Most privately held businesses have not implemented effective steps to protect themselves against a variety of risks, according to a recent nationwide study.
The Chubb 2013 Private Company Survey, based on interviews from executives at 450 U.S. companies, uncovered a number of disturbing conclusions. For example:
- Although nearly three in four of respondents (73%) use a third-party provider to administer their employee benefits plan, fewer than half (46%) have taken steps to reduce their fiduciary liability.
- Only two in five (42%) have a broad policy against hiring employees with criminal backgrounds, which could be a violation of state law.
- Among the more than two in three companies( 68%) that use social media, only one in ten (12%) percent are concerned about being sued for defamatory posts, while fewer than half (48%) have a written social media usage policy for employees.
During the past three years, approximately half of respondents suffered at least one loss from such exposures as employment practices liability, fiduciary liability, crime, workplace violence, and cyber liability.
“Many private companies have not taken loss prevention measures or purchased the appropriate insurance to help insulate themselves from litigation, government fines, and their related financial and reputational consequences,” says Tracey Vispoli, Chubb Senior Vice President and Specialty Insurance Global Customer Segments Leader. She add that, “This is surprising, because a large number of these firms have been sued in recent years by employees, customers, government agencies; and other parties; and many are planning to participate in activities such as mergers that can increase their risk profile.”
How effective is your risk management program?