Managing Profitability Risks in Uncertain Times

From inflation and global tensions to cybercrime and climate change, companies are navigating what feels like a complex maze. The path to profitability is increasingly more complicated and less forgiving.

According to a recent HUB survey, these are the biggest profitability threats business leaders are facing in 2025:

Rising costs – Inflation may be easing, but expenses keep climbing on everything from insurance and benefits to property coverage and trade.

Operational disruption – Geopolitical tensions and shifting tariffs are triggering supply chain delays, cost spikes and quality concerns.

Climate risk – Natural disasters caused $151 billion in losses globally in 2024,¹ and could reach $38 trillion by 2050.² From hurricanes to wildfires, companies are experiencing firsthand the effects of climate change.

Cyber threats and AI fraud – AI-driven scams and deepfake attacks are on the rise, costing businesses $1 trillion last year alone.³

Workforce instability – Employees are switching jobs for small raises, raising turnover costs and straining productivity.

The HUB EDGE

Given the many ongoing challenges to profitability, companies need to take a proactive approach to managing their risks and protecting their bottom line. However, 73% of North American businesses are underinsured against key risks. This highlights the urgent need for organizations to not only secure more comprehensive insurance coverage but also develop stronger resilience strategies that address organizational vulnerabilities.

Here’s how forward-thinking leaders can stay one step ahead of profitability risks:

Get Clear on Your Vulnerabilities

No two businesses face the same risks. The degree of risk and appropriate mitigation strategy varies greatly by organization, industry and unique circumstances. That’s why risk management can’t be one-size-fits-all. Start with a top-to-bottom assessment of both internal and external threats, including supply chain gaps, aging infrastructure, cyber threats and even talent engagement and retention.

Specifically, companies should assess their exposure to supply chain and property risks and ensure they do not sacrifice quality and safety because of material cost increases or shortages. For example, opting for lower-grade materials can introduce new safety risks and potential claims, particularly in high-risk industries like construction and real estate.

And with climate-related risks escalating, whether it be wildfires in Canada and California or increasingly catastrophic hurricane seasons sweeping the southern U.S., organizations need to evaluate their exposure to severe weather events.

Stress-Test Your Coverage

Your insurance from two years ago might not be sufficient today. Regularly audit your policies for gaps, overlaps or outdated limits, especially for emerging risks like cyber and business interruption. Updating business interruption exposures and the estimated financial impact is critical to ensure the right protection is in place if a business must shut down for a covered reason, like catastrophic weather or a cyberattack.

It's just as important to understand your dependence on certain suppliers or customers and how a disruption to their operations could impact your business. This not only satisfies strict reporting requirements found in some property policies, but also sheds light on uninsurable exposures that require proactive risk management. An experienced broker can help identify smarter risk transfer solutions, negotiate better terms and align your coverage with your current risk profile. They can also help you explore ways to manage rising premiums, like optimizing deductibles, bundling policies or even restructuring your program altogether.

To help retain top talent, companies should evaluate their benefits strategy. Employees are more likely to be more productive and less likely to leave if they feel valued; offering a Quality Employee Experience (QEX) can be the differentiator in the battle for talent.

Use Tech to Stay Ahead

Advanced data tools and AI-powered analytics give businesses a clearer picture of where they’re most vulnerable and where they’re wasting money.

Tools like HUB’s Stochastic Cost of Risk Evaluation (SCORE℠) can evaluate and offer in-depth insights on nearly every line of coverage. SCORE can generate numerous loss scenarios, such as catastrophic weather events, the likelihood of those scenarios taking place in the policy year, and possible loss outcomes if these events were to occur. Other tools can help monitor equipment, assess real-time risk exposures and flag weak spots in your operations. These capabilities enable you to plan for a multitude of situations instead of reacting to what’s already happened.

For health benefits, predictive analytics and clinical informatics can provide insights into future costs and risks, while an early warning system in your claims analytics package can flag serious health conditions and offer ideas to control costs or optimize outcomes.

On the cybersecurity front, a broker with access to cyber benchmarking tools can help evaluate your security posture and recommend the right level of protection for your budget.