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Risk awareness among SMEs improving
Written by staff reporter
The risks posed by cyber attacks and reputational damage are increasingly worrying small and medium-sized enterprises, according to Zurich Insurance Group’s third annual global SME survey. It found a greatly improved awareness of risk amongst organisations in this category, with over 90% of SMEs surveyed now saying they are aware of the risks facing their business.
The survey polled 2,600 C-suite executives and managers at SMEs across 13 countries in Europe, the Americas and Asia-Pacific. Among respondents, concerns about cyber crime have almost tripled since 2013 (11% vs 4%), while worries about reputational damage have also increased (14% vs 8% three years ago). These were the fastest growing perceived risks since the survey began in 2013.
Just under a third (31%) rated the impact of competition on margins as the greatest risk facing their business, a slight decline from previous years. Lack of consumer demand continued to be the second-greatest risk, and has increased in prominence since 2013 (30% vs 24%). Globally, SMEs’ risk awareness increased over the past years – only 7% don't see any risks for their business in 2016.
Global economic recovery and growth have led SMEs to be more optimistic about growth. In 2016, only 8% saw no opportunities for growth, down from 16% in 2013. Despite this, SMEs are more focused on their home markets, reducing foreign expansion ambitions (10% vs 14% in 2013). As in previous years, SMEs have continued to reduce their costs and expenses to fund growth (33% vs 26%).
European SMEs’ awareness and perception of various types of risk have increased since the survey started in 2013. Concerns about cyber crime tripled among European SMEs (12% vs 4%), while the perceived risk of reputational damage doubled (14% vs 7%). Concerns about fire risk also doubled (10% today vs 5%).
In the US, risk awareness has risen across the board. Interestingly, technology failures and vulnerabilities feature among the top three risks in the US – significantly higher than in the other regions surveyed. The SMEs’ concerns over risks of theft (18% vs 9%) and damage related to corporate transport (14% vs 6%) also roughly doubled.
One-third of SMEs surveyed in the US see potential to grow by exploring new sales channels – almost twice as many as in other regions. But only 6% believe that investing in the workforce would help them to grow, a much lower percentage than in other parts of the world.