RSA, a commercial insurer RSA has released a report, entitled ‘Future Impacts’, which assesses the risks that businesses face and how they are managing those risks. The research found that Brexit is not perceived as a risk by the majority of businesses , with 70 percent stating that leaving the EU will either have no impact at all (43 percent) or will have a positive effect on their business (27 percent). However, SMEs identified a range of more significant threats which many companies are not sufficiently protected against.
Twenty-eight percent of SMEs in the UK say they would go out of business if faced with an unexpected bill of £50,000, yet 58 percent are not insured against any of their top three risks.
The top risks businesses identified were:
1. Economic uncertainty (35 percent)
2. Increasing market competition (35 percent)
3. Cash flow (31 percent).
The research shows a significant disparity between the issues perceived by UK businesses to be a risk and the extent to which they are protecting themselves against them.
RSA’s Future Impacts report also investigates the emerging risks for UK businesses, with 73 percent of business owners stating that new risks have emerged since they first started their company. However, little is being done, for example, 82 percent have not altered or increased their insurance coverage as a result of technological change.
The threat of cyber attacks is one of the most prominent emerging risks for businesses. However, while government figures show that two-thirds of large businesses and three-quarters of SMEs had experienced some form of cyber-attack, RSA’s research shows that only 9 percent of businesses have cyber insurance cover in place, and only 26 percent said that 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 only one third of firms had formal written cyber security policies and only 10 percent had an incident management plan in place.
Russell White, schemes and deals director, regions and SME, commercial at RSA, said:
“Although the vast majority of SMEs are untroubled by Brexit, there are a range of risks that appear to have fallen under their radar. Our research shows a significant disparity between the issues perceived by UK businesses to be a risk and the extent to which they are protecting themselves against them. Many are putting themselves in a precarious position by not having anything to fall back on if they are hit with unexpected costs. Although not all risks are directly insurable, there are policies that businesses can take out that would alleviate the impact these risks could have, such as, for example, business continuity insurance which could cover loss of income in the event of a significant incident affecting their property.
“There are also risks facing businesses that they are seemingly oblivious to, particularly when it comes to emerging risks such as cyber attacks. Businesses’ lack of awareness of emerging risks and the fact that only 14 percent of SMEs plan to increase their cover in the next 12 months suggests the scale of underinsurance amongst UK businesses is likely to worsen in the coming years unless significant action is taken.
“The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively raise awareness of the protection gap and help SMEs to better understand the risks they face, and what they can do to protect themselves against them.”www.rsagroup.com