Leading commercial insurer RSA has today released a report, Future Impacts, which assesses the effects of economic events such as Brexit on business growth, as well as the risks that businesses face and how they are managing those risks.
The research found that Brexit is not seen as a risk by 73% of businesses in Yorkshire, with 49% stating that leaving the EU will have no impact at all and 24% saying that it will have a positive effect on their business. This compares to an average of 70% amongst SMEs across the UK as a whole. However, SMEs identified a range of more significant threats that many companies are not sufficiently protected against.
35% of SMEs in Yorkshire say they would go out of business if faced with an unexpected bill of £50,000, compared to a national average of 28%. Yet 59% of SMEs in Yorkshire are not insured against any of their top three risks, compared to a national average of 58%.
The top three risks UK SMEs identified were:
- Economic uncertainty (35%)
- Increasing market competition (35%)
- Cash flow (31%)
Additionally, almost nine in 10 (88%) insurance brokers see underinsurance as a problem for their SME clients, suggesting that businesses which do not have enough insurance in place are potentially at risk of not being covered for the full cost of repairing the damage caused by unexpected issues.
Future risks
RSA’s Future Impacts report also investigates the emerging risks for UK businesses, with 73% of SMEs stating that new risks have emerged since they first started their company. However, little is being done; for example, 82% have not altered or increased their insurance coverage as a result of technological change.
The threat of cyber-attacks, for example, is one of the most prominent emerging risks for businesses. While government figures show that two-thirds of large businesses and three-quarters of SMEs have experienced some form of cyber-attack1, RSA’s research found only 9% of businesses have cyber cover in place, and only 26% said they are concerned about the threat posed by a cyber-attack.
Businesses’ lack of protection against cyber threats is echoed by government data, which found that approximately one third of firms had formal written cyber security policies and only 10% had an incident management plan in place.
Russell White, Schemes and Deals Director, Regions and SME, Commercial Risk Solutions at RSA, said:
“Although Yorkshire SMEs consider themselves more vulnerable to a large unexpected bill compared to the UK average, a vast proportion of small businesses in the region are not protected against their top risks. Not all risks are directly insurable, but there are steps businesses can take to alleviate the potential impact they could have, such as by implementing rigorous risk management strategies or taking out business continuity insurance.”
Russell added: “The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively help SMEs to better understand the risks they face, and what they can do to protect themselves against them. In the Future Impacts report, RSA has devised a number of recommendations demonstrating what insurers, brokers, government and SMEs themselves can do to subvert this trend and help strengthen UK businesses and their contribution to our economy.”
