Deteriorating Confidence: Small Businesses Face Geopolitical Risks

The landscape for U.S. businesses has shifted dramatically in just a few months, revealing a landscape fraught with uncertainty and concern. A recent survey from Sentry, the mutual insurer, found that 82% of executives now express greater anxiety about their company’s future than they did at the beginning of the year, reflecting a profound transformation in business sentiment due to various geopolitical risks. This midyear report from Sentry's 2026 C-Suite Stress Index highlights not only the grim outlook but also the urgent need for businesses, particularly smaller ones, to rethink their risk management and long-term strategies.

As geopolitical tensions rise, the implications for American businesses are becoming increasingly severe. The survey results indicate that nearly all executives—98%—acknowledge the impact of recent global events on their strategic planning. This sentiment is particularly acute among smaller firms, which are often more vulnerable to economic shocks. With 90% of executives from companies employing 10 to 49 people expressing heightened concerns, the survey underscores the structural challenges faced by smaller enterprises. In contrast, larger organizations with over 1,000 employees reported a lower concern rate of 69%, highlighting the differing resilience levels based on company size.

Understanding the Shifting Landscape of Business Confidence

Business confidence typically reflects the economic environment, influencing decisions on investments, hiring, and strategic planning. The recent survey from Sentry showcases a sharp decline in confidence due to an array of factors, including:

• Geopolitical Instability: Ongoing tensions in global trade have created an unpredictable environment for businesses.
• Supply Chain Disruptions: Nearly two-thirds of executives reported experiencing negative impacts from geopolitical events, which have disrupted logistics and operations.
• Labor Shortages: The ongoing challenge of finding qualified labor has compounded operational difficulties.

These factors have led to a significant increase in executive anxiety, with concerns over supply chain and logistics disruptions rising by 17 percentage points to 62%. Similarly, fears regarding tariff and trade uncertainties have climbed by 13 points to 52%, while worries about labor shortages increased by 11 points, reaching 49%. Such statistics paint a picture of a business environment that is not only anxious but also reactive, as companies scramble to adapt to rapidly changing conditions.

The Impact on Small Businesses

Small businesses, particularly those with fewer than 50 employees, are feeling the effects of these geopolitical risks more acutely. With limited resources to absorb shocks, these firms are often at a disadvantage compared to their larger counterparts. Brett Hoopingarner, Sentry's national sales director for direct writer and life and annuities, emphasized that resilience isn't merely a function of size but rather the agility to adjust to changing circumstances.

As a result, 70% of executives are shortening their planning horizons to remain agile in the face of uncertainty, while 61% report incorporating more contingencies into their strategies. The rapid pace of change—88% of executives acknowledged the difficulty in managing evolving risks—means that firms must be prepared to pivot quickly. Jeff Cole, assistant vice president of national accounts at Sentry, noted that the evolving nature of risks requires organizations to reassess their exposure regularly, allowing for greater flexibility in decision-making.

Advisory Opportunities for Agents and Brokers

The findings from Sentry’s survey indicate a growing opportunity for insurance agents and brokers, particularly those working with small and midsize businesses. With many small business owners feeling overwhelmed by the complexity of current risks, there is a pressing need for expert guidance. A significant portion of these leaders are actively seeking advice on how to navigate operational uncertainties.

Furthermore, insights from Gallagher, another research entity, revealed that 63% of business owners are concerned about supply chain disruptions but remain largely unaware of how limited their contingent business interruption coverage is against tariff-related triggers. This gap presents an opportunity for agents to conduct direct reviews of clients’ contingent business interruption limits and supply chain dependencies. By proactively addressing these coverage gaps, brokers can help their clients mitigate risks effectively.

The Legal Landscape and Trade Policy Uncertainty

As businesses grapple with these challenges, they must also navigate the evolving legal landscape surrounding tariffs. Earlier this year, the Supreme Court ruled that the administration exceeded its authority in imposing broad emergency tariffs. However, this ruling has not eliminated trade policy risks; rather, it has created a more complex environment, as the government retains the ability to target specific products or countries.

This uncertainty means that advisors must remain vigilant and adaptable, ready to help clients respond to potential shifts in trade policy. As businesses seek to understand their risks better, brokers must provide comprehensive insights on how changing regulations could impact their operations and bottom lines.

Key Takeaways

• 82% of executives are more concerned about their company's future than at the start of the year.
• Small businesses, especially those with 10 to 49 employees, are particularly vulnerable to geopolitical risks.
• 70% of executives are shortening planning horizons and 61% are adding contingencies to their strategies.
• There is a growing advisory opportunity for brokers working with small and midsize businesses.
• Recent legal rulings have added complexity to trade policy, necessitating proactive risk management.

Frequently Asked Questions

What are the main concerns driving the decline in business confidence?

The primary concerns driving the decline in business confidence include geopolitical instability, supply chain disruptions, and labor shortages. As these challenges become more pronounced, they create an environment where businesses feel less secure about their futures, prompting many executives to reevaluate their strategies and risk management practices.

How can small businesses effectively manage these risks?

Small businesses can manage these risks by shortening their planning horizons and incorporating contingencies into their strategic plans. Regularly reassessing risk exposure and working with trusted advisors or insurance brokers can also provide valuable insights into how to navigate the complexities of the current business landscape.

What role do insurance brokers play in this changing environment?

Insurance brokers play a crucial role in helping businesses understand and mitigate their risks. As small businesses face increasing uncertainties, brokers can offer tailored advice on coverage options, ensuring that clients are adequately protected against potential disruptions, particularly related to supply chains and tariffs.

How can businesses prepare for potential changes in trade policy?

Businesses can prepare for potential changes in trade policy by staying informed about legal developments and engaging with their insurance brokers to review their contingency plans. Actively assessing their supply chain dependencies and ensuring they have appropriate coverage in place will be vital in mitigating the impact of any sudden changes in trade regulations.