Risk, Managed — August 2022 Newsletter

Labor Day weekend is fast approaching, and you know what that means: the dog days of summer are well and truly over. With schools already back in session in large parts of the country, many parents have gotten a taste of the fall rush. We hope you’ve managed to get some rest over the last few weeks, because with Q4 around the corner, the real fun’s about to begin.

In our last newsletter, we put the focus on the recessionary fears that have been casting a shadow over the economy all year long. It doesn’t look like the risk of an economic downturn will disappear anytime soon. In fact, with continued pressures from rising inflation and interest rates, plus the upcoming midterm elections, the risks keep mounting. We hope that our Harry Potter reference off the top was enough to help you to gulp down the stress.

So this time, we’re going all in on managing those risks. Our August Newsletter is dedicated to all things risk management. We’ll discuss the major current trends and developments, and share some valuable resources to help you manage your business risk before the busy season starts. It’s risk, managed.

Risk Management Resources for Businesses

Putting together an effective risk management plan is no easy task. This guide provides a step-by-step approach to creating your own plan for tackling business risks. 

How can small businesses manage risk? This guide from the US Small Business Administration (SBA) provides a useful overview of how small businesses can manage the risks they face.

In order to learn how to calculate business risk, we have to understand what kind of risk-taker we are. Find out what your risk archetype is by taking this quiz. 

Federal Reserve Heightens Risk Sentiment 

Federal Reserve Chair Jerome Powell rebuffed expectations of tempering the Fed’s monetary tightening by delivering a stern message that interest rates are going higher for a longer period of time. The comments indicate that the fight against inflation will be more painful and drawn out than investors had hoped. Investors reacted negatively to Powell’s comments, with global markets shedding some $2 trillion in value in the aftermath. 

Powell’s critics included Senator Elizabeth Warren, who expressed worries that the Fed’s actions will tip the economy into a recession. Warren’s comments add to concerns that have been expressed throughout this year by business leaders and politicians alike that the fight against inflation risks pulling the country into an economic downturn.

For businesses, the heightened risk sentiment makes risk management more difficult but also more urgent. VC firms, for example, are synonymous with risk, but the kind of risk-taking that can lead those firms to success is only achievable with a solid risk management plan in place. 

For small business owners across the country, taking steps to recession-proof their businesses is crucial in getting a head start during economically volatile periods. And while having the right insurance coverage is always a good idea, it’s especially necessary in the face of an economic downturn. Deciding on what type of business insurance you need, such as for small businesses, for example, is the most effective way of helping you manage your business in the face of mounting risks. 

Risk Managed: Investor Appetite Grows, Risk Sentiment Declines

Investors’ Risk Appetite Grew This Month, but Their Expectations Sank Lower

Investor sentiment hit a new low in August as equity markets in the US and worldwide continued to absorb pressure from geopolitical tensions, high inflation, and central bank tightening. 

The results from S&P Global’s last Investment Manager Index monthly survey indicated that only 15% of surveyed investors raised their earnings expectations for the third quarter, while 36% revised earnings downward. On the other hand, investors’ risk appetite improved from July, as investors held on to the promise of stronger shareholder returns. 

These results indicate that investors are having a tough time navigating the current economic risk environment, much like everyone else. For business owners and startup founders, this kind of investor uncertainty adds to the challenges of managing the risks faced by their companies. As the findings in Embroker’s Startup Risk Index Report show, investors are not always in agreement with founders and owners when it comes to what kind of external and internal risks are most important for businesses to address. That’s why it’s important for businesses to assess the role the investor factor plays in their risk management strategy.

What’s New from Embroker?

The Startup Risk Index Report, based on a survey of over 500 VC-backed startup founders in the US, analyzes how founders think about risk from both an individual and a business perspective.

Based on Embroker’s Risk Index Survey, find out how founders think that the recent Roe v. Wade decision will affect their hiring practices, employee relationships, and reputation.

Like What You’re Reading?

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