Business Continuity Plans Lacking Among SMBs: Nationwide Survey

Mid- and small-market businesses (SMBs) face a lot of the same big-picture challenges, but how they prioritize risk, spending, and solutions varies widely.

According to Nationwide’s latest risk management survey, mid-market business owners are most concerned about economic and financial risks, regulatory changes, and technological and supply chain disruptions over the next two years.

Meanwhile, small-market business owners also list economic and financial risks as a top concern, but their worries about technological disruptions are eclipsed by concerns about market conditions, natural disasters, inflation, and labor.

Despite implementing various risk management strategies, only 54% of business owners feel highly protected against these threats.

Budgeting for Risk Management

Small business owners dedicate more of their budget (18%) to risk management and safety than mid-market business owners (6%). Eight in 10 (83%) of middle-market businesses have a dedicated safety budget. High-risk industries like construction and manufacturing allocate even more to safety at 19% and 13% of their annual budget, respectively.

Mid-market business owners report top areas of investment for risk mitigation include technology/security (40%), followed by security/cybersecurity enhancement (24%), labor/staffing (19%), supply chain/supplier stability (17%), and training programs (11%), according to the survey.

Over the same period, small-market businesses plan to invest in technology/security (24%), offerings/growth (21%), costs/revenue (20%), recruitment/employee retention (17%) and supply chain/supplier stability (14%).

Impacts of Evolving Regulations and Standards

Middle-market business owners overwhelmingly agree that evolving regulatory and safety standards hinder operations. Three-quarters (78%) say changes had an impact on their risk management needs, and 20% feel their business is unprepared to respond to new regulations.

Mid-market business owners are likelier to take action, such as additional training, utilizing technology (72% vs. 62% of small business owners) and implementing KPIs (69% vs. 58% of small business owners). Technology provides crucial risk management or regulatory support for 76% of middle market businesses, with 11% reporting it is central to all their risk management activities and 65% using it in specific areas but not comprehensively.

Small business owners are split, with 51% saying regulatory changes impact their risk management practices and 48% reporting little impact.

Where Are the Gaps?

While businesses scramble to implement plans and evolve with technology, there are still gaps. For example, 55% of mid-market business owners report having a disaster preparedness plan, and 60% of small- and mid-market business owners currently have a fall protection program in place. Two-thirds of middle-market businesses report that compliance is integrated into overall risk management framework, but only about one-third of small businesses (34%) make the same claim. While half of middle-market businesses (52%) use technology for real-time monitoring of compliance issues, only 29% of small businesses have invested in that tech.

Many owners struggle to recognize the value and impact of their efforts: only 51% currently view risk management initiatives as effective. Their top challenges with safety and risk management include:

• Cost of safety measures (38%)
• Maintenance of safety equipment (31%)
• Resources required for conducting regular safety assessments (30%)

And 21% of businesses report they do not have a business continuity plan, leaving them vulnerable to operational disruptions.

“Despite nearly 90% of businesses having formal risk management policies that are regularly reviewed, a critical vulnerability remains: one in five businesses lack a business continuity plan,” said Mark McGhiey, Nationwide’s leader of commercial lines risk management.

“This gap leaves them exposed to potential disruptions that could severely impact their operations,” he said. “Agents can help identify and fill these gaps with commercial clients, partnering with them and carrier-provided risk management experts to develop and implement a comprehensive business continuity plan. These efforts can significantly enhance clients’ resilience and ensure they’re prepared to navigate unexpected challenges.”

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