Five top risks facing professional services firms

Professional services companies deliver knowledge and expertise that help other businesses grow. From management and consulting services to advertising agencies, legal firms, tax and accounting services and countless other roles, business services providers are an indispensable part of the U.S. economy. But while providing clients with all manner of critical services to help manage the operational challenges of a changing business environment, professional services organizations also need to focus appropriate attention on the risks they face in the course of their own activities.

Based on Zurich’s own claims data and external insights, the following are among the top business risks that many mid-sized professional services organizations may face in order to ensure their ability to effectively serve clients:

5. Slips, trips and falls

Among the most frequent and common risks facing businesses of all kinds — including office occupancies usually considered lower risk than manufacturing, construction and other activities — are injuries due to slips, trips and falls, along with strains. Indeed, Zurich data indicates that slip, trip and fall injuries and strains (with strains taking the lead), account for almost half of all injury claims, averaging $17,000 per case. And according to the National Floor Safety Institute (NFSI)²:

• Falls account for over eight million hospital emergency room visits each year, representing the leading cause of visits (21.3%).
• Slips, trips and falls account for over one million of those visits, or about 12% of total falls.

• About 5% of falls result in fractures.

• While slips and falls do not constitute a primary cause of fatal occupational injuries, they represent the primary cause of lost days from work.

Businesses should take steps to prevent employee or customer injuries due to slips, trips and falls; starting with a slip, trip and fall assessment. Floor markings should be used to route people around dangerous areas, while warning signs can alert people to slippery floors or other possible dangers. Marking or eliminating obstructions can keep people from tripping. And improved lighting can help them see potential dangers.³

4. International exposures

Increasingly, mid-sized firms are looking beyond their national borders for new business horizons. When engaging in business activities with international dimensions, including employees traveling abroad, professional services firms may face a variety of often unanticipated risks associated with local regulations and business conventions.

For this reason, organizations need to engage risk management and insurance expertise from companies delivering the experience and global presence to understand local regulatory environments. Also needed is access to tools and resources to manage the unpredictable trade credit and political risks inherent in today’s volatile global economy.

3. Property fires

According to the U.S. Fire Administration’s Non-Residential Fire Trends (2009-2018), over a 10-year period there were 103,600 non-residential structure fires accounting for losses of $2.6 billion.¹ Over the same period, non-residential structure fires increased 26%. All of which shows that all businesses, including professional services firms, need to be acutely aware of the threat that property fires may pose to their operational resilience.

All businesses, including professional services providers, should perform thorough risk self-assessments to uncover and respond to any apparent fire risks and document their pre-fire safety plan. Facilities must be equipped with adequate alarms and fire suppression equipment such as sprinklers, along with safety personnel trained in preventing fires and what to do until help arrives if a fire breaks out.

2. Water intrusion

According to Zurich Claims data, water damage is a leading cause of commercial property losses from the standpoint of frequency and severity. Water-related losses due to severe weather events are only part of the story. Buildings over 20 years old may be at greater risk of water damage due to aging infrastructure and internal leaks. Deferred maintenance of structures, sprinkler systems and other potential sources of leakage also account for many water-related losses. Contractors working inside buildings may sometimes be the cause of water-leakage events.

Whether a business services company’s assets are specialized equipment that can be damaged by water leaks or computer equipment, data and records that could be destroyed by such an event, a major water leak could cause significant loss.

It is critical that businesses take effective steps to prevent costly water leakage events. Further, professional services firms must assess their risks and draft detailed plans covering what to do in the event of a water intrusion.

1. Cyber security

All companies face threats of network intrusions, malware and other high-tech hazards. And because business services firms depend heavily on network and cyber resources to maintain customer records, schedule work, prepare reports, deliver creative output and meet a wide and varied range of client needs, if network resources are impacted so are income and profits.

Business services organizations need to be aware of the growing dangers of cyber risks. Networks need to be evaluated and assessed to determine whether undetected breaches have already occurred. Ongoing monitoring resources and professional advice should be accessed to help intercept and prevent future cyber attacks. Insurance solutions such as Zurich’s Cyber Insurance Policy can also provide essential, frontline defense against the financial impacts of cyberattacks.

Understand your risks to build resilience

These are just some of the risks mid-sized professional services providers may face in today’s uncertain environment, but not the only ones. By working to become better aware of the full continuum of business risks facing their organizations, and responding with effective risk management and insurance strategies, professional services companies can ensure resilience that will strengthen reputations and customer ties.