Cyberattacks Pose Greatest Threat to Middle-Market Businesses – Middle Market Growth


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Improvements Over 2020

While the middle market appears more concerned about cybersecurity, business interruptions and regulatory issues, executives said that some of their worries have lessened in the last year.

Pandemic macro risk declined in the minds of middle-market executives as an overall concern. In 2020, it was the third-highest macro risk, but in 2021, it’s fourth, according to the survey.

For every pandemic micro risk in 2020—employee safety, pandemic impact on supply chain, lack of demand, ability to interact with colleagues, customer safety, cash flow, inability to meet demand and travel restrictions—business executives were equally or less concerned in 2021.

As businesses feel less affected by the pandemic, 2021 was more like a transitional year. 2022 will likely give a clearer picture of exactly where business is heading.

“I almost look at 2022 as the first real look at what the new normal will be for people,” says Williams. “A lot of government programs are gone, and in 2022, we are going to be dealing with—OK, here’s how much it costs to make my product with labor, here’s what my parts are costing, here’s my logistics costs and what does that mean for what my business model looks like.”

Also, reputational risk dropped two spots from 2021 to 2020 in the macro-risk ranking from sixth to eighth place. Within reputational risk, actions of errant employees was cited as the biggest risk factor.

During 2020, as social media platforms continued to grow and become more video-centric, some employees were caught on camera taking actions that embarrassed employers.

As tempers flared during the racial-justice marches in the summer of 2020, businesses cited this as a top concern. But in 2021, 13% cited actions of an errant employee as a top risk, down from 25% in 2020.

Another issue that dominated the fears of some middle-market businesses was the worry about a pending recession.

The survey showed that the macroeconomic risk category dropped two spots to 11th place as a top macro concern. Among the biggest drop within this macro risk category, the micro risk posed by a recession/economic downturn was less concerning in 2021 compared to 2020.

That decline is to be expected. In 2020, the specter of the 2009 crash loomed large in business leaders’ minds as some companies made preemptive layoffs in anticipation of a major downturn as businesses closed. But a recession did not materialize, and now it appears the pandemic is more under control.

In 2021, 16% of respondents said that a possible recession was concerning to their businesses compared to 23% in 2020. Twenty-seven percent said it was a top risk in 2021, compared to 35% in 2020.

“I don’t anticipate a recession, but we avoided a recession by pumping so much money into the system that the rising tide raises all the boats. The question is what the cost is, and now we have these big infrastructure bills that are on the table, which will increase the national debt. Is that OK? Opinions vary,” says Howard Brownstein, a turnaround and crisis management professional and president and CEO of Pennsylvania-based The Brownstein Corporation. “The danger of a recession isn’t any likelier as we come out of the pandemic. The risk goes down because businesses can do business normally again, but it’s too soon to declare victory over the pandemic.”

HawkPartners surveyed 302 US midmarket decision-makers at companies with revenue ranging from $200 million to $3 billion. QBE Insurance Group Limited, Australia’s second largest global insurer, sponsored the survey.

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