Caution Ahead in 2025

Nuclear Verdicts and extreme weather are among business leaders' concerns in 2025, with 82% of respondents to a recent survey saying they believe a multi-million dollar verdict against them would put them out of business, and 76% expressing uncertainty that their insurance would cover six months of payroll following a severe weather incident.

Sentry’s 2025 C-Suite Stress Index, which analyzes the top external challenges threatening 1,000 executives’ bottom lines in 2025, found that economic uncertainty (47%) is seen as the biggest threat, followed by supply change challenges (44%); employee health care costs (41%); labor shortages (38%); and inflation (36%).

External Threats Challenging Executives

“The unpredictable nature of these external factors makes planning difficult, putting leaders under pressure as they search for ways to shore up their businesses,” states the report. “Most executives (67%) feel more stressed at the onset of 2025 than the prior year.” Meanwhile, 25% anticipate downsizing or going out of business this year, and nearly all (97%) have put off upgrades due to cost pressures or scarce resources, including upgrades to business equipment (48%) or technology (47%).

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Furthermore, only 26% of executives are “completely confident” their insurance coverage is adequate, prompting them to plan for reevaluations this year. However, “for many business leaders, anxiety over the coming year does not necessarily equate to pessimism,” as almost half of leaders surveyed believe their businesses will not only survive, but thrive, in the year ahead.

“Many company leaders are actively taking steps to better shore up their businesses—often relying on existing technology and equipment to maintain the health of their company. However, it’s hard to invest in operations when expenses are rising and uncertainty looms. Many businesses are preparing for potential headwinds by making the tough decision to delay upgrades to their existing equipment and infrastructure. By taking a more cautious approach, businesses are likely weighing near-term risks and short-term costs with the long-term benefits of upgrades to their operation.”

The Risks of Inaction

“Dated equipment and systems pose risk—particularly in industries that rely on machinery to drive production and maintain a competitive advantage. Equipment failure can lead to costly repairs, logistical headaches, and extended downtime. Additionally, a malfunction in specialized equipment often necessitates sourcing hard-to-find-parts further delaying the delivery of products to customers.” The report notes that as leaders focus on maximizing existing resources, regular inspections and proper maintenance will be critical. A proactive approach can help identify problems, minimize repairs, and keep operations smooth.

Furthermore, cyberattacks are continuing to impact businesses of all sizes and industries. Thirty-three percent of executives listed cyberattacks among the top threats to their company in 2025. As leaders postpone updates to their technology and cybersecurity systems in the coming year, businesses will need to assess their vulnerabilities to protect sensitive data.

Labor Market Pressures Workers and Increases Risk

“The lack of available workers for labor-intensive tasks poses risks for both employees and their employers,” emphasizes the report. Across industries, leaders are requiring workers to do more with less; for instance: 48% admit employees are pressured to work longer hours and/or take fewer breaks; 81% say employees are being assigned tasks outside their roles and/or training; 43% have increased output expectations for employees; and 40% have shortened training cycles to get workers into roles quicker.

A major concern is that safety efforts are being overshadowed by demand. Twenty-four percent of executives have put off improvements to safety protocols due to cost, the survey found. “Leaders are relying on their employees to take on extra responsibilities that could put their workforce and company at risk. Many companies are asking employees to take on tasks that go beyond their experience, which can contribute to an increase in worker injuries.”

Eighty-two percent of executives are responding to this issue by planning to boost investments in safety during 2025. “However, these ambitious safety plans will only succeed if they don’t get overshadowed by the growing pressure to increase output without proper coaching,” states the report. “As labor shortages remain a dominant perceived threat, leaders who plan to spend are prioritizing staffing, particularly: increasing worker retention rate (49%); [and] making employee recruitment easier (45%).”

Furthermore, executives who plan to invest in worker safety also plan to focus on reducing lost work hours or curbing workers’ compensation claims (61%); and increasing operational output (48%).

Extreme Weather Raises Concerns

“With 54% of companies unable to remain in business longer than 60 days without generating any income—and another 11% unable to withstand even a single day without income—it’s clear most companies have very little financial cushion to fall back on should a natural disaster interrupt their business,” according to the report. “Smaller companies, in particularly, face mounting challenges, as 17% of executives at companies with 10-49 employees believe they wouldn’t be able to remain in business a single day without generating income.”

Concerningly, most executives (76%) are not completely certain their insurance would cover six months of payroll following a severe weather incident that significantly impacts their revenue. Other companies, however, appear to be either over-confident in their abilities to successfully withstand a severe weather incident, or unfamiliar with how their businesses could be interrupted if one occurred. In fact, “executives at companies that anticipate surviving 30 days or fewer without generating income are the least concerned—47% say they don’t fear a business-shuttering event from the next severe weather incident.”

One reason for the gap in perception could be outdated ideas of where—and when—severe weather strikes. “An incredible 90% of executives say their businesses have been impacted by severe weather events during the past five years,” states the report. “However, the impacts weren’t limited to the businesses themselves. Thirty-nine percent experienced supply chain disruption that created delays, and 34% had employees who were unable to come back to work due to these incidents. [Sixty three percent] of leaders cited outages that left company, customer, or vendor systems unable to operate.”

Businesses throughout the country are becoming increasingly vulnerable to extreme weather events, regardless of their geographical location. As a result, “more than one-third of executives (35%) plan to reevaluate their company’s insurance policies this year because their area has started to experience new kinds of natural disasters,” according to the report. “In the year ahead, businesses will need to prepare for navigating unforeseen outages as weather patterns shift.”

Nuclear Verdicts: A Growing Concern

“Nearly a quarter (24%) of executives initially identified lawsuits among their top five threats in 2025,” according to the report. “However, this perception increased substantially when leaders were asked about the risk to their own industry and business,” suggesting a disconnect between perceived risk to others, while underestimating the risk of a large verdict to their own operations.

Seventy-two percent of executives believe that increases in litigation and Nuclear Verdicts are a problem for the industry, and 82% believe a multimillion-dollar verdict against their company would put them out of business. As a result, “59% [of leaders] report increasing their liability insurance to help cover the cost of litigation.” The report recommends a two-pronged approach toward avoiding nuclear verdicts: “take a safety-first approach to daily operation—including hiring practices, training programs, and accident protocols; [and] carry sufficient insurance to cover potential litigation expenses.”

Of the 97% of executives who plan to reevaluate their insurance policies in 2025, 43% plan to reevaluate their policies with an eye to adding insurance coverage to lower risks, while 38% are looking to shore up areas where they are not currently covered but know they should be. As far as risk, “38% prefer to pay more now than later—looking for policies with higher premiums to avoid deductibles they can’t afford—[and] 28% choose to keep money in reserves to cover higher deductibles, allowing them to take advantage of lower premiums.”

Twenty-three percent of executives are willing to accept some level of risk in an effort to save costs; however, this tactic is best suited for safety conscious businesses who have demonstrated a history of few or no accidents, states the report. “While priorities may vary, an overarching theme remains: business leaders see a growing set of risks on the horizon, and they’re seeking ways to balance short-term costs without compromising their long-term protection.”