Zurich research finds increased risk awareness amongst SME's
Executive General Manager - SME, Bobby Lehane, says in Australia, the survey results tell us that small business is more volatile but companies are becoming increasingly aware of risk in the environments in which they operate and are more likely to invest in risk analysis.
"Over the last year SME’s were up to four times more likely to have considered closing down or conducting a comprehensive restructuring of their business, or at the very least, reduced their business offering. Over the same 12 month period however, over 16% of SME respondents increased wages compared to 12% who reduced them. Similarly, close to 17% reduced staff numbers while 12% increased them.
"Of note for the insurance industry in Australia, around 7% of those surveyed had invested in some kind of risk analysis and risk assessment over the last year – this demonstrates that while there is scope to improve, thinking about risk is not entirely off the radar for SMEs.
"The need for solid cross- jurisdiction insurance insight such as that provided by Zurich's global Risk Room and Zurich International Program services was also evident with 14% having expanded their activity to new export markets over the last 12 months.
"The two most significant risks perceived by local Australian business for commercial operations include high competition and low demand / overstocking which correlates with concerns around buyer behaviour but also highlights the challenges small businesses face in managing stock levels and the potential need for small business advice where more sophisticated ‘just in time’ style stock management is out of reach."
Other perceived key risks theft (burglary cover), the failure of partners and suppliers to deliver (business interruption insurance), damage to company vehicle (motor), natural catastrophe (property), legal and financial problems (liability and professional indemnity), customers or employees health and safety (liability and workers compensation) and fire.
All of these key risks have corresponding insurance solutions available as mitigation.
For small businesses with 0-9 employees, the failure of partners and suppliers to deliver is seen as particularly important. Additionally, property damage whether through catastrophes, fire or malicious damage, seems to be more important to smaller SMEs.
"These particular risks are consistent with the conundrum the insurance industry has long faced - why is take-up of business interruption insurance relatively low when it covers a risk perceived to be so important?" says Bobby.
Looking forward, what does the SME population in Australia see as the biggest opportunities for their business?
New customer segments remain the stand out opportunity with 45% of respondents citing this as their biggest opportunity and nearly 24% specifically noting expansion into foreign markets. Cost and expense reduction excites 29% while 14% hold out for the acquisition of competitors.
Interestingly, nearly 18% see new business technologies such as mobile and tablet based computing and new sales channels such as web-trading (16%) as an opportunity but only 6% see online fraud and other cyber crime as a risk.
Zurich surveyed