Bradford explains, “There are some complex issues driving this. Part of it is that losses increase with the growth in the economy. More trucks on the road mean more accidents, for example.”

One area seeing particular increases in the risk profile, he adds, is workers’ comp. Other areas include tort liability, wage and hour litigation and regulation and lawsuits against directors and officers—especially concerning mergers and acquisitions—which he says have increased during the economic recovery.

He notes, however, that companies do not need to sit idly by and watch their risk profiles increase at this time. Rather, they need to identify the areas of heightened risks and address them proactively.

Areas identified by Advisen where critical changes to a company’s risk profile can occur include:

• Workers’ compensation claims, which can surge as companies add less experienced workers.
• A rise in the likelihood of lawsuits caused by employee errors.
• Liability claims triggered by temporary workers not covered under most insurance policies.
• The likelihood for more companies to be charged with labor law violations.
• An increase in the probability that company directors will be sued by shareholders as merger and acquisition activity picks up.

“Concerns about increased risk should not keep any company from taking full advantage of an improving economy,” Bradford says. “On the other hand, companies should not let growth overwhelm prudent risk management. By understanding where within their organizations exposures are likely to increase, business owners and managers can take steps to keep risk in check without dampening growth.”

The report outlines how companies and their brokers can identify areas of increased risk. It recommends steps to mitigate and manage increased exposure to loss, including:

• Maintaining high standards when hiring new employees. Corners should not be cut on conducting thorough interviews, checking references and where appropriate, investigating backgrounds.
• Senior management should clearly communicate that proper training and supervision of new employees is a high priority during a growth phase.
• Carefully evaluating policies concerning temporary workers, balancing the benefits of a flexible workforce against the liability issues temporary workers pose.
• Reassessing policies concerning independent contractors, especially considering the heightened emphasis by the Department of Labor on properly classifying employees.