middle Market CFOs Prioritize Stability in 2024—BDO Survey, BDO
29%
of CFOs plan to enhance nonmonetary benefits in 2024.
36%
of CFOs plan to increase monetary compensation for their employees.
Source: 2023 State of Manufacturing Report, Fictiv
55%
of middle market companies are prioritizing improving supply chain resilience and agility.
63%
of middle market companiesare prioritizing improving manufacturing and supply chain visibility.
Complex and global supply chains expose middle market businesses to disruptions, customer dissatisfaction, reputational damage, and loss of market share. Robust supply chain risk management and contingency plans are key to mitigating these issues.
CYBERSECURITY
Economic volatility
Labor issues
Supply chain disruptions