Leaders of lower middle market companies are steering through a complex landscape, with global interconnections and technology creating substantial opportunities – and significant risks. 

Their most pressing challenges are spotlighted in the Middle Market Indicator 2025 Fall Update, which surveyed 1,000 executives from companies with $10 million to $1 billion in annual revenue, including hundreds from lower middle market companies.1

Respondents revealed top risks as: (1) supply chains, (2) cybersecurity, and (3) advancing technology and digitization. According to the survey, these risks weigh especially heavy on lower middle market companies. 

Recognizing the Risks 

Executives at lower middle market companies are feeling the uncertainty of today’s environment. The survey made it clear that they realize that supply chain disruptions – triggered by climate events, economic volatility, geopolitical instability, even shocks to secondary suppliers – can quickly cascade and jeopardize operations. These companies are in the very early stages of preparing for these disruptions:  only 6% engage resilience-building services, 29% work with a third party on business continuity planning, and 27% consider contingent business interruption (CBI) insurance.

At the same time, leaders view technology as both a competitive necessity and a source of concern. Advancing AI and other technology hold great promise, especially in increasing operational efficiency, improving customer experiences and reducing operational costs, according to the survey. However, it requires balancing potential downsides arising from data security and privacy, accuracy and reliability, and the costs of new technologies. Just 56% of lower middle market companies reported that they are very or extremely prepared for cyberattacks. Less than half (44%) carry cyber insurance, according to the survey.  

Turning Awareness Into Action

Greater preparedness is within reach, and lower middle market companies, by virtue of their scale, have a key advantage: agility. In addition, more than half (58%) of lower middle market leaders say they are very or extremely reliant on brokers to help them manage risk. These relationships can open the door to robust resources to mitigate risk and accelerate readiness.  In this endeavor, three actions stand out: 

  1. Investing in Business Continuity Planning.  A business continuity plan prepares an organization and its employees to weather disruptions -- from cyberattacks and natural catastrophes, to supplier failures. The process requires mapping mission- critical processes, identifying potential points of disruptions, and developing recovery playbooks for various scenarios. It should be an enterprise-wide effort: Operations, sales, IT, HR and leadership all have a role to play. An insurance carrier can facilitate the process, helping to uncover blind spots, strengthen preparedness – and provide wide-ranging services to build resilience for physical properties. 
  2. Assessing Business Interruption Insurance. Companies should work closely with their brokers to evaluate the coverage they have in place for potential disruptions—whether from damage caused by extreme weather or issues involving third parties. Standard Business Interruption coverage, which protects against losses arising from physical damage-related disruptions, is typically included as part of a commercial property policy. For more complex risks, such as supply chain delays, companies may require adjusted limits or may need to explore additional coverage options, such as contingent business interruption (CBI) insurance, to ensure comprehensive protection.
  3. Elevating Cyber Readiness:  With the increased digitization of business, cyber resilience has become synonymous with business resilience. Cyber insurance provides essential protection for a company’s reputation and financial stability.  It can also provide middle market companies with access to vital services, such as data-driven vulnerability assessments, resources to harden defenses and incident response capabilities.

The challenges of supply chains, cyber threats, and fast-moving technology can seem daunting. They are also surmountable. With a clear understanding of vulnerabilities, trusted partnerships and decisive action, lower middle market companies can skillfully navigate their greatest risks – and continue to thrive.

Chubb partners with the National Center for the Middle Market (NCMM) to support the Middle Market Indicator (MMI), a semi-annual research survey launched in 2012. The MMI polls executives (CEOs, CFOs, and other financial decision makers) from middle market companies with $10 million to $1 billion in annual revenue. For our Mid-Year Updates and to sign up for future survey reports, click here.

1. For the purposes of the survey, Lower Middle Market is defined as companies with $10M to <$50M in revenue. 

 

 

Rob Poliseno
Division President, Small & Lower Midmarket, Chubb North America

 

 

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