According to a new report by insurance broker Marsh, small and medium sized enterprises (SME) in the UK believe that their business continuity plans responded well to both the COVID-19 pandemic and Brexit, despite the disruption they have experienced since the beginning of 2020.
However, the report also highlighted that since the UK left the European Union on 31 January 2020, 31% of SMEs have experienced supply chain delays, with 22% suffering reduced trade, and 19% seeing a decrease in cash flow.
In addition, as a result of the COVID-19 pandemic, 26% of SMEs said that they had to close their business, either temporarily or permanently, due to government guidelines while 42% made a shift to remote working; 26% said that they had to put some employees on furlough.
56% of the report’s respondents said that they are still concerned about ongoing and future Brexit-related risks, with concern about continued economic impact of greatest worry (29%), followed by an impairment of the ability to trade in Europe (25%) and potential border delays (25%).
Continued fallout from COVID-19, such as further lockdowns or disruptions to day-to-day business operations, is considered the most critical external risk (36%) to businesses, and managing this risk is deemed a top priority (29%), even more so than improving IT and online security (22%) or responding to financial challenges such as cashflow and reduced customer spend driven by the current economic climate (21%).
The research revealed that firms believe there is still work to be done to close gaps in risk management planning. The top three gaps that SMEs identified as important to address were: adoption of new behaviours (31%); education of employees in key risk management practices (30%); and the implementation of formalised risk management programmes (28%).
Half of those surveyed said that they adjusted their business insurance coverage as a result of the COVID-19 pandemic and 26% of respondents highlighted that the pandemic was one of their top three reasons for reviewing insurance arrangements. However, 49% of respondents saw increases in pandemic specific exclusions, and 42% found it challenging to find the insurance they need.
Anthony Gruppo, CEO of Marsh Commercial commented: “A focus on the narrow view of COVID-19 fallout as a risk management priority, rather than broadening the scope of activity to address other types of challenges, could leave businesses exposed.
“Global and local risk landscapes are changing with issues such as climate change, cyber security, and sustainability taking centre stage. These present opportunities for SMEs, but with these opportunities come new risks.
“It is important for SMEs to assess whether their risk management and business continuity plans are as robust as is required by their industry and by insurers. Plans must be fit for purpose and be able to respond to future risks.
“Robust insurance is also a vital measure to help mitigate risk and support long-term business resilience. The crux of business resilience is knowing that you will be tested again, and ensuring you are prepared for all eventualities.”
