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Building Resilience in a World of Constant Risk
134 Plays5 days ago
What separates companies that weather disruption from those that fall behind? In this episode, Justin Boardman of Chubb joins NCMM’s Doug Farren to explore how resilience is becoming a defining capability for middle market organizations. From the rise of cyber risk as a board-level priority to the growing importance of business continuity planning, the discussion highlights how leaders can prepare for the unexpected. Learn why agility, proactive planning, and integrated risk strategies are critical to staying competitive in today’s environment.
To explore Chubb's Middle Market Insights, visit this link.
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Transcript
Introduction to Middle Market Podcast
00:00:02
Speaker
Welcome to The Market That Moves America, a podcast from the National Center for the Middle Market. The center is the leading source of knowledge, leadership, and innovative research on the middle market economy. Throughout our podcast, we will feature middle market leaders and stakeholders to hear their real-world perspectives on trends and emerging issues.
Importance of Risk Management and Resilience
00:00:24
Speaker
Welcome to the market that moves America. My name is Doug Farron, executive director of the National Center for the Middle Market, located at The Ohio State University Fisher College of Business. The world is full of disruptions, which makes risk management and resilience so important, especially to middle market companies.
00:00:44
Speaker
The work that the center does with Chubb has been extremely valuable. in bringing these issues to the forefront. And I'm really excited about today's episode where we get to talk with a CHUB leader about what are some of the practical implications of these issues as we think about cybersecurity, technology, and other form forms of risk that are prevalent for midsize
Industry Specialization with Justin Boardman
00:01:09
Speaker
companies. Joining me today is Justin Boardman. Justin is the Executive Vice President and commercial insurance specialty manager at Chubb. So Justin, welcome to the podcast.
00:01:20
Speaker
Yeah, thank you, Doug. I really appreciate that. um Yeah, I just introduced myself a little bit here is been with Chubb for about 25 years, kind of bounced around in various roles and responsibilities in the organization over that period of time.
00:01:33
Speaker
I currently lead a team overseeing about a dozen industry practices within the middle market at Chubb. My focus is really on developing and enhancing our industry specialization and underwriting expertise to drive sustainable growth.
00:01:48
Speaker
um I work closely with our teams to execute strategies and launch new initiatives that support our continued success. So I really appreciate the opportunity to be here. Yeah, that's great. um So, i you know, i mentioned a little bit there in the intro that we've been working for a long time with Chubb and we ah really appreciate the support here over the years.
00:02:08
Speaker
and And I think really one of the strengths that we do together is look at a lot of the data that that we collect, specifically when we think about our semi-annual middle market indicator research.
00:02:18
Speaker
And there's a lot of information in there about risk and disruptions and um you know, certain organizations are going to operate in in uncertain environments, but there just seems to be a lot of broad and interconnected issues happening right now.
Navigating Evolving Risks with Technology
00:02:34
Speaker
So I guess as a maybe just an opening question, how are you seeing leaders navigate the current risk landscape?
00:02:43
Speaker
Yeah, it's a great question, actually. it's It's interesting, right, to see how leaders are adapting today's evolving risk environment. You know organizations are increasingly prioritizing productivity and efficiency, you know, making the most of the resources to drive growth.
00:02:58
Speaker
Technology is at the heart of of the transformation now, right? Interest in AI and digital tools continues to rise as companies seek new ways to stay competitive and agile. As leaders embrace these innovations, the risk landscape shifts as well. it Demands constant vigilance and vigilance and proactive strategies.
00:03:16
Speaker
At the same time, though, Doug, to be honest, leaders are identifying physical risks, right, such as rising sea levels and changing temperatures. You know, it's all over the news, right, which are becoming more significant threats to their properties. They understand the wide-ranging impacts these risks can have on their businesses and are actively seeking ways to strengthen resilience.
00:03:33
Speaker
So the forward-looking insights and data from this middle market survey, as an example, are empowering leaders to make informed decisions. And I think it's future-proof that there are operations against both digital and physical disruptions.
