What Has 2019 Meant for SMEs?
With the seemingly unending threat of Brexit and fresh rounds of political uncertainty, you’d be forgiven for thinking not much else is affecting businesses this year. As we race towards the mid-year point, Mike Dickinson, our Sales & Marketing Director, looks at some of the trends that are impacting small businesses in 2019 and what the rest of the year may bring.
The Rising Cyber Threat
Cybercrime continues to be a major concern for businesses and shows no signs of abating. The MORI Cyber Security Breaches Survey found that four in ten businesses and a fifth of charities had experienced a cyber-attack in the last year. The impact of such an attack on an organisation is far reaching – from business interruption and fines to loss of customer data and a company’s reputation.
SMEs are also finding themselves under increasing pressure to protect themselves from cyberattacks to mitigate the risk of being excluded from supply chains. Enterprises at the top of a supply chain often now require certification proof of security and compliance, or want contractual warrants as protection for themselves. Larger organisations are choosing to use only those suppliers that are certified as part of their due diligence and selection process. For example, the Cyber Essentials certification is already a mandatory requirement for any HS2 sub-contractor who handles building information modelling (BIM) or Bill of Quantities (BOQ).
It is clear that cybercrime remains a significant concern for small business owners and along with effective employee education – businesses need sound security policies that are comprehensively applied and firmly enforced; the right mix of security products and tools and a constantly updated incident response plan.
Data: The Opportunity and Challenge
Data and its importance to a successful business is one of the central themes of 2019. With businesses all over the world relying on data to reach new customers and retain existing ones, it’s important that data is accurate, complete and reviewed frequently.
However, data poses as many threats as opportunities. Legal and regulatory obligations around data protection make this an area of concern for many SMEs. The introduction of GDPR in 2018 was one of the biggest raft of changes affecting the way businesses collect, store and use data in decades. During the first few months after GDPR came into operation, the ICO started with exploratory investigations, mainly offering recommendations and guidance for companies in breach. In effect, they allowed a bit of leeway and the opportunity for businesses to get their houses in order. However, this phase is now largely over and following the recent one-year anniversary in May, we will undoubtedly see them ramping up enforcement, particularly for those organisations that are reporting a second or even third breach.
Data security, and good practice around data management, will continue to be important in 2019 and beyond. As more examples of smaller, less known organisations facing hefty fines emerge over the coming months and years, business owners will be forced to ensure that data protection is front of mind across the whole business.
With growing awareness of the damage to our planet caused by unsustainable practices, those businesses that put environmental and ethical concerns at the top of their agendas are the ones which are reaping the benefits.
Consumers are more aware of sustainability, informed by Blue Planet II and continually clear scientific warnings. Millennials are especially more likely to buy from companies that promote green initiatives, as they see the actions of businesses as crucial to combating climate change and other global problems. No matter what your business does, there are ways to reduce waste and incorporate sustainability into your wider business goals.
SMEs are in a particularly good position to implement sustainable practices, as being smaller means less bureaucracy and less of a dependence on existing energy solutions. Simply switching off electronic devices at the end of the day, deciding to go paperless or only using recycled materials can go a long way to reducing one’s impact on the planet.
Work Perks and Wellbeing
As millennials have come to make up a greater percentage of the workforce, businesses have had to adapt and change their offering to employees, including innovative ways of driving engagement.
There was been a shift to placing a greater emphasis on the workplace as a space which is as much about wellbeing as it is work. Encouraging sustainable working habits and preventing employees from burnout is one of the motivators for this.
A survey conducted by Moorepay found that 71% of small to medium-sized firms had seen their profitability affected by people not coming into work due to stress, low-morale and mental illness. With smaller companies so reliant on every employee performing at their best, business owners are looking to combat this trend by finding ways to better nurture the wellbeing of their staff.
Companies need to not only look at offering rounded support for physical and mental health, but also preventative care, such as providing access to screenings, health MOTs, access to alcohol management and smoking cessation programmes.
Gone are the days of looking at healthcare benefits in isolation, employers are looking at putting together packages that support staff holistically. Offering employees a range of benefits will continue to be a prominent trend in 2019.
Adapting to Changing Threats
It’s been just over two years since the horrific terror attacks in Manchester and London Bridge which claimed 30 lives. In the weeks and months that followed, the gap in insurance coverage became increasingly evident. In the past, terrorism insurance has covered business interruption caused by damage to premises – mostly geared towards the use of explosives in attacks. However, with more events involving the use of handheld weapons and vehicles to cause human casualties; businesses do not always have to be the direct target to be financially impacted by an event. Personal injury, potential liability claims from staff or customers, and indirect effects on their business, such as a decline in visitors or customers are also critical issues.
Whilst the evolving nature of terrorism incidents brings a whole new set of risks and exposures, the good news is that insurers are now better equipped to address this. Earlier this year, amendments made to the Counter-Terrorism and Border Security Bill 2018 allows insurers to cover losses incurred if a business cannot trade or is prevented from accessing its premises in the wake of a terrorist attack.
However, despite it now being more accessible and cost effective than ever, less than 3% of SMEs purchase any form of terrorism insurance. Given the unpredictability of terrorism, combined with its constant evolution, a business that does not buy terrorism insurance is vulnerable and that vulnerability will only increase over time as terrorist methods evolve. In today’s ever-changing environment, business owners need to ensure they are suitably covered against all possible impacts on their business.
For more information on how Russell Scanlan can provide support for all your business insurance needs, call 0115 947 0032.