OSHA Finalizes Rule Requiring Construction PPE to “Properly Fit’ All Workers
Fed-OSHA has finalized a new regulation that requires personal protective equipment for construction workers to be properly fitting.
The lack of access to properly fitting PPE for smaller-framed construction workers — especially women — has been a perennial problem, as ill-fitting gear may not protect employees adequately in case of an incident. The new standard explicitly states that PPE must fit properly to protect workers from workplace hazards.
Often, the industry has just purchased smaller gear for female workers, but that hasn’t worked well because women’s bodies have more variations in size and shape.
What the new standard says
While the new standard does not define what a “proper fit” is, OSHA, in its proposal of the standard, clarified that the phrase means “the PPE is the appropriate size to provide an employee with the necessary protection from hazards and does not create additional safety and health hazards arising from being either too small or too large.”
Under the new rule, construction employers will be required to provide PPE in various sizes and designs that accommodate a diverse workforce. It requires that they assess the fit of PPE for each worker individually. The fit must address different body shapes, proportions and size and applies to all types of PPE, such as:
- Hard hats
- Gloves
- Goggles and safety glasses
- Safety shoes
- Helmets
- Harnesses
- Coveralls
- Vests
- Respirators
- Hearing protection devices
- Boots
The rule applies to PPE that an employer provides to its workers, as well as PPE purchased directly by a worker for personal use.
Employers are also required to incorporate the importance of properly fitting PPE into their training regimens, including:
- Guiding workers on how to adjust the equipment,
- How to recognize when PPE is ill-fitting and
- How to request replacement gear if a worker’s PPE does not fit.
Record-keeping is also required. To comply, construction employers should maintain comprehensive records of their PPE compliance efforts, including documenting:
- PPE assessments,
- Inspections,
- Training sessions and
- Any instances where PPE was replaced or adjusted for proper fit.
The standard applies to all construction companies; there are no exceptions based on size.
Dangers of ill-fitting PPE
- Sleeves of protective clothing that are too long or gloves that do not fit properly may make it difficult to use tools or control equipment, putting other workers at risk of exposure to hazards.
- The legs of a protective garment that are too long could cause tripping hazards and affect others working near the wearer.
- A loose harness when working at elevations may not properly suppress a person’s fall and may get caught up in scaffolding and equipment.
- Goggles worn by an employee with a small face may leave gaps at the temples, allowing flying debris from a machine to enter the eyes.
- Gloves that are too large have a number of issues: the fingers are too long and too wide, the palm area is too big and the cuffs allow sawdust to fill the fingers. Someone wearing such ill-fitting gloves risks getting their fingers caught in machinery or pinched when stacking or carrying lumber.
The takeaway
Manufacturers already make PPE in various sizes, but finding properly fitting PPE for workers may be difficult.
Fortunately, The Center for Construction Research and Training has created a list of manufacturers and suppliers of PPE for female, nonbinary and transgender workers. It includes links to firms that focus specifically on women’s wear and the products they offer.
FAIR Plan increases Commercial Property Limits
California Insurance Commissioner Ricardo Lara has approved a request by the FAIR Plan to increase commercial property coverage limits.
The move is aimed at ensuring that commercial facilities insured by the FAIR Plan are not underinsured, which can be devastating if they suffer a total loss.
Under the new limit, the FAIR Plan will create a new “high-value” commercial property coverage option for larger housing developments, farms and businesses with multiple buildings at one location.
The new limits will be up to $20 million per building, with a total maximum limit of $100 million per location — up from the current limit of $20 million per location. The FAIR Plan must make these new coverage limits available to all eligible applicants for both new and renewal policies before July 26, 2025.
The decision comes as commercial property rates continue rising due to inflationary pressures, particularly for companies in areas considered urban-wildland interfaces.
Insurers have pulled back on underwriting commercial properties as well as homes in the state due to increasingly destructive wildfires and their inability to get rate increase requests approved by the Department of Insurance.
Businesses located in wildfire-prone areas and those in smaller towns have found it increasingly difficult to secure coverage. If they are unable to secure coverage with a private insurer, their only option is the FAIR Plan.
