Get protected: How brokers can ensure SMEs cover all risks

No one can yet predict what a post-Brexit Britain will look like, but there is one thing that we can sure of. SMEs will continue to show the level of resilience that makes them the beating heart of the UK economy.

More Britons than ever before are seizing the opportunity to go into business for themselves, swelling the ranks of SMEs to a record total of 5.5million by the beginning of 2016.

An element of risk is inevitable when driving growth. But whether you are an ambitious start-up, a fledgling business experiencing rapid expansion, or a long-established company at the heart of your local community, it is critical that your exposure is identified and successfully managed.

Avoiding the twin traps underinsurance (choosing a level of cover that underestimates your potential exposure to financial loss) and not having any cover in place at all is the key to protecting your business.

Four in ten small companies fail to survive their first years and recent research by RSA reveals just how many are sailing close to the edge. The Future Impacts report found that 28% of SMEs would go to the wall if they were hit with an unexpected bill of £50,000. A further one in five businesses could only survive if owners raided their personal savings, remortgaged their own homes or relied on the generosity of family and friends to bail them out.

It is clear that there is a big difference between the perception SMEs have of their own potential exposure, and the true level and nature of the risks they face. As Russell White, Schemes and Deals Director, RSA Commercial Risk Solutions, explained: “Our research shows a significant disparity between the issues perceived by UK businesses to be a risk and the extent to which they are protecting themselves against them.”

It is not hard to explain this gap between perception and reality. Three-quarters of SMEs consist of just one person. When building and growing a business, it is inevitable that issues such as short-term cash flow and increasing competition are higher priorities than understanding what the rapidly-changing risk landscape means for you. That is where brokers have a vital role to play, providing expert and independent advice.

By working with SMEs to identify and reduce their risk exposure, and working with insurers such as RSA, brokers can ensure you have the scope of cover you need. That means SMEs can get on with growing their business, knowing that they have cover in place to protect their future and safeguard their customers.

Cyber threat

Large firms can afford robust digital infrastructure and call upon in-house IT teams or expensive, external experts but few SMEs have those options. Worryingly, many are unaware and ill-prepared for the potentially catastrophic consequences of cyber-crime. Average loss per incident is estimated at between £65,000 and £115,000 and SMEs are increasingly being targeted.

Regardless of Brexit, the EU General Data Protection Regulation (GDPR) will apply to all SMEs in the UK from May next year – another compelling reason to speak to your broker about protecting your business against the economy’s fastest-growing threat.