Mid-market French firms struggling to keep pace with rising risk

Mid-sized French companies increasingly see the value in risk management as threats grow but often lack the ability to respond, according to a survey by insurer QBE. The risk management survey, now in its third year, polled 300 executives at French small and mid-sized companies with 50 to 5,000 employees. It found that risks faced by French mid-market companies were more numerous and more widespread at the end of 2019 than in 2018. Just 7% of those surveyed said the risk landscape had reduced, while 20% felt it was elevated. Almost three quarters (72%) said the risks to their business were stable. Of the six categories tracked by QBE, respondents experienced an increase in risk during the past year for market, financial, regulatory and intangible risks. According to Renaud de Pressigny, head of QBE in France, the survey highlights two contrasting trends. On the one hand mid-sized companies face increased risk, but their ability to manage risk is not keeping pace, he said. “Mid-sized companies perceive risk and risk management as a strategic issue and key for the competitiveness and success of their company,” Mr De Pressigny told CRE. “Traditional risks are high on the agenda of French companies, but they also see emerging risks. Mid-sized companies find it difficult to move to action and put a formalised risk management programme in place. They say they lack the expertise in-house and do not know where to start,” he said. QBE’s survey finds that French mid-sized companies appreciate the value of risk management. Some 42% said risk management was one of the three key ingredients to commercial success, ranked second only to business strategy (57%) and ahead of pricing (41%) and innovation (35%). But only a quarter of companies felt they were in control of their risks, while three quarters said they were partially in control. Lack of time (66%) was cited as the main barrier to risk management by mid-sized companies, followed by monitoring regulations and standards (56%) and lack of qualified risk management resource (41%). Survey respondents believe implementing and monitoring action plans is the most complex risk management task, followed by crisis management and risk identification. Mr De Pressigny said SMEs can formalise risk management through a dedicated employee, a part role or by assigning responsibility to a director. They can then set about identifying and mapping risks, before taking steps to prevent and mitigate risk in a more structured way, he added. The biggest risks perceived by French mid-sized companies were those related to people, with some 75% of respondents ranking people risk highest. Market risks were seen as the next-biggest threat, followed by physical risks, regulation, financial and, finally, intangible risks. Insurable risks remain prominent concerns for mid-sized French companies. The top people risk was workplace accidents, while industrial diseases also ranked highly. Among physical risks, fire was ranked highest, followed by machinery breakdown, theft, product recall and extreme weather. However, many top concerns remain uninsurable, such as recruitment issues, increased competition, changes in labour laws and other regulations. The concerns of mid-market companies are in stark contrast to large corporates, which frequently rank intangible risks as their top threat. This may reflect the in-house capabilities of large companies to manage physical risks and human resources, explained Mr De Pressigny. But a common area of concern is cyber. QBE’s survey finds that one in two French mid-market companies believe the risk is increasing. The top cyber risk concern was loss of data – cited by 78%, followed by business interruption (47%) and extortion (37%). Surprisingly, 81% of firms were confident they could manage a cyberattack, while 76% had invested in cybersecurity, up 14% on the previous year’s survey. When it comes to assistance and advice, 64% of mid-sized French firms would seek help from insurers and brokers, the second-highest-ranked third party. Only 1% of respondents said they had a dedicated insurance manager, while the CEO or another director was responsible for insurance in 38% of companies surveyed. The poll also found that the person in contact with insurers is often not the person responsible for risk.

Mid-market French firms struggling to keep pace with rising risk

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