Home Business SMEs risk false sense of security as gaps in risk management remain
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

SMEs risk false sense of security as gaps in risk management remain

New research reveals firms identify COVID-19 or a new pandemic as top critical external risk

by jcp

The majority of small and medium sized enterprises (SME) in the UK believe that, despite the disruption they have experienced since the beginning of 2020, their business continuity plans responded well to both the COVID-19 pandemic (71%) and Brexit (55%), according to new research from Marsh Commercial, a leading UK insurance broker and risk advisor and part of Marsh.

However, the research also revealed that since the UK left the European Union on 31 January 2020, 31% of SMEs have experienced supply chain delays, with 22% suffering reduced trade, and 19% seeing a decrease in cash flow.

In addition, as a result of the COVID-19 pandemic, 26% of SMEs said that they had to close their business, either temporarily or permanently, due to government guidelines while 42% made a shift to remote working; 26% said that they had to put some employees on furlough.

The findings come from Marsh Commercial’s new UK SME Risk Report, based on survey data from 1,300 SMEs across the UK, which explores how events over the last 18 months have impacted business risk appetite, risk management approaches, and future risk resilience.

The majority of respondents (56%) admitted that they remain worried about ongoing and future Brexit-related risks, with concern about continued economic impact of greatest worry (29%), followed by an impairment of the ability to trade in Europe (25%) and potential border delays (25%).

Continued fallout from COVID-19, such as further lockdowns or disruptions to day-to-day business operations, is considered the most critical external risk (36%) to businesses, and managing this risk is deemed a top priority (29%), even more so than improving IT and online security (22%) or responding to financial challenges such as cashflow and reduced customer spend driven by the current economic climate (21%).

Some firms have recognised that there is still work to be done to close gaps in risk management planning, but not all. The top three gaps that SMEs identified as important to address were: adoption of new behaviours (31%); education of employees in key risk management practices (30%); and the implementation of formalised risk management programmes (28%).

Half of those surveyed said that they adjusted their business insurance coverage as a result of the COVID-19 pandemic and 26% highlighted that the pandemic was one of their top three reasons for reviewing insurance arrangements. However, 49% of respondents saw increases in pandemic specific exclusions, and 42% found it challenging to find the insurance they need.

Anthony Gruppo, CEO of Marsh Commercial commented: “A focus on the narrow view of COVID-19 fallout as a risk management priority, rather than broadening the scope of activity to address other types of challenges, could leave businesses exposed. Global and local risk landscapes are changing with issues such as climate change, cyber security, and sustainability taking centre stage. These present opportunities for SMEs, but with these opportunities come new risks.

“It is important for SMEs to assess whether their risk management and business continuity plans are as robust as is required by their industry and by insurers. Plans must be fit for purpose and be able to respond to future risks. Robust insurance is also a vital measure to help mitigate risk and support long-term business resilience. The crux of business resilience is knowing that you will be tested again, and ensuring you are prepared for all eventualities.”

See the full UK SEM Risk Report at: https://www.marshcommercial.co.uk/uk-sme-risk-report/.

You may also like