Cyber Risk and Digital Transformation
00:03:44
Speaker
Yeah, so let's stick on that topic of technology and digital because here at the center, we've been monitoring this in the middle market for a number of years. And I would say in the last couple, it's really become prominent to us as we think about the rise of ah of platforms like ai And in fact, in the latest year-end 2025 MMI, cybersecurity was ranked as a top concern.
00:04:09
Speaker
So for your perspective, why has cyber risk become such a major issue and in the risk landscape today? Yeah, I think rapid the rapid pace of digital transformation is probably where where that starts, right? Businesses are adopting new technologies faster than ever, right? Which is expanding the threat landscape.
00:04:29
Speaker
Cyber attacks are not only becoming more frequent, but they're also getting more sophisticated, right, making it critical for leaders to remain vir vigilant. excuse me Today, cyber risk goes beyond just protecting data, right? It's about safeguarding operations, reputation, and financial stability. As a result, cybersecurity has become a board-level priority, prompting companies to reassess their insurance coverage and overall risk management strategies.
00:04:54
Speaker
Yeah, so you mentioned board level priority. I mean, that that's pretty significant in my eyes. And, you know, talking with some other leaders at Chubb, you know, we've heard this kind of shift from just, you know cybersecurity being no longer just an IT t risk, but really a balance sheet risk. Can you explain that a little bit? Tell us what that means.
00:05:16
Speaker
Yeah, absolutely. um What we mean is that cyber risk is no longer seen as just an IT issue, right? It's now recognized as a factor that can directly impact a company's financial health. When a cyber incident occurs, it can disrupt operations, result in costly data breaches and damage reputations, all of which have tangible effect on the balance sheet.
00:05:35
Speaker
That's why managing cyber risk requires a holistic approach involving every part of the organization, not just the IT department. Leaders are increasingly aware of the need for specialized insurance solutions. such as cyber insurance to help protect against these enterprise-wide risks.
00:05:49
Speaker
Furthermore, from the middle market survey, 47% of companies are considering adding that coverage. Ultimately, it's about ensuring the company remains resilient, both operationally and financially.
AI Adoption Challenges and Strategies
00:05:59
Speaker
So as these companies are increasing investment in AI as well as other digital tools, we've also seen that there are some substantial barriers. They're telling us that things like data quality, privacy concerns, even having you know the right people internally, having the expertise to both implement and manage these platforms is is a challenge.
00:06:24
Speaker
If you could share with us what kind of what are you seeing from companies as as they navigate through some of those issues that I mentioned? Yeah, data quality and privacy concerns, I think, are front and center.
00:06:37
Speaker
Businesses must ensure their data is accurate, I think, first and foremost. Secure and compliant regulations. Internal expertise is another major hurdle. you know Many organizations are working to build the necessary skills and the knowledge to manage these new technologies effectively.
00:06:52
Speaker
You know, we're seeing that companies are taking strategic approach, right? They're prioritizing investments in workforce training, focusing on data privacy and developing tailored strategies to address their unique risks. Ultimately, it's about balancing innovation with risk management, right?
00:07:05
Speaker
Enabling companies to leverage new technologies without exposing themselves to additional threats.
00:07:12
Speaker
So I'm glad we spent the first part there really doing a deep dive into technology and and
Industry-Specific Risks and Insights
00:07:18
Speaker
cyber. So i want to move on to some other topics that risks and topics that middle market companies might be experiencing. Tell us a little bit about what some of the other things you're hearing about in some of the industries that you work with.
00:07:34
Speaker
Yeah, well, i you know, When we reviewed the data, right, the middle market indicator, i we focused on overlapping risk across the 12 industries. I mentioned beginning, right, I managed kind of 12 industry practices. So kind of focusing there, right, in addition to cybersecurity, as you mentioned, right, several areas kind of stood out to us or to me, right, starting with regulatory compliance risk, I think is number one, right? This was consistently ranked among the top three risks in nine out of the 12 industries that that were surveyed.
00:07:59
Speaker
You know regulatory and compliance risk increased by 131% over year, year over year, excuse me, in manufacturing. highlighting the rapidly evolving environment. I think a second area, building on that supply chain risk remains a critical concern.