FAIR Plan policies are not a complete replacement of a commercial property insurance policy. These are named peril policies, which provides coverage only for damage caused by the specific causes of loss listed in the policy:
- Fire
- Lightning
- Internal explosion
Optional coverages are available at an additional cost, such as for vandalism and malicious mischief.
Comparatively, typical commercial policies offer the following:
Basic form policies. They provide the least coverage, and usually cover damage caused by fire, windstorms, hail, lightning, explosions, smoke, vandalism, sprinkler leakage, aircraft and vehicle collisions, riots and civil commotion, sinkholes and volcanoes.
Broad form policies. These policies usually cover the causes of loss included in the basic form, as well as damage from leaking appliances, structural collapses, falling objects and the weight of ice, sleet or snow.
If you must go to the FAIR Plan, we can arrange for a “differences in conditions” policy that will cover the areas in which the plan is deficient compared to a commercial property policy.
The FAIR Plan will cover the following commercial structures:
Habitational buildings — Buildings with five or more habitational units, such as apartment buildings, hotels or motels.
Retail establishments — Shops such as boutiques, salons, bakeries and convenience stores.
Manufacturing — Companies that manufacture most types of products.
Office buildings — Offices for professionals such as design firms, doctors, lawyers, architects, consultants or other office-based functions.
Buildings under construction — Residential and commercial buildings under construction from the ground up.
Farms and wineries — Basic property insurance for commercial farms, wineries and ranches, not including coverage for crops and livestock.
A final word
The higher limits will come as a relief to many businesses in California whose properties’ replacement costs far exceeded the FAIR Plan limits. That said, premiums remain high under the FAIR Plan.
Besides the FAIR Plan, there is another option if you can’t find coverage. We can try to find coverage in the “non-admitted” market, which consists of global insurance giants like Lloyd’s of London.
These entities are not licensed in California, but they can still cover properties in the state, which we can access through a surplus lines broker.
Treasury Dept Suspends Beneficial Ownership Reporting Rule
The U.S. Treasury Department has announced that it will not enforce a law requiring most businesses with fewer than 20 employees and less than $5 million in annual revenue to report ownership and control information to the federal government every year.
The Corporate Transparency Act required firms to file this information by Jan. 1, 2025, under the threat of a maximum civil penalty of $500 per day (up to $10,000) and up to two years in prison.
The Treasury Department said that it would not enforce any penalties or fines associated with the beneficial ownership information reporting rule on any companies that missed the Jan. 1 deadline. As well, it will not enforce penalties going forward for companies that fail to file their BOI report.
While the Trump administration cannot repeal the CTA, it is instead opting not to enforce it and plans to introduce new regulations that would essentially eliminate enforcement of the law for U.S. businesses.
The act explained
The CTA aimed to crack down on fraud, money laundering and terrorism funding that can run through anonymous business entities.
Under the act, businesses with 20 workers and less than $5 million in revenue were required to file reports identifying their “beneficial owners,” defined as individuals who own or control 25% or more of the equity interest of a company or who exercise “substantial control over its management or operations.”
There were some exemptions to the reporting requirement, including stock brokerages, banks and other financial institutions, insurance companies, accounting firms, public agencies and non-profits.
It’s estimated that the law affected some 32 million small businesses .
What’s next
The Treasury Department will issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. A “foreign reporting company” refers to any entity formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction.
Legal experts recommend that affected companies which have not yet filed an initial, updated or corrected report may consider waiting to file a BOI report until new guidance is issued by the Treasury Department, as no penalties or fines will be enforced for failing to file reports for now.
The department’s action may face legal challenges, or the present or a subsequent administration could restore the reporting requirements as the law remains on the books.
More Contractors Increase Deductibles to Reduce Insurance Premiums
As construction projects become larger and more complicated, contractors are taking on more of the risk by increasing their builder’s risk insurance deductibles, according to a recent report.
Michael Cusack, executive vice president of insurance broker Alliant Specialty, told Insurance Business magazine that contractors are willing to take on more of the risk as those that have strong internal risk management regimens will be rewarded with lower premiums, particularly if they can stave off expensive claims.
