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When it’s Important to Stay in the Know.
What the Risks Could Be in 2023
In 2022, companies saw a rollercoaster of social and economic changes, creating uncertainty now over what 2023 will bring. Organizations are feeling the strain – from employee retention to financial stability – and are leaning on their partners, such as their risk management and benefits teams, to be prepared for any obstacles to come. With experts predicting new challenges in the new year, it’s crucial for businesses to understand and help identify risks that may arise.
Below we’ve outlined several factors expected to impact a company’s day-to-day in 2023 – along with recommendations on how to mitigate them. And as always, BCH is here to help you prepare for and navigate the unknown when it matters.
Labor Shortages
Mid-size companies often depend on employees with specific skill sets to operate; without them, production can come to a costly standstill. To combat labor shortages and attract new talent, employers in various industries have improved job benefits, workplace conditions and compensation packages.
Supply Chain Disruptions
Experts predict supply chain issues will continue through this summer before eventually subsiding. To remain operational in the event of a disruption, business leaders can plan to adopt new supply chain technologies, revise contingency plans, prioritize domestic supply chain solutions and search for eco-friendly options.
Inflation Issues
For the property insurance sector, the costs to repair, replace or rebuild structures and their contents after losses have soared due to increased labor and material expenses. Medical and wage inflation are also affecting workers’ compensation and liability insurance segments, but economists predict interest rates will slowly help reduce inflation by the end of 2023.
Recession Risks
Businesses can prepare for a recession by establishing concrete financial plans to maintain profits, scaling back certain operations, promoting steady cash flow, ensuring proper debt management, fostering strong connections with stakeholders and leveraging effective marketing strategies. Above all, it’s important for businesses to maintain ample coverage and secure financial protection against possible losses, as commercial risks tend to rise during such a downturn.
Extreme Weather Events
The insurance industry will need to adapt to more frequent weather-related losses and focus on preparedness to reduce expensive claims. Businesses should also have an emergency plan in place to avoid such risks that threaten operations.
Geopolitical Conflicts
It’s important for businesses to review coverage definitions and have a cyber risk management plan in place to avoid cyber-related losses. Businesses should also prepare for potential international disruptions by prioritizing fuel efficiency, monitoring evolving global trade policies and considering domestic production solutions.
Annual Benefits Cost Growth
Experts are predicting benefits price inflation will continue to rise as a result of volatility in the healthcare market. The average health benefit cost per employee is expected to increase by 5.6% in 2023. At BCH, our benefits advisors are here to find creative and proactive ways to help our clients control healthcare costs now and into the future.
Annual FSA Limit Increases
In October, the Internal Revenue Service (IRS) announced the inflation-adjusted limit for 2023. Salary reduction contributions to health FSAs increased to $3,050, and the maximum carryover limit went up to $610. As an employer, it’s important to communicate benefit plan details and FSA limits during open enrollment.
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