According to research carried out by Chartis, almost two thirds of mid-corporates were positive about the outlook for their business for the next 12 months. Nevertheless, this optimism was tempered by a growing concern amongst respondents about the severity and variety of risks to which their businesses are exposed in the current economic environment.

From among the 252 UK-based mid-sized corporations questioned during the summer, 81%thought that they are exposed to a greater breadth of risks today compared to five years ago. At the top of their list of concerns was damage to physical assets (plant and premises), mentioned by 30% of the sample. Other commonly-cited business risks were public/ third party liability (28%) and employer’s liability (25%).

Problems that tend to be recession-related had also shot up the agenda when compared with similar research in 2006. For example, debtors and bad debts were cited by 21% of respondents, professional indemnity/ negligence by 16% and crime, vandalism and staff turnover were mentioned as key concerns by 14%.

Commenting on the findings Tom Doherty, executive director, Major & Corporate Accounts Practice at Chartis said “The picture that emerges from the research is that the volatile economic environment has heightened the respondents sense of vulnerability to potential risks – some of which appear to have more significant consequences than before – while others are posing new challenges. ”

81% of the sample thought that the risks they face seem more ‘real’ today in terms of the consequences for their business than they did five years ago. When asked to categorise the level of risk (ie. likelihood of the event occurring and potential extent of damage) their prime concern was customers not paying invoices on time or becoming insolvent. This was followed by concern about damage to corporate reputation and then product liability/ professional negligence claims.

Tom Doherty continued: “A key research finding is the difference between the list of risks that respondents think of spontaneously and those they are concerned about when prompted. This suggests there could be a lack of awareness about the seriousness of exposures such as D&O and environmental liability in this sector. For example, clients may be aware of new environmental or corporate manslaughter legislation without associating these risks with their own companies, leaving them exposed to potential financial penalties, criminal actions or damage to their brand which could be detrimental.”

Despite the expectation that legislation and red tape will become more prevalent and complex, it is still surprising that a significant proportion of the respondents have not heard of key recent or forthcoming legislative changes. Of those who had, many stated that some elements of legislation create a fair degree of concern for them. And many do not know where to find information that would keep them up-to date – 44% of those questioned said they are not always sure where to turn for advice.

“These findings highlight the need for mid-sized corporates to be provided with information and advice about possible threats to their business as a result of changing legislation – and protect themselves accordingly” continued Doherty.

“For example, recently introduced environmental and employment legislation impose, far-reaching liabilities and damages regimes. Some companies may not be able to keep going if they were hit with a large, one-off cost such as, for example, fines and legal fees due to unintentional breaches of new laws. Insurance brokers can play a valuable role in assessing and briefing mid-corporates on these issues, with advice, and related risk management and insurance protection, tailored to individual business needs.”

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