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After years of contraction, staffing firms are under pressure to grow—but not all revenue is created equal. Learn how smart risk management can help staffing leaders avoid costly exposures, evaluate high-risk relationships, and protect long-term profitability in a changing industry landscape.
After several years of industry constriction, today’s staffing leaders are laser-focused on their bottom lines. But if they’re not careful, what seems sensible for generating short-term revenue could lead to long-term financial losses.
“We understand that staffing companies can sometimes face challenging contractual exposures and business decisions,” says Craig Hand, an executive risk consultant for Philadelphia Insurance Companies (PHLY), a national property/casualty and professional liability insurance carrier that designs, markets, and underwrites commercial products and services.
The good news is you don’t have to go it alone: “Many insurance carriers have experienced risk-management teams that can help identify risk and develop strategies to manage it effectively,” Hand says. “When risk feels uncertain, that’s exactly when a strong risk-management partner can help you evaluate the exposure and determine whether the opportunity aligns with your organization’s long-term business goals.”
For example, as part of his work for a client, Hand and his team did a comprehensive analysis of the company’s losses. “We calculated that, over a four-year period, 54% of their claims were due to one partner that represented only 6% of their revenue.” Digging deeper, Hand then reviewed the client’s business relationship with that specific partner.
Hand’s team led the client through a series of meetings focused on risk management. They talked about how, in this instance, the short-term revenue growth the partner generated was being eclipsed by the long-term cost associated with their losses. Ultimately, the client decided to sever ties with the company driving the claims. “In many cases, removing a single high-risk exposure or partner relationship can dramatically improve a company’s loss experience and overall profitability,” Hand says.
His story underscores the power of good risk management. “Risk management helps policyholders view their operations and relationships from a different perspective,” Hand says. “With so much happening day-to-day, it’s invaluable to have dedicated insurance expertise to analyze loss trends and identify loss drivers.”
Fortunately, by finding the right partners and following best practices, staffing leaders can better manage risk and maximize profitability in the long run.
What Is Risk Management?
Broadly speaking, risk management refers to the actions employers take to minimize the likelihood of any hazards that can result in financial losses. In the staffing industry, that could include employee theft, worker injury, property damage, or unsafe conditions.
Because risk, by its nature, focuses on what could happen, it’s tempting for leaders to prioritize the revenue they know will result from new contracts. After all, isn’t dealing with risk what insurance is for?
“Insurance is a risk-transfer mechanism—so that, if a loss should occur, subject to the terms and conditions of the policy, it becomes covered,” says Margarita Hambrock, vice president of PHLY’s staffing division, World Wide Specialty.
That said, staffing-firm leaders also play an important role in risk management. “They have control over the protocols that are utilized, which ultimately have a huge impact on the way their business performs,” Hambrock adds.
Moreover, with the staffing industry showing the first signs of growth postpandemic, now is the opportune time to develop an airtight strategy. Industry revenue is projected to increase 3% in 2026, according to Staffing Industry Analysts. In addition, ASA data indicates that staffing employment is steadily ticking upward as well—and has been since the third quarter of 2025.
STEP 1: Assess Markets and Trends
Addressing risk effectively requires an understanding of the entire business landscape. That means tracking trends for both the staffing industry and all the verticals that your clients occupy.
To grasp what each player is experiencing, staffing professionals “have to be active, and they have to be well-read,” says Hambrock, who recommends attending staffing conferences and reading applicable industry magazines and websites.
Premiums are impacted by everything from inflation to remote work to large recent jury awards in employment litigation. Hambrock also notes a recent rise in mergers and acquisitions, which can result in increased claim costs if business leaders enter into them without understanding pertinent risks.
“Staffing companies should be very familiar with the specific industries they are involved with, as well as regulations and pertinent laws,” Hand says.
Artificial intelligence (AI) is another industry game-changer. In fact, 21% of large companies have already replaced contingent workers with automation, according to SIA. “I encourage clients to explore the benefits of AI, while understanding the operational and compliance risks that come along with utilizing new technology,” says Hand. He adds that ASA provides many resources for understanding the benefits and drawbacks of AI.
STEP 2: Analyze Your Specific Risks
Next, it’s time to get granular. Start by reviewing your company’s claims history to gauge patterns.
“Taking it to the next level, I would advise organizations to keep records of incidents—even if they’re not required to,” Hand says. In addition to tracking on-site injuries and near-misses, staffing leaders should encourage open communication with their employees.
“Oftentimes, we see claims that resulted from an employee not being properly trained or certified on a specific job function,” Hand says. “It’s important that staffing firms identify and prevent these occurrences.”
It’s also vital to work with trusted partners who understand your business—such as ASA, your insurance company, and your insurance agent—Hand explains. “Use these organizations to your benefit; they have the industry knowledge to really help.”
“The insurance agent representing the staffing firm needs to be a staffing specialist,” Hambrock adds. Many agents have only one or two staffing accounts and lack the necessary familiarity with comprehensive coverage and contractual language, she says.
The desire to offer targeted staffing expertise is what drove PHLY to acquire World Wide Specialty Programs Inc. in 2021. For more than 60 years, World Wide Specialty’s insurance products have been carefully designed to meet the staffing industry’s unique needs.
STEP 3: Act to Mitigate Risk
Of course, doing research won’t help unless you’re willing to act on what you find. “You need to implement corrective action to avoid recurrence,” Hambrock says. What that looks like depends on what your analysis reveals. In the opening anecdote about Hand’s client, it meant moving away from a company that was driving the lion’s share of claims.
“If a company has proven to be unsafe, it’s best not to do business with them,” Hand says. “That’s a method of risk avoidance.”
In addition to working with your insurer to identify potential risk, check with the Better Business Bureau, do Google and AI searches, and review Occupational Safety and Health Administration records, Hand advises.
Finally, know where to turn for guidance. PHLY, for instance, has a suite of risk-management resources available to its policyholders. Most relevant to staffing professionals is the PHLYGateway, which gives policyholders access to a number of helpful resources related to employment practices, including trainings, sample forms and policies, and a library of articles and white papers.
“PHLY wants its policyholders to understand that they are not in it alone,” Hand says. “One of our most popular offerings is a best-practices hotline, which can connect policyholders to a licensed attorney who can guide them on how to handle specific situations that may arise.”
“No matter what the risk, we’ve likely seen it before and can help staffing firms strategize to ensure their long-term success,” Hand says.
For more than 55 years, World Wide Specialty has provided the staffing industry with superior protection and support to help it grow. Now, World Wide Specialty has combined its premier staffing insurance with the leading specialty commercial insurance carrier in the U.S.—Philadelphia Insurance Companies. Visit wwspi.com to learn more.
