Retail & Fashion Risk Management: The Top Threats to Watch Out For

All businesses come with unique risks to protect against, and operating a retail store, fashion/apparel business or an e-commerce website is no different. Whether it’s slips, trips and falls, or increasing cybercrime, retail risks can have a significant and costly impact on your business. Fortunately, with a retail risk management strategy in place, businesses can mitigate the risk of these threats before they happen. Retailers should especially be vigilant in watching out for the following major risks:

1. Physical Theft

Theft continues to be a leading loss factor for traditional retail store operators. According to data from the National Retail Federation, the average shoplifting incident cost U.S. retailers about $460 in 2020. The average robbery cost retailers more than $7,500, a tremendous increase over the previous years.

Onsite security guards are the most effective protective measure, but a combination of approaches is generally recommended. Newer security technologies allow for multiple battery powered cameras, alarms and lights to be remotely set up on motion sensors with smart device notifications. Signage stating that surveillance is in use can further deter criminals. Sensor-based product tags and labels, locked display cases for items that can be easily stolen and alerts that sound when customers enter or leave the store are other important approaches. Training employees to detect shoplifters can also be an effective retail risk management strategy.

Since theft will affect many merchants at some point, a good retail risk management strategy starts with purchasing industry-specific property and inventory insurance, which covers theft fires, and other losses.

2. Cyber Crime & Data Breaches

As more people shop online, e-commerce crimes are on the rise. In a 2022 report, the Federal Trade Commission found that social media scams caused losses of $770 million in 2021 – more than 18 times the losses reported in 2017. Website and app scams cost U.S. residents about $554 million that same year.

As the cost of data breach recovery continues to rise each year, the risk of cyber threats will also continue to rise across industries throughout 2022 and beyond.

When addressing concerns about your operation’s online safety, the first step is to acknowledge the existing cybersecurity risks that expose an organization to a hacker’s malicious attacks. Best practices to avoid a data breach include patching and updating software, high-grade encryption for sensitive data, upgrading devices when a manufacturer no longer supports software, enforcing “bring your own device” security policies, enforcing strong credentials and multi-factor authentication and educating employees on best security practices and ways to avoid socially engineered attacks.

3. Supply Chain Disruption

From retailers to manufacturers, apparel supply chains span across the globe, with dependability, cost efficiency and speed as critical components for operations.  Global supply chains have been tested more in the last few years than many organizations have experienced throughout their entire existence.

Ongoing supply chain challenges could cost North American apparel and footwear brands between $9 billion and $17 billion in lost EBITDA in 2022, according to a recent report1. The report also shows that approximately only 12% of organizations in the sector are “leaders” in resilience2, meaning they have design, distribution, and financial agility, among other qualities that can help weather supply chain disruption.

When your business is interrupted as a result of an unforeseeable supply chain failure that prevents your organization from producing its products or delivering its services, contingent business interruption coverage (CBI) will bridge the gap of income for your business and help you get on your feet again.  

CBI is an important extension to your business interruption insurance to help minimize the financial loss of a supply chain disruption. When your operations rely on others coming through, you can rest assured knowing you’ve planned for events outside of your control.

4. Employee & Customer Injuries

Onsite injuries for both employees and customers are a leading risk exposure across most industries. In fact, the most common work-related injuries are caused by inadvertent slips, trips and falls, which are among the most common and costly workplace accidents, accounting for 35% of incidents and 65% of lost workdays, according to the National Safety Council. 

Maintaining work areas free of clutter and obstacles will greatly reduce hazards and exposure to accidents. Good housekeeping should start at the top and filter throughout the organization. Instilling cleanliness and organization in your company will ensure accountability and send a message to your employees that management is committed to a safe environment. Instilling this behavior within the culture of your business will allow it to become second nature to your employees.

General liability insurance protects your retail businesses if a customer sues you for injuries they sustained on your premises. Workers’ compensation (WC) insurance is required by law for businesses with employees in almost every state and protects both owners and workers who sustain injuries on the job.

6. Forced Closure/Business Interruption

When a natural disaster, fire, burst pipe or vandalism causes an unplanned closure, the loss of income can be devastating. When the business interruption is the result of a natural disaster, key personnel loss, structural collapse, power interruption or machinery breakdown directly related to the business, business interruption coverage (BI) will bridge the income gap caused by the disaster, finance a temporary relocation for the business and more.  


Frank DeLucia currently serves as senior vice president of Hub International Northeast, a leading full-service global insurance brokerage. He can be reached by phone at (212)338-2395 or at For more information on Hub, please visit