The "It Won't Happen to Me" Trap: Why Business Owners Misjudge Risk
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As a P&C Insurance agent, I talk to business owners every day. They’re experts in their field—whether it’s manufacturing, running a restaurant, or providing professional services. They know their market, their product, and their bottom line.
But when it comes to risk, I consistently see a pattern: a cognitive blind spot where they overestimate their security and underestimate how quickly a single, unexpected event can wipe out years of hard work
It’s the “it won’t happen to me” trap—and the hard data shows just how dangerous that mindset is.
The Data Doesn’t Lie: Your Most Underestimated Threats
When business owners think about threats, they often focus on visible risks like fire or customer slip-and-falls. However, today’s most damaging exposures are often invisible or abstract—until it’s too late.
The latest reports from organizations like the U.S. Chamber of Commerce and Allianz are flashing red alarms about three major risks hitting small and mid-sized businesses the hardest (Allianz Commercial, 2025; U.S. Chamber of Commerce, 2025).
1. Cyber Incidents: The #1 Global ConcernIf you think your business is “too small” for a cyberattack, you’re working off outdated information. Hackers view small businesses as easier targets and backdoors into larger supply chains. In fact, 43 % of all cyberattacks target small businesses, and 80 % still don’t have a formal cybersecurity policy (QualySec Technologies, 2025).
The Exposure: According to the Allianz Risk Barometer 2025, cyber incidents remain the #1 global business risk—cited by 38 % of respondents—followed by business interruption (including supply-chain disruption) at 31 % (Allianz Commercial, 2025).
The Reality: The Verizon 2025 Data Breach Investigations Report (DBIR) found ransomware present in 44 % of all breaches, with small and mid-sized businesses accounting for roughly 88 % of ransomware incidents (Verizon Business, 2025; Infosecurity Magazine, 2025).
The Financial Impact: The median ransom payment was about $115,000, and 64 % of victims refused to pay (Infosecurity Magazine, 2025). The IBM Cost of a Data Breach Report 2025 estimates the average global breach cost at $4.44 million (IBM Security, 2025). And the fallout can be devastating—60 % of small businesses hit by a cyberattack go out of business within six months (QualySec Technologies, 2025).
Bottom Line: Cyber risk isn’t just an IT problem—it’s a business-continuity threat. A robust Cyber Insurance policy covering ransomware, data restoration, and business-income loss is now as critical as your Property policy.
2. Supply Chain Disruptions: When an Event Far Away Shuts You DownYou might have a local shop, but your risk is global. A flood in Asia, a labor dispute in Europe, or a vendor’s ransomware attack can immediately halt your operations and revenue.
The Exposure: In 2025, 62 % of companies reported perceiving global supply-chain risk as “high” or “very high,” and 81 % said their operations had been directly impacted by supplier disruptions (RapidRatings, 2025). Similarly, more than 70 % of business leaders cite cyber incidents within supply-chain partners as their fastest-rising risk factor (WTW, 2025).
The Reality: Cyber incidents such as data breaches or ransomware attacks, and IT disruptions, like the CrowdStrike incident, are the biggest worry for companies globally in 2025, according to the Allianz Risk Barometer. Even after pandemic bottlenecks eased, business interruption (including supply-chain failures) remains the #2 global risk (31 %) (Allianz Commercial, 2025).
The Hidden Cost: Most owners focus on replacement materials but overlook Contingent Business Interruption (CBI)—coverage for lost income when a supplier, customer, or manufacturer suffers a covered loss that impacts you.
3. Employment Practices Liability (EPLI): The Human-Element Risk
You work hard to create a great work environment, so why worry about a lawsuit from an employee? Because today’s legal environment is complex, and claims tied to employment practices are rising—regardless of merit.
The Exposure: Many small business owners don’t carry—or fully understand—Employment Practices Liability Insurance (EPLI), assuming their General Liability policy covers it. It doesn’t.
The Reality: In 2025, the EEOC received 88,531 new charges and secured nearly $700 million for workers (U.S. Equal Employment Opportunity Commission, 2025). Even a single claim can cost tens of thousands to defend.
Typical Claims Include:
Bottom Line: If you have employees, you have EPL exposure. Review limits and defense coverage now—before you face a claim.
Turning Data Into Action: Your Next Step
The truth is, 27 % of small businesses say they’re one disaster away from shutting down (U.S. Chamber of Commerce, 2025). Replace the “it won’t happen to me” mindset with a data-backed strategy:
Your business is an engine of growth. Don’t let an underestimated risk stop it cold.
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