There are a number of factors at play that are driving this transfer of risk:
- Claims costs are skyrocketing as the cost of rebuilding and materials has continued rising.
- Increasing litigation.
- Larger and larger liability lawsuit settlements and jury awards, and an increase in “nuclear” verdicts of $10 million and more.
“Contractors are taking on more deductible risk and manage that risk effectively using in-house protocols, and the ones that can do that will be the most successful,” Cusack told the trade publication.
“Construction jobs are getting much bigger, and the risks are becoming more complicated. If contractors can develop the systems and the personnel to manage risk, they can do it more efficiently and therefore be rewarded for that,” he explained.
The reason that you carry contractor insurance coverage in the first place is to protect your business from an accident or incident that could be financially devastating, such as a fire that wipes out all of your progress and destroys the materials and supplies that you had stored on-site.
Considerations
Increasing a deductible obviously comes with risk, particularly if you end up having multiple claims.
Raising your deductible amounts can be a smart business move that saves you money on your monthly or yearly premium payments. The extra money can help you grow your business, invest in new equipment, and even increase your available cash flow. But the best use of the extra cash is to create a contingency fund that you can draw on in case you incur a claim.
If you are comfortable assuming some additional risk yourself, and have resources you can draw on if they’re needed, talk to us about the possibility of raising your deductible. If the savings are enough to cover the deductibles on one or two claims, it may be worth making the change.
To make taking on more risk financially viable, you’ll have to prioritize risk management at your worksites. Emphasize the importance of safety to your supervisors, crew members and subcontractors.
By conducting regular safety training, providing personal protective equipment and strictly enforcing safe work practices, you can reduce the risk of on-site accidents and minimize damage and injury claims.
One other major risk to contractors is theft and vandalism. To lower this risk, builders have been erecting fences and walls around worksites since the dawn of construction. Today, there are cost-effective solutions to increase site security and reduce risks, such as:
- Online cameras and smart sensors on the job site can enable continuous monitoring for unauthorized access, unlawful activities, CO2 levels and real-time water leak detection systems like WINT’s water intelligence platform.
- Adequate lighting is much cheaper to procure, and built-in motion sensors can help save energy (while deterring potential trespassers to the site).
- GPS tracking tags on vehicles, equipment and even valuable materials can make it easier to recover them if they are stolen.
- Mobile applications for your workforce management can be a helpful tool in creating ongoing and interactive safety training, and risk-reporting programs to reduce the risks of human error and negligence.
Talk to us first
Builder’s risk premium calculations can be complex, and taking the step to increase your deductible has to be done with forethought and care.
Call us to review your policies before renewal and we can do a deep dive into your policy and risk management practices to see if increasing your deductible is a good move for you.
Businesses Struggle with Risk Protection Gaps
Nearly half of middle-market businesses feel unprepared for key threats despite implementing various risk management strategies, according to Nationwide Insurance’s latest “Agency Forward” survey.
The survey found that while 90% of businesses have formal risk management policies that are reviewed regularly, 21% lack a business continuity plan, leaving them exposed to potential disruptions that could severely impact their operations.
Additionally, 45% lack a disaster preparedness plan, and only half have a fleet safety program in place.
These shortfalls create vulnerabilities that could lead to financial and operational setbacks.
The survey found that companies allocate an average of 6% of their budgets to risk management and safety. Industries with higher risk exposure, such as construction and manufacturing, dedicate a larger share — 19% and 13%, respectively.
Key business concerns
Middle-market businesses identified their top risks over the next two years as:
- Costs and finances (42%),
- Economic and regulatory factors (40%), and
- Technological disruption (26%).
Economic downturns, supply chain disruptions, cyber-security threats and regulatory changes are the most pressing risk management priorities, each cited by 42% of respondents. However, only 5% of businesses listed natural disasters as a risk management priority, which could be a blind spot given recent climate-related disasters affecting various industries.
Leveraging technology
Technology is playing an increasingly important role in risk management, with 76% of surveyed businesses utilizing some form of digital solution.
Owners reported improved efficiency and compliance to regulations, enhanced data analysis and reporting, and better real-time monitoring of risks as a result of their technology use.
