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74% of manufacturing SMEs do not see Brexit as a threat
The Future Impacts report, which assesses the effects of economic events such as Brexit on business growth, as well as the risks that businesses face and how they are managing those risks, has been released today by RSA.
The research found that Brexit is not perceived as a risk by 74% of SME businesses in the manufacturing sector, with 29% stating that leaving the EU will have no impact at all and 45% stating that it will have a positive effect on their business. This compares to an average of 70% amongst SMEs across the UK.
However, SMEs did identify a range of more significant threats which many companies are not sufficiently protected against 20% of SMEs in the manufacturing sector say they would go out of business if faced with an unexpected bill of £50,000, compared to a national average of 28%. Yet 59% of SMEs in the manufacturing sector are not insured against any of their top three risks, which is slightly higher than the national average of 58%.
The RSA report highlights three risks UK SMEs identified during the survey:
1. Economic uncertainty (35%)
2. Increasing market competition (35%)
3. Cash flow (31%)
The report also investigates the emerging risks for UK businesses, with 73% of SMEs stating that new risks have emerged since they first started their company. However, little is being done; for example, 82% have not altered or increased their insurance coverage as a result of technological change.
The threat of cyber-attacks, for example, is one of the most prominent emerging risks for businesses – timely considering The National Lottery website is the latest in a series of high-profile hacking incidents. However, while government figures show that two-thirds of large businesses and three-quarters of SMEs had experienced some form of cyber-attack, RSA’s research shows that only 9% of businesses have cyber cover in place, and only 26% said that they are concerned about the threat posed by a cyber-attack.
Businesses’ lack of protection against cyber threats is echoed by government data, which found that approximately one third of firms had formal written cyber security policies and only 10% had an incident management plan in place.
Russell White, Director at RSA, said: “Our research shows that SMEs in the manufacturing sector are behind the national average when it comes to insuring against their top three risks. Though, positively, it is this sector which has the biggest plans to increase their insurance cover over the next 12 months, with nearly a fifth (19%) saying that this is the case.”
“The onus is not only on SMEs themselves to better manage their risks, but also on brokers and insurance providers to proactively raise awareness of the protection gap and help SMEs to better understand the risks they face, and what they can do to protect themselves against them. RSA has devised a number of recommendations demonstrating what insurers, brokers, government and SMEs themselves can do to subvert this trend and help strengthen UK businesses and their contribution to our economy.”
Future Impacts report key findings
• Brexit is not perceived as a risk by 74% of SME businesses in the manufacturing sector
• 29% of respondents stated that leaving the EU will have no impact at all
• 45% stated that leaving the EU will have a positive effect on their business
• 51% of respondents say the government isn’t doing enough to help businesses grow – 27% think the government are and 23% don’t know
• In the next 12 months, 23% of manufacturing SMEs expect their revenue to grow, 63% expect their revenue to stay the same and 11% expect their revenue to shrink
• 23% of manufacturing SMEs see cash flow pressures in their top 2 risks
• 22% of manufacturing SMEs have considered cyber cover which is way above the national average amongst SMEs across all sectors (9%)
The report – Future Impacts, The changing nature of risk facing small businesses in the UK – can be downloaded here.