According to new survey-based research by Marsh, the top emerging risks faced by small and medium-sized companies are facing all reflect the wider economic climate. Two-fifths (39 percent) of respondents pointed to increased energy costs, a third (32 percent) cited inflation, and 27 percent said staff shortages were a pressing issue. Rising inflation in particular can have an acute impact on firms’ risk and insurance programmes, resulting in underinsurance of property and other valuable assets.
The findings come from Marsh’s UK Business Risk Report 2022, which features data obtained in May and June 2022 from over 1,700 UK businesses with revenues of up to £20 million. Now in its second year, the report explores how circumstances over the last 12 months have impacted the business risk appetite and approach to risk management among the UK’s small and medium-sized businesses.
In terms of the short term, organizations are most concerned about the impact of employee mental health and wellbeing, financial uncertainty, and health and safety on their businesses over the next 12 months.
Almost half (49 percent) of respondents identified employee mental health and wellbeing as a key risk, up from 30 percent in 2021 when COVID-19 related risks dominated business risk registers. While over one-third (36 percent) of businesses questioned remain concerned about financial uncertainty – indicating that balance sheet volatility still persists – Marsh recorded a decrease by 6 percent from 2021. One-third (33 percent) of respondents identified health and safety as a key concern this year, up marginally from 32.6 percent last year.
Commenting on the findings, Alistair Fraser, CEO, Corporate & Commercial UK, Marsh, said: “Small and medium-sized businesses across the UK, in every region and sector, are navigating a hugely diverse array of risks amidst a very challenging operating environment. Since the survey was conducted, UK inflation has reached a 40-year high, which will have a profound impact on how these firms operate in the near and longer-term. As new risks emerge and current risks continue to evolve, we urge businesses to review their current insurance arrangements and approach to risk management, to build even greater resilience into their people and operations.”