In-depth - mid-market: Making connections

The business services sector is the mid-market in a microcosm. It is large and made up of a disparate group of disciplines – everything from IT and procurement to legal and facilities management for third parties.

It’s an important (and growing) area employing over three million people across the UK and, according to Deloitte, 12 of the 50 fastest growing occupations fall into this sector. 

Their raison d’etre is to support their clients and in bid to make that support ever more efficient and effective, they have become ever more digitally connected to their clients. And in the case of IT providers, are often their client’s entire digital capability.

But with that digital connectivity and efficiency comes risk.

“The more interconnected they are, the more services they use over the internet, the more risk they inherit,” says Jonathan Pope, CEO and co-founder of Corax, a firm specialising in cyber risk analytics.

The risk that many companies face in this interconnected world is that when one company experiences a disruption to service, be that as the result of a cyber attack or other systems failure, it can have a knock-on effect down through the chain.

“The main risk is primarily contingent business interruption and being affected indirectly by another company’s issue,” adds Pope.

Experiencing a systems failure as a company is bad enough but when you are the company that others are reliant upon for their own operations, the threat starts to look very unpalatable indeed. 

The more interconnected they are, the more services they use over the internet, the more risk they inherit

Jonathan Pope

But as Accenture’s Andrew Barratclough explains, the youthful nature of the cyber insurance market means that there isn’t a lot of real understanding about what the policies can and can’t do in the event of an attack.

“Underinsurance in cyber market is a major problem,” he says. 

“Because cyber is very new and softening, it means that a company’s appetite to spend additionally on risk management services is slim. But I would argue that a broker has a duty of care to ensure their client’s risks and needs are dealt with. And if you are not doing that, another broker will be.”

In line with their mid-market brethren in other sectors, the focus is increasingly on prevention which of course opens up opportunities for brokers. 

But many of the sectors within business services require specialist knowledge and if brokers are to avoid the threat of litigation, they really do need to know what they are talking about in order to properly service these clients, particularly in emerging cyber risks.