00:08:13
Speaker
While the risk has eased in some sectors, it is still the number one risk for construction, manufacturing, food, and wholesale, and it's tied in the top spot for retail.
00:08:24
Speaker
It continues to be listed among the top three risks more than half of the industry's analyzed. I think next, digitization, right, and technology advancement is emerging. This is particularly true in sectors undergoing rapid transformation. you know For example, digitization risk rose by 52% for life science firms, 70% in financial institutions, and more than 120% in both retail and consumer services year over year.
00:08:51
Speaker
And finally, reputation and brand risk, right? That remains prominent, right? The risk is especially notable in the food and education sectors where it surged by 83% year over year in construction as well.
00:09:05
Speaker
Yeah, those are all really important categories and and ones that we hear from
Trends in Key Industries
00:09:09
Speaker
middle market companies that we talk to and meet with all the time. um So you mentioned you cover about a ah dozen different industries. Are there any you know significant or interesting trends that you could share with us on some of the select industries that you look more closely at?
00:09:25
Speaker
Yeah, I think, you know, definitely we, we, those, those kinds ones we identified, right. But where the analysis, you know, back to the study where we found, you know, where they were somewhat not very, or not at all prepared construction, number one stands out appearing in 12 of the 15 disruption categories.
00:09:43
Speaker
making it one of the most exposed sectors. Real estate falls closely behind, cited in 11 categories, both face a wide range of threats from a property damage and natural disasters to supply chain issues and cyber attacks. Both of these risks are interconnected.
00:09:57
Speaker
A single event can trigger delays, cost increases and threaten long-term success. kind Comprehensive risk management, technology, workforce development and scenario planning, absolutely essential.
00:10:09
Speaker
For food, it's highly sensitive, right? So they were cited in 10 categories. Beyond supply chain and operational risks, the sectors face threats like workplace violence, payment fraud, and environmental incidents. Global supply chain complexity makes contingency planning and supplier partnerships critical for food as well.
00:10:26
Speaker
For educational life sciences, and at least they they appeared in at least half the disruption categories. Education faces new risks like cyber attacks and talent shortages, reflecting in shifts in digital tools and remote learning.
00:10:39
Speaker
Life sciences is pressured by regulator regulatory investigations, lawsuits, and environmental incidents, requiring agility and proactive risk management.
Building Resilience and Risk Management
00:10:49
Speaker
Yeah, those are really interesting and a really ah kind of a great transition to the next topic I wanted to to talk about with you, which is business response and resilience. you You talked about this a little bit earlier, but when you look at companies that are really good at this, you know, they they're thinking comprehensively about Digital, physical, reputation, all those risks that you were mentioning earlier that kind of stood out in this latest MMI data.
00:11:15
Speaker
What would you say are the steps that they're taking to create the biggest impact or or actually build that capability to be resilient and respond when these types of issues arise?
00:11:29
Speaker
Yeah, resilience is becoming a top priority, right, as risks continue to evolve. At Chubb, we define resilience as a business's ability to anticipate, prepare for, respond to, and recover from unexpected disruptions.
00:11:43
Speaker
This means taking a proactive, adaptive approach to risk management to ensure continuity and long-term success. Middle market leaders are increasingly proactive. About half are already planning for long-term resilience and 51% expect to boost investment in resilience for commercial properties in the near future.
00:12:01
Speaker
You know, some key steps in American companies can take right now, right? Number one, keep insurance programs up to date, right? Regularly review and update coverage, especially for DNO or directors and officers liability to stay aligned with changing regulations and exposures.
00:12:16
Speaker
I think two, integrate and test business continuity plans. This is big, right? So move beyond just having a plan. You know test and refine it regularly to ensure readiness for a range of scenarios. And three, address supply chain risks.
00:12:29
Speaker
Right. Review property insurance and consider a contingent business interruption or CBI. Some people call it right to protect against disruptions affecting supply chain partners. By focusing on these strategies, I think businesses can strengthen their ability to withstand and recover from future disruptions.
00:12:45
Speaker
So um you mentioned this a bit, Justin, but I'd like to dive in a little bit more. And it's about one of the terms that we we hear, which is ah many you know many many leaders may not necessarily focus on this, but it's something they should be thinking about on a
Business Continuity Planning
00:13:01
Speaker
regular basis. And it's business-based.
00:13:03
Speaker
continuity planning. So, you know, planning as the world does and and risks that are in the consideration set. So kind of a two-parter here for you. First, give us a brief definition of of what business continuity planning actually is, because we may have some listeners who may not be familiar with it or may call it something else or or whatnot. So starting with a definition, and then second, talk a little bit about about why this topic may not get the type of attention or focus that it may deserve, particularly inside of middle market companies.
00:13:41
Speaker
Sure. So at its core, business continuity planning ensures your organization can keep operating, right? and In the simplest form. It's about having clear well-documented plans in place so you're prepared for a wide range of scenarios.
00:13:57
Speaker
You know from cyber attacks and supply chain failures to extreme weather events. The goal is to minimize downtime, right? That's the goal. Protect your people and assets and ensure you can continue serving customers no matter what happens.
00:14:11
Speaker
that's kind of what it is. But often business continuity planning can feel abstract or a nice to have, right? Until a crisis hits. Leaders may focus on immediate priorities and put off planning for unlikely events.
00:14:24
Speaker
But as recent years have shown, disruptions are having more frequently or happening excuse me more frequently and from unexpected directions. Risks are also constantly evolving. What worked a few years ago may not be enough today, especially with new threats like cybercrime, global supply chain issues, and and extreme weather.
00:14:43
Speaker
That's why it's crucial to treat business continuity as a living process. Regularly review, update, and test plans to stay ready for whatever comes next. i mean, ultimately, companies that invest in robust business continuity planning are able to respond quickly, recover faster, and even gain a competitive edge when disruptions occur.
Advice on Agility and Resilience
00:15:02
Speaker
Yeah, those are all really good points and supports what we talk about here at the center, which is, you know, a lot of times middle market business leaders are tend to focus more time in the business than on the business. So thinking about these types of issues longer term and how they can be best prepared, i think really solid, valuable information and advice for them. So um just as we close out um this discussion, Justin, i ah we typically like to leave our listeners with you know some takeaways or practical advice. So
00:15:37
Speaker
For all middle market companies out there who may be listening, what would be you know one piece of advice or thing you you would share with them to help them for the next wave of disruption? We don't know where that will be, when that will be. It could come in all different shapes and forms as we kind of talked about today. But what would you kind of be your takeaway for those businesses?
00:15:58
Speaker
Yeah, but my advice would be to build agility into your organization. The risk landscape is always changing. So the ability to pivot quickly Whether that's adopting new technology, responding to regulatory changes, or managing unexpected disruptions will set you apart.
00:16:14
Speaker
Flexibility is the key to resilience. Yep. Yep. Totally agree. Well, hey, this has been a wonderful conversation. great having you on today. These are you know really important topics for the middle market, as i've as I said earlier.
00:16:30
Speaker
And the fact that we could kind of get into the weeds a little bit on some of these topics around not only technology, but resilience and business continuity planning, I think it's just extremely important and and glad that we could have you on and really appreciate your time and insights on on today's episode.
00:16:48
Speaker
I really appreciate the time, Doug, and the great work that you guys do as well. And and the partnership, you know, we couldn't be happier. So thank you for all the great work you guys do. All right.
Closing Remarks and Resources
00:16:56
Speaker
Thank you. Well, for more information about Chubb, clearly you can go to chubb.com.
00:17:02
Speaker
And then for the middle market indicator, if you're looking for specific data or to look at some of those insights, you can visit the center's website here at middlemarketcenter.org.
00:17:14
Speaker
And this has been a great discussion as always. And we look forward to talking to you all again next time. Thank you.
00:17:23
Speaker
Thank you for listening to The Market That Moves America. Never miss a new episode by subscribing anywhere podcasts can be found. You can also subscribe to our email newsletter at middlemarketcenter.org.