Small Business Owners 'Not Taking Some Risks Seriously'

Research Shows Business Owners Are Becoming Less Concerned About Threats To Operations

06.02.2014

Fergal Dowling, Partner | +44 (0)121 214 5476

A new study from Zurich has shown that small firms in the UK are less concerned than they should be about certain business risks.

The index is calculated by taking an average score of how concerned managers are about nine different parameters, on a sliding scale of one to 100.

This figure was found to have dropped from 42.61 in the third quarter of 2013 to 41.68 in the following three-month period, indicating that confidence is at its highest level for 18 months.
 
Researchers found that almost four in five businesses are not overly - or at all - worried about the threat of major incidents, such as a flood or fire affecting their premises.

Despite the spate of poor weather to affect the UK recently, only 18% of respondents said unpredictable conditions were their top business risk concern. The same proportion cited the failure of a supplier as their number one worry.

Discussing the results of the SME Risk Index, Zurich's director of SME Richard Coleman said that while it is undoubtedly important for owners of smaller businesses to take full advantage of new opportunities like recruitment and online trading, it is also crucial for them to plan ahead for "long-term risks on the horizon".

In particular, he warned that "significant changes" in workforce structure and technology will require sufficient forward planning to ensure a smooth transition.

Mr Coleman went on to stress the importance of paying enough attention to traditional business risks such as severe weather.

"With flooding in recent months causing disruption to many businesses, it's likely that many SME owners need to consider moving major incident risk management closer to the top of their priority list," he insisted.

"Whilst these are insurable incidents, a focus on prevention, preparedness and mitigation is invaluable in the event of an incident and ensuring a speedy return to business."

Expert Opinion
The improvements in the economic climate have spelt good news for SMEs, as they are well-placed to take advantages of new opportunities which may lead to both growth and expansion.

"However, it is always vital for smaller businesses to take a balanced approach to growth and ensure they do have contingency plans in place should their operations be hit by something unexpected. Thinking about business continuity is vital and should involve consideration of a range of issues, including the implementation of remote working capabilities and how key company and client data may be affected by power outages or other risks.

"All businesses can face risks but with proper strategies in place they can ensure they are able to both operate and meet their legal requirements on a range of key issues, such as employment policies and data protection. Companies with concerns about this subject should seek legal advice at the earliest opportunity."
Fergal Dowling, Partner