Analysis conducted by global insurance brokerage Gallagher has highlighted the vulnerability of Small and Medium Enterprises across the UK to what it describes as “crisis events”, a category that includes cyber-attacks, extortion, industrial espionage and terrorism.
Gallagher says such events are costing UK SMEs billions of pounds a year and that subsequent trading paralysis is putting thousands at risk of collapse in their aftermath.
In a poll of 1,120 UK SMEs, 24% confirmed they were affected by a crisis event in 2018, equating to 1.4 million firms across the country and a 5% increase from 2017.
17% of those affected spent £10,000 or more to combat crises, with nearly one in 10 paying out in excess of £20,000.
23% said they would survive for less than a month if rendered unable to trade by a crisis incident.
Based on these findings, Gallagher estimates that nearly 57,000 UK SMEs could be at risk of collapse in 2019.
“Our research illustrates the scale of the challenge facing UK SMEs,” said Paul Bassett, Managing Director of Crisis Management at Gallagher.
“When it comes to crises, cyber and IT security clearly represent a “soft underbelly” of businesses that together account for more than 99% of private sector firms.
“Given that the UK economy is heavily tilted towards services, cyber-attacks and data breaches evidently present a growing and grave threat to small and medium-sized businesses.
“Alongside regularly reviewing their crisis preparedness, response plans and forms of protection, such as insurance, it is critical UK SMEs also assess their ability to survive in the event of a major crisis incident when the risk of serious disruption and protracted recovery process is very real.