While only 11% have fully integrated technology into all aspects of risk management, 65% use it selectively.
The most common digital tools include:
- Cyber-security solutions (78%),
- Compliance and reporting software (67%), and
- Supply chain management software (58%).
However, technological adoption is not without challenges. Business owners cite the cost of safety measures (38%), maintenance of safety equipment and technology (31%) and keeping up with evolving safety standards (30%) as significant barriers to effective risk management.
How companies can better manage risk
To close these protection gaps and strengthen their resilience, mid-market businesses should consider the following strategies:
- Develop a comprehensive business continuity plan — Organizations without a continuity plan should work with risk management professionals to create one, ensuring they have a roadmap for responding to disruptions.
- Review the company’s compliance with regulations and laws — It’s important that your human resources team stays on top of regulations and legislation to ensure the organization doesn’t run afoul of them, which can result in penalties and fines.
- Enhance disaster preparedness — Natural disasters may be a low priority for many businesses, but proactive planning can prevent severe financial and operational consequences. Developing an emergency response plan can help mitigate potential damage.
- Analyze workplace accident data — Managing workplace safety is key to any company’s risk-management efforts. You should track incidents and thoroughly investigate each accident or near miss to find out what led to the event.
- Invest in technology for risk mitigation — Consider expanding your use of AI, predictive analytics and cloud-based risk management platforms to identify and address vulnerabilities before they become major issues.
- Regularly review and update risk management policies —As regulations and business risks evolve, you should regularly assess your policies to ensure they remain effective and aligned with industry best practices.
- Integrate risk management with business strategy — Risk management should not be seen as a separate function but as a core component of business success. Leaders should align their risk strategies with company objectives to ensure a seamless approach to resilience.
Expect to See Surcharges on Your Policy for the L.A. Fires
Even if you have a business or a home that was not affected by the recent wildfires in Los Angeles, you will likely see a surcharge to help pay for them on your next property insurance policy renewal.
The state-run California FAIR Plan, which is the market of last resort when policyholders are unable to find coverage from private carriers, expects its total loss from the Palisades and Eaton fires to come in at $4 billion.
Under its charter and state law, if it exhausts its funds, the plan can surcharge all commercial property and homeowner’s insurers in the state after approval from the state insurance commissioner.
Commissioner Ricardo Lara approved the Fair Plan’s request in early February to surcharge insurers a total of $1 billion, which will be assessed depending on each insurer’s market share. Under state law, those carriers are allowed to pass half of their assessment on to their policyholders in the state. It’s unclear how much each policy will be surcharged, but the fee will partly be based on the size of each policyholder’s annual premium.
Without the assessment, the FAIR Plan would run out of funds by the end of March and be unable to pay all of the claims from the fires, as well as claims from unrelated or future events and operating expenses, including the cost of increasing staff to respond to the disaster.
The state of play
The L.A. fires are one of the costliest natural disasters in the history of the country. Consulting firm Milliman estimates that the wildfires will cost $23 billion to $39 billion in insured losses.
As of Feb. 11, the Fair Plan had paid out about $800 million in claims, leaving it with about $1.2 billion in cash on hand.
It has also tapped reinsurance, which is basically insurance for insurance companies. It has multiple layers of reinsurance, but it cannot access all of them until it spends more of its funds on claims. It now has access to the first tranche of coverage worth $350 million after it met its $900 million deductible.
The FAIR Plan can access additional layers of reinsurance based on the claims incurred and outstanding reserves up to a $5.78 billion limit. To access all layers of available reinsurance, the plan would have to pay out about $3.5 billion, including the $900 million deductible, and copays. That’s more than its cash in hand.
After accounting for its reinsurance package, the FAIR Plan expects to pay out $2.3 billion of the remaining $3.1 billion reserved for unpaid losses from the fires.
How it will affect your policy
To help the plan pay for the $1 billion shortfall, it will surcharge each property insurer in the state based on their market share two years prior to the assessment. Every carrier that sells commercial property and homeowner’s insurance in the state will be assessed.
