The challenges and opportunities for SMEs to minimise risk 

Guest post by Gemma Archibald

Since the outbreak of the pandemic in 2020, the need for effective risk management has accelerated for businesses of all sizes, across all industries and sectors, globally.

In 2021, Covid remained the biggest challenge for many firms across the UK as they continued to manage new risks to their businesses. Supply chain bottlenecks and rising raw material costs added a new dimension of risk that needed to be managed and mitigated.

Further, the eyes of the world turned to the climate debate, particularly during COP26 which emphasised future risks and highlighted the necessity for many SMEs to revisit their business models to eliminate risks that could turn into business-critical issues in the future.

While companies and entire sectors are undergoing huge changes to the way they do business and protect their people while doing so, I believe that 2022 holds exciting opportunities for SMEs across the UK.

Covid-19 – where are we now, and what does the future hold?

The emergence of the omicron variant made it clear that the ramifications of the pandemic will likely stay with us throughout 2022, possibly beyond. The subsequent uncertainty to people, businesses and society at large remained the biggest concern among our 34,000 UK SME clients in the past year1.

Protocols that demonstrate businesses are “Covid secure” for customers, contractors and staff became front of mind. And despite efforts taken to ensure organisations continue to thrive, I believe Covid will remain one of the most prominent and evolving issues for 2022.

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The requirement for HR health and safety support has increased significantly in 2021. According to HSE, a regulator dedicated to assessing and securing effective management and control of hazards and workplace risk, work-related stress, depression, or anxiety is the most reported cause of work-related ill health in Great Britain, accounting for 51% of all cases, and 55% of all working days lost2.

Data access and visibility, as well as process management around compliance, are becoming more of a necessity for SMEs

Covid heightened well-being and mental health concerns as the move to remote working took its toll on employee welfare. As hybrid working remains in place employers must take action to support their valued people.

Covid has also resulted in information security becoming a more critical issue. Greater integration of IT and industrial control systems requires greater precautions against cyber-attacks on systems delivering major accident controls.

Among our clients, we have seen a significant rise in demand for industry certification, especially ISO 27001, the defined standard to tackle compliance among international customers. What used to be an issue for large businesses is becoming mainstream across companies of all sizes.

Data access and visibility, as well as process management around compliance, are becoming more of a necessity for SMEs and software is playing a key role now in managing compliance.

The opportunities in hand

The underlying and emerging opportunities must not be overlooked. Covid has opened doors to streamline business operations, move to smaller premises and consider outsourcing of functions previously done in house – at a higher cost.

Hybrid working has delivered cost savings to many businesses and there is undeniably access for those firms to a greater talent pool. The decreasing importance of location is also opening the potential for better opportunities in new trade markets and countries signalling growth.

Supply Chains – closing the skills and supply gap, and overcoming the cost challenge

Supply chain resilience has been tested in 2021. Both Covid and Brexit have demonstrated how dependent supply chains are for the overall economy.

The growing skills gap, both for companies and their supply chains, has seen a new set of risks emerge. In the construction industry alone, the pandemic has triggered an exodus of experienced workers aged 45-55, the core age group in the sector. Other sectors, such as manufacturing and healthcare experienced similar issues. 

Business continuity was the focus in 2021. In 2022, it will be business growth

Such structural shifts to the entire workforce bring along challenges to health and safety. For companies this means knowing your suppliers and observing whether business partners adhere to safety standards becomes critical. Practices of modern slavery can creep in and/or be overlooked as many SMEs do not currently have the policies, procedures, and resources in place to uncover and combat Modern Slavery in their business or supply chain3.

Climate change – companies’ role in 2022 and beyond

Businesses will focus on addressing environmental concerns that impact climate in 2022, especially the pursuit of becoming carbon neutral, as well as the reduction of water usage and waste management. 

This has significantly been enhanced by COP26 and the pressing need to address environmental issues. But as ESG considerations increasingly filter from blue chips into the business models of SMEs, climate is only part of the puzzle.

To effectively address ESG considerations, UK SMEs should be looking across a much broader spectrum of ESG measures now, spanning modern slavery, safety, people development, social value, equality, diversity and inclusivity, anti-bribery, cyber security and ultimately profit contribution – all of which we help clients understand and assess. The ability to document and measure progress is key to tracking – and celebrating – positive change.

By evolving this focus in 2022, SMEs have a considerable contribution to make to the ESG agenda, and the power to make contractor relationships and entire supply chains safer.

Business growth – the main challenge and opportunity for 2022

Business continuity was the focus in 2021. In 2022, it will be business growth. A survey we conducted among UK SMEs revealed that winning contracts was a major challenge in 2021 particularly among the smallest companies.

There seems to be an abundance of work, with contractors employed at an all-time high, who are increasingly trying to find their competitive edge in what has become fierce competition. As a result, contractors and small companies will seek accreditation to achieve a competitive advantage in the year ahead.

In 2022, the SMEs that act in the best interests of their business, their people, their customers and the planet will best manage the risks they face. And not just appropriately, but successfully, for their business to thrive.

Gemma Archibald is COO for the UK SME market at Alcumus, the workplace risk management provider

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SME Publications/ SME XPO 2024