A maelstrom of the shock UK election result in June, ongoing uncertainty over Brexit, and a raft of physical terror and cyberattacks have significantly knocked the confidence of British businesses, a new report from commercial insurer
CNA Hardy has revealed.
In its Autumn Risk and Confidence survey, just 28% of UK multinational business leaders said they were confident they could grow and prosper in the coming months – a dramatic drop from the Spring 2017 report, in which 71% of business leaders cited confidence in growth.
With executives unsure on the domestic front, they are looking elsewhere for growth: 63% of leaders identified Europe as the market with the strongest growth potential in autumn this year, and looking ahead to spring next year, interest in Asia almost doubled from 8 to 13%.
But while many companies have international growth in their sights, the report found that they are underestimating three fundamental boardroom risks – corporate, regulatory and supply chain – which could threaten their future growth plans.
“UK multinationals are still quite bullish on growth, and they certainly are looking to grow the top line by focusing on foreign markets, and by leveraging both talent as well as technology as they move forward,” CEO Dave Brosnan told Insurance Business.
While the overall findings were “understandable” in the face of perceived political turmoil and economic risks at home, Brosnan said he was “a little concerned that companies are focusing on what we call headline grabbing news.”
“It’s a little disturbing to see that boardroom risk has fallen off the agenda quite sharply since spring this year. If we compare that to our own experience from an insurance perspective, we know that as businesses expand globally it increases the overall complexity and sometimes can lead to claims,” he went on to say.
High-profile cyberattacks that saw many major businesses hit this year, including Petya, NotPetya and WannaCry, look to have caused concern among companies: Almost half (48%) of businesses think they will be most concerned by cyber risk and that the threat of malware, viruses, hacks or data theft will increase, according to the report.
While the issue has climbed to the top of executives’ concerns, it has so far been “rather misunderstood at management level,” said CUO Patrick Gage.
“I think management has generally seen cyber as an IT risk, and it’s much broader than that. It won’t be served well by just bolting on an extension to an existing insurance policy. We believe as a business that to meet our clients’ needs best, we need to provide specialist risk consultation, risk mitigation and insurance products to cover a much more bespoke and much more tailored approach towards this kind of risk,” he commented.
As a result of the changing landscape and sentiment among businesses, insurers need to work with both their brokers and insureds “to ensure that they truly appreciate the growing boardroom risk which is associated with expanding overseas,” CEO Brosnan said.
“We’re going to have to evolve as we go forward as insurers,” he continued. “It’s incumbent upon us to evolve as an organisation in terms of both risk control, as well as underwriting, and claims management.
“Likewise as a specialist insurer, we have a broad spectrum of products but we tailor those to specifically meet the needs of industry segments. It’s a requirement of us to hire underwriters that have a deep knowledge of the industries that we insure.”
Related stories:
MI5 head says terror threat now at unprecedented scale and pace
ARAG launches first ‘crisis comms’ cover for High Net Worth clients
