While British small and medium enterprises (SMEs) believe that their business continuity plans have held up well, a study by Marsh Commercial has warned that they could be falling into a false sense of security amid the risks brought by the COVID-19 pandemic and Brexit.
According to a survey of 1,300 SMEs across the UK, respondents believed their business continuity plans responded well to both the COVID-19 pandemic (71%) and Brexit (55%). However, the report also found that since the UK left the European Union on Jan. 31, 2020, 31% of SMEs have experienced supply chain delays, with 22% suffering reduced trade, and 19% seeing a decrease in cash flow.
Concerning the 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. Meanwhile, 26% said that they had to put some employees on furlough.
A majority of respondents (56%) reported that they remain worried about ongoing and future Brexit-related risks, led by continued economic impact (29%), and followed by an impairment of the ability to trade in Europe (25%) and potential border delays (25%).
SMEs are also still worried about pandemic-related risks, with further lockdowns or disruptions to day-to-day business operations considered the foremost external risk by 36% of respondents. This was followed by the need to improve IT and online security (22%) and financial challenges, such as cashflow and reduced customer spending driven by the current economic climate (21%).
“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,” said Anthony Gruppo, CEO of Marsh Commercial. “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.”