Here are the market shares of the top 10 insurers in 2023, the year assessments will be based on:
- State Farm 19.7%
- Farmers 14.7%
- Liberty Mutual 6.5%
- CSAA 6.4%
- Mercury 6%
- Allstate 5.7%
- AAA of Southern California 5.5%
- USAA 5.3%
- Travelers 4.3%
- Nationwide 3.1%
Avoiding Wage & Hour Lawsuits in a Connected, Remote Work World
While wage and hour lawsuits filed against employers around the country declined between 2022 and 2023, there were still nearly 6,000 complaint filings under the federal Fair Labor Standards Act.
These types of complaints are the most common employee actions against employers and they typically cover failure to pay workers for hours worked, overtime infractions or requiring them to work during their lunch period.
With the onset of remote work and mobile devices, the chances of an employee working off the clock have increased substantially.
For example, if a manager texts a non-exempt employee while they are home and during non-working hours and asks them to send a client an e-mail, they are essentially requiring the employee to work unpaid.
If your require or allow your staff to work off the clock, the employee must be compensated for all of that time. This means that even if you did not ask the employee to work, you may still be required to compensate them, as long as:
- You know or have reason to believe that the employee is continuing to work, and
- You are benefiting from the work being done.
This is true regardless of where the work is performed at in the office or at home, for example.
Nine steps to protect your business
To protect your business from being sued for wage and hour infractions:
- Calculate overtime correctly. In some cases, an employee is paid by salary or piecework, and may receive bonuses and commissions. All of these are factors that must be considered in correctly calculating overtime pay.
- Keep detailed records of everything related to wages and hours.
- Do not allow non-exempt employees to remotely access their work e-mail account.
- If you give an employee access to their work e-mail at home, ensure that they are paid for their time in reviewing and responding to e-mails when not at work.
- Educate managers about text messaging or e-mailing non-exempt employees when they are off the clock. Conversely, tell non-exempt staff avoid answering text messages or e-mails about work when they are off the clock.
- Do not allow employees to take lunch at their assigned work area. If a worker answers a phone call or writes an e-mail during a lunch break (even if they weren’t not ordered to do so), they may be entitled to payment for time worked.
- If an employee is asked to stay after their scheduled end time to finish up a project, they need to remain on the clock and paid for that time.
- If a supervisor knows that a worker is staying late to finish a project, that time is compensable, even if the supervisor never asked them to stay late.
- Have in place a written policy that bars unauthorized work or unauthorized overtime. Ensure that your employee handbooks and wage and hour policies and procedures are up-to-date and compliant.
Insurance
If an employee is successful in an FLSA claim, they may recover twice the amount of their unpaid wages, plus a mandatory award of attorney fees, which often far exceed the amount of any unpaid wages.
Many employers purchase employment practices liability insurance to help cover the costs of employee lawsuits, but policies typically exclude coverage for wage and hour claims.
However, there are some insurers that will provide a wage and hour defense-cost-only sublimit on the EPL policy.
There are some specialized insurance policies that are sold by offshore companies that will cover wage and hour infractions, the costs of litigation and awards. However, they are uncommon.
In light of the scarcity of coverage, it’s important that you have in place strong policies to deter employees from working unauthorized overtime.
How the L.A. Fires May Affect Your Commercial Property Insurance
The fires that have ravaged large swaths of homes and businesses in Los Angeles are likely to significantly alter the California commercial property insurance market. Policyholders may need to brace themselves for surging premiums, policy non-renewals and uncertainty.
These wildfires will result in record payouts by insurers. Moody’s RMS estimates insured property losses from the fires will be up to $30 billion, and uninsured property losses will be billions of dollars more.
So many insurers have in recent years already left the state or drastically curtailed the number of policies they write due to the wildfire threat, that the scale of these fires could push more of them to do the same.
Besides the hit to insurers, the L.A. fires are likely to have severe consequences for the state’s market of last resort for home insurance, the California FAIR Plan, which said it may see more than $3 billion worth of claims from the fires.
The FAIR Plan does not have the resources to cover damages above $2.3 billion at this stage. If its ultimate claims exceed that, all property insurers in the state will be surcharged — and likely will pass those fees on to policyholders.
Here’s a look at the current state of the market and how commercial property policies may be affected.
