Their Future Impacts report showed economic uncertainty (35%), increasing market competition (35%), and cash flow (31%) to be the top three identified risks to business.
In addition, 82% have not altered or increased their insurance coverage despite 73% of business owners stating that new risks have emerged since they first started their company.
RSA schemes and deals director, Russell White, said: “Although the vast majority of SMEs are untroubled by Brexit, there are a range of risks that appear to have fallen under their radar.
“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 was found that 28% of SMEs believe that they would go out of business if they faced an unexpected bill of £50,000, yet 58% are not insured against any of their top three risks.
“Many are putting themselves in a precarious position by not having anything to fall back on if they are hit with unexpected costs,” White added.
“Although not all risks are directly insurable, there are policies that businesses can take out that would alleviate the impact these risks could have.
“Such as, for example, business continuity insurance, which could cover loss of income in the event of a significant incident affecting their property.”
Online security is believed to be one of the most prominent emerging risks for businesses, with government figures released earlier this year showing that three quarters of SMEs have experienced come form of cyber attack.
However the RSA research shows that only 9% of businesses have cyber cover in place, and only 26% are concerned about the threat it poses, with recent government data finding that approximately two-thirds of firms are without formal written cyber security policies, and only 10% have an incident management plan in place.
“There are risks facing businesses that they are seemingly oblivious to, particularly when it comes to emerging risks such as cyber-attacks,” White continued.
Businesses’ lack of awareness of emerging risks, and the fact that only 14% of SMEs plan to increase their cover in the next 12 months suggests the scale of underinsurance amongst UK businesses is likely to worsen in the coming years unless significant action is taken.”
The RSA report suggests that SMEs should:
• Ensure they review their insurance annually
• Speak to a broker as part of their review to discuss any emerging risks that they should be aware of.
• Strongly consider the impact of technological risk to their business, notably cyber cover.
Source: Chris Seekings - The Actuary