Report: Owners’ and Founders’ Approach to Risk Management Not a Match for Today’s Modern Threats

63% of SME owners believe they’re not at risk for a ransomware attack, with only 28% having cyber insurance policies; tech founders show more awareness, but still lack adequate protection

SAN FRANCISCO--()--In an era of increased business risk, small-medium enterprise (SME) owners and CEOs technology startup founders are falling short in both evaluating these risks and showing the right acumen for risk management, according to a new report released today by Embroker, a digital business insurance platform.

For the report, Big Risks for Small Businesses, Embroker surveyed over 500 SME owners and CEOs and tech startup founders in August 2021. The report found that owners’ and founders’ perception of business risk is not aligned with how they manage and transfer that risk. Owners and founders acknowledged critical business risks like labor shortages and product malfunctions, yet only 22% say they have read and understood all of their policies and half are relying on their brokers to sign up for coverage.

“While many SME owners and startup founders have been experiencing strong growth and financial backing in the past year, modern day risks including cyber attacks, supply chain breakdowns, and remote workforce issues can stop progress in its tracks. This means companies need to constantly evaluate risk and protect their business,” said Matt Miller, Embroker CEO. “Business insurance is a critical element in a company’s growth strategy, allowing a company to effectively transfer risk and ensure that unforeseen events don’t impede their growth – it is not a decision and process you can go through on autopilot.”

“The data shows that while some companies feel that business insurance is like a tax or simply a checklist item, no business should have to suffer a negative impact to their business for risk that is or could be transferable,” continued Miller. “Our mission is to change these perceptions – to demonstrate how business insurance provides value to a company of any size, but especially to the inherent risk-takers that are business owners, founders and leaders. To truly be successful, these owners and founders need to embrace transferable risk as a part of their growth strategy.”

Key findings from the report include:

Owners’ and Founders’ Misaligned Priorities: When reflecting on the risks and liabilities to their business, owners cited their top three risks around reputational harm to the company or brand (43%), product or equipment malfunction (42%), and labor shortage or overworked employees (37%). But, when asked about the areas of focus on their overall business, owners and founders identified a different set of issues: customer retention and growth, generating demand and managing costs.

Understanding and Preparing for Emerging Threats Like Cyber Attacks: SME owners’ lagging knowledge of their policies and risk assessments is leaving them vulnerable to many rapidly emerging risks, especially the risk of cyber attacks like data breaches and ransomware attacks. As business threats intensify and concern grows, both owners (46%) and tech founders (57%) fear they don’t have sufficient coverage in the event of a ransomware attack. But surprisingly the concern about this risk remains low: 63% of SME owners believe they are unlikely to face a data breach or ransomware attack.

Tech Founders, on the other hand, are more aware of cyber risks than other industry business owners. 58% of tech founders believe they are likely to face a data breach or ransomware attack. However, despite understanding cyber risks, tech founders are still not securing coverage, with only 34% having cyber policies.

Broker Reliance for Business Insurance: Owners and founders could be doing more to stay on top of the changes that impact their risk and act on those changes as they evaluate their business insurance renewal. Some owners and founders are engaged: the report shows half of owners and founders rely on the expertise of a broker to sign up for coverage, and 25% rely on the broker to fully research and price out their options. Others are less engaged: 1 in 5 admitted to not knowing how their insurance purchases are handled.

When it comes to policy renewals, though, it’s clear that owners and founders need to have more rigor in their process. Almost one in three (29%) SME owners allow their insurance to auto-renew without making changes, while 74% of tech founders either engage with a broker or have someone internal to assess their needs and options upon renewal.

Owners’ and Founders’ Insurance Acumen Falling Short: Most business owners are aware of risks and concerns when it comes to their business, however very few (22%) have even fully read through their policies or understand the cost behind their policy, with 56% of businesses saying they do not know the exact cost of their business insurance.

To learn more about the business insurance approach for SME owners, CEOs and tech founders, download the full report at:

About Embroker

Embroker is transforming commercial insurance by making it radically simple for businesses to get the right insurance at the best price. Embroker focuses on industry-specific coverage for the most complex and inefficient lines of insurance, such as Directors and Officers, Employment Practices Liability, Cyber, and Professional Liability. Embroker uses predictive modeling powered by proprietary technology to fully automate underwriting and make the buying process simple, fast, and more affordable. Through Embroker Access, Embroker provides partner agencies and wholesalers with the capability to offer all of Embroker’s industry-leading insurance products to their customers. Founded in 2015, Embroker is headquartered in San Francisco and has raised more than $140M in funding from leading Fintech and Insurtech investors.


McClain Stone
104 West Partners for Embroker


McClain Stone
104 West Partners for Embroker