The state of the market
The homeowner’s and commercial property insurance market in California is in a state of crisis.
Dozens of insurers have pulled out of the state and the ones who have opted to stay have dropped policies in high-risk areas or they have gotten more selective about the properties they are willing to insure.
Mainstays like State Farm, Farmers and Allstate have stopped taking on new customers and have been shedding others they deem too risky. State Farm has dropped more than 100,000 policyholders in the last year alone.
Some common factors that can prompt a carrier to refuse coverage are the age of the roof (10 years for composite) or the age of the property (some insurers won’t insure a home older than 25 years).
Commercial property owners who have recently filed claims are often dropped as well by their insurers and find it hard to secure new coverage.
Besides the wildfire risk, the cost of repairs and rebuilding has skyrocketed in the last few years, which has driven rates higher.
The bottom line: The market was already turbulent before the L.A. fires.
Commercial property rates
Commercial property rates have been increasing an average of 20% a year recently, but many property owners have seen their rates double or triple. Even those who are forced to go to the FAIR Plan for coverage face significantly higher premiums, particularly if they live in a wildfire-prone area.
Besides wildfires, a number of other factors have converged to drive insurance rates even for properties in areas not prone to wildfire, like urban, suburban and industrial areas. These include:
- Inflation and rising repair costs — Rebuilding costs have risen more than 30% since 2020.
- Reinsurance costs — Insurance companies purchase their own insurance called reinsurance to manage risk, especially in catastrophe-prone regions. Reinsurers have raised rates and increased the thresholds for when they’ll start paying claims due to the increased risk in California.
While you’ve already experienced rate hikes for your commercial property policy, the size of rate increases over the past few years has been tempered by laws that restrict the factors insurers can use when calculating future rates.
New rules that just took effect in January 2025 will allow insurers to factor in expected future costs of natural catastrophes and the cost of reinsurance when pricing their commercial property policies.
The Department of Insurance has also been expediting rate increase requests, which in the past sometimes have taken years to get approved.
Moody’s has predicted that property rates will rise again as a result of the fires.
Risk to the FAIR Plan
As insurers leave the Golden State or refuse to cover properties in areas like the Pacific Palisades, Big Bear, Truckee and other wildfire-prone areas, more property owners have been forced to get coverage with the FAIR Plan, which has put it in precarious shape. As of Sept. 2024 (prior fiscal year-end), the FAIR Plan’s total exposure was $458 billion, a 61.3% increase from Sept. 2023.
Those sums are astounding, considering that the FAIR Plan’s annual written premium is $1.26 billion. Also, the plan had just $200 million in reserves as of Sept. 30 last year, and $2.5 billion in reinsurance.
Current estimates are that the FAIR Plan will likely face more than $3 billion in claims from the fires, mostly from homeowners, but also the hundreds of businesses that were damaged or destroyed.
Under state law, if the L.A. wildfires exceed its reserves and reinsurance, the plan can charge all private insurers in the state based on their portion of the insurance market for the first $1 billion above what the FAIR Plan can pay — and they can collect half of that from their policyholders.
For any funds needed above $1 billion, the FAIR Plan can seek approval to assess all policyholders in the state.
Any of those surcharges would be on top of premiums policyholders pay. However, there is talk that the California Legislature may come to the rescue with some sort of bailout.
One other issue: Property owners with the FAIR Plan must contend with its policy limits. For commercial properties, the most the plan will insure on any given property is $20 million (for homeowner’s insurance, it’s $3 million).
What you can do
Don’t lose hope if you have business property in California. Consider the following:
California’s property rates are still lower than in many other states. The current changes may reflect a market correction rather than an outlier spike in costs.
There is still insurance capacity with surplus insurers. If you can’t get coverage with a carrier that’s licensed in the state, we can help you find coverage in the non-admitted insurer market. These insurers are reliable even though they’re not licensed in California, but that also gives them flexibility in how they write policies, which they can better tailor for your individual needs.
The market is cyclical and will change. The current challenges are likely to stabilize as insurers adjust to the new risk environment, raise rates, change policy wording and regulatory changes are implemented. Market corrections, along with efforts to mitigate risks, such as improved fire safety measures, may restore balance.
