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Two-thirds of SMEs do not see Brexit as a threat to their businesses
Written by staff reporter
A report by commercial insurer RSA has found that Brexit is not perceived as a risk by the majority of SMEs, with 70 per cent stating that leaving the EU will either have no impact at all (43 per cent) or will have a positive effect on their business (27 per cent). However, SMEs identified a range of more significant threats which many companies are not sufficiently protected against.
The RSA report, titled Future Impacts, 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. 28 per cent of UK SMEs questioned admitted they would go out of business if faced with an unexpected bill of £50,000, yet 58 per cent are not insured against any of their top three risks.
Additionally, almost nine out of 10 (88 per cent) insurance brokers see underinsurance as a problem for their SME clients, showing that businesses which do have insurance in place are at risk as well due to their coverage potentially not being sufficient enough to cover the full cost of repairing the damage caused by unexpected issues.
RSA’s Future Impacts report also investigates the emerging risks for UK businesses, with 73 per cent of business owners stating that new risks have emerged since they first started their company. However, little is being done - for example, 82 per cent 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 and yet, 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 per cent of businesses have cyber cover in place. Only 26 per cent said that they are concerned about the threat posed by a cyber-attack.
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.”
He added that 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.”
The top three risks businesses identified in the RSA research were: economic uncertainty (35 per cent); increasing market competition (35 per cent); and cash flow (31 per cent).
White added that 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 per cent 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.”