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Singapore’s small and medium enterprises (SMEs) are most threatened by failing to innovate to meet customer needs, according to a study of over 300 firms by Aon.
Aon Inpoint’s 2019 SME Insurance Survey showed that failure to innovate tops the list of risks faced by Singapore SMEs. Rapid emergence of technologies such as artificial intelligence, drones, and advanced robotics has made SMEs vulnerable to new threats. As the global economy evolves further, these risks are becoming more unpredictable and SMEs find it difficult to prepare for them, the survey said.
In addition, the survey revealed that there is a clear link between the failure to attract and retain top talent and the ability to deal with increasing competition (third-ranked risk). Workforce shortage is the seventh-ranked risk as organisations look to fuel growth through people. This becomes more pronounced as companies strive to hire high performers and strike a balance between local and foreign talent.
According to representatives of Singaporean SMEs, these are the top 10 risks their businesses face:
1. Failure to innovate/meet customer needs
2. Damage to reputation/brand
3. Increasing competition
4. Economic slowdown/slow recovery
5. Cash flow/liquidity risk
6. Major project failure
7. Workforce shortage
8. Outsourcing
9. Corporate governance/compliance burden
10. Loss of intellectual property/data
Around half of the polled firms are considering expanding overseas. More than 60% seek external financing via bank loans to fuel their growth plans and help with cash flow management due to delayed payments from customers.
“Given the extent of Singapore’s market size, SMEs must seek to achieve growth on a regional and global scale,” said Andrew Hare, managing director of Aon Inpoint in Asia. “However, with this comes the need to mitigate new risks in new territories – and the ability to employ insurance and financing to boost their expansion plans.”
“As SMEs look to innovate and internationalise, they must have the right corporate governance structure and risk management process in place,” Richard Tan, head of sales at Aon Singapore, added. “In addition, the on-demand economy has brought about issues around consumer and worker safety, consistency in service quality, and data privacy. Having a deep appreciation of these evolving risks and taking appropriate measures quickly could make or break their business ventures.”