Top Eight Business Risks for 2025
One of the keys to running a successful business is having in place a robust risk management system to ensure your company can guard against a growing number of threats that can derail operations or cause significant losses.
While each industry and company have different risks they face, a recent survey collected responses from risk managers around the world to identify the top risks facing businesses.
The “Allianz Risk Barometer 2025” highlights the key threats for organizations in an increasingly interconnected and volatile environment.
Below are the top eight risks in 2025 and what you can do to protect against them.
1. Cyber incidents
Cyber risks like ransomware attacks, data breaches and IT outages remain the number one threat globally. With AI accelerating the sophistication of attacks, businesses have to double down on protection.
What you can do — Invest in robust cyber-security measures and training employees on how to detect threats and avoid clicking on links that contain malicious code. Regularly update systems, conduct penetration testing and educate staff on cyber hygiene.
2. Business interruption
Supply chain disruptions, often triggered by cyberattacks or natural disasters, have consistently ranked high. If one of your suppliers suddenly can’t provide you with goods your firm needs or a cyberattack affects your ability to function, you will lose money.
What you can do — Diversify suppliers, explore local sourcing and implement business continuity plans that include how to respond to each possible issue that could result in disruption to operations or sales.
3. Natural catastrophes
Events like hurricanes, wildfires, convective storms and flooding can cause significant losses, be that from damage to property and assets, injury to staff, employees being unable to work or business interruption.
What you can do — Put in place a disaster recovery plan that includes how members of your staff will communicate, possible alternative locations for operations, and how to protect your facilities. Evaluate disaster preparedness and explore insurance solutions.
4. Changes in laws, regulations
Regulatory shifts, especially around sustainability and emerging technologies like AI, are creating compliance challenges. Businesses will be faced with plenty of uncertainty under a new Trump presidency, considering his plans to pursue deregulation.
While a boon for business, it could lead to confusion, particularly for those who operate in blue states. As well, the new president’s promises of raising tariffs could lead to higher costs for many businesses that source products, parts and machinery from abroad.
What you can do — It’s important that you stay on top of regulatory and legal changes to avoid penalties or lawsuits. Engage legal advisors or compliance experts to navigate changing laws.
5. Climate change — The physical and operational impacts of climate change, such as extreme weather and resource scarcity, are intensifying and businesses need to harden their operations to cope.
According to the report: “Extreme temperatures can drive up energy demand, which is especially critical for industries reliant on cooling systems, potentially leading to operational cost increases. Water scarcity can threaten businesses reliant on water for operations, while biodiversity loss undermines ecosystem services which many industries depend on, for example, agriculture or maintaining crop yields.”
What you can do — Many of the same preparations businesses can make for dealing with natural catastrophes can also be used for climate change resilience.
6. Fire and explosion
Fires remain a leading cause of business interruption, especially with the rise of lithium-ion battery incidents. “The degree of disruption can be very high, as it can take longer to recover from than many other perils,” the report states.
What you can do — Ensure that you conduct regular fire safety audits and training to staff, particularly if you store flammable materials on-site. Regularly update your fire prevention protocols and provide emergency response training.
7. Macroeconomic developments
Economic uncertainties, including inflation and fluctuating monetary policies, pose challenges for budgeting and forecasting. This will be especially true under the Trump administration as he sets out to reverse Biden’s policies and pursues tariffs that could lead to trade wars.
What you can do — Keep abreast of market trends and adapt to macroeconomic changes with flexible planning. Staying agile and diversifying revenue streams can mitigate risks.
8. Market developments
Many experts believe it is unlikely that there will be a major stock market correction in 2025. Recovering earnings and Trump’s plans for deregulation and strong fundamentals should support continued growth.
What you can do — Strategic planning and market analysis are critical if your organization is reliant on stock market gains.
The takeaway
The above list of risks was gleaned from a survey of companies around the world, but many of the risks also apply to U.S. firms.
It’s important that businesses take a structured approach to managing their risks and creating plans for all eventualities that may affect them. That requires buy-in from management and a focus on protecting the company’s revenue stream, physical and digital assets, employees and supply chains.