Four key risks challenging U.S. retail/wholesale, food and beverage sector in 2015: Marsh report

Barring unforeseen events, retail/wholesale, food and beverage (RWFB) companies in the United States that benefited from generally ample insurer capacity and competitive rates at the end of 2014 are expected to see similar market conditions though 2015, notes a market update released Monday by Marsh.

That said, RWFB companies should be taking several steps to rein in the wide range of risks they must confront, notes the statement from Marsh, a global provider of insurance broking and risk management services. The US Insurance Market Report – one of six regional reports that analyze insurance market conditions and risk trends in 62 countries worldwide – suggests that the sector will need to contend with four key risks in the coming year:

Information Privacy and Network Security. Many insurers have stopped writing cyber coverage for retailers, while those still in play are implementing stricter eligibility requirements for coverage. Companies should ensure their cyber insurance policies’ coverage terms and limits are adequate, and help mitigate the risk by performing cyber risk assessments and strengthening internal controls.

Workers’ Compensation. Workers’ compensation continues to be the largest component of the total cost of risk for RWFB companies. With increasing marijuana legalization and the Affordable Care Act (ACA), these could affect WC programs and companies should consider the associated risks. The increased scrutiny from the Occupational Safety and Health Administration should also encourage companies to review their workplace safety programs and policies to ensure they are compliant.

International Insurance Regulatory Compliance. While many RWFB companies are looking overseas to grow, this expansion brings with it several new exposures, including political risk and tax/ regulatory compliance issues.

Government and Regulatory Oversight. With multiple state and federal agencies having increased scrutiny and enforcement actions on several matters (including workplace safety, food safety and fleet management), RWFB companies will need to pay particular attention to ensure they are in compliance with these and other workplace policies.

The report recommends that RWFB companies take steps to rein in the wide range of risks. “Analytics and risk modelling can help companies to better understand and mitigate risks. And strong corporate compliance policies can help RWFB companies to steer clear of regulatory issues,” the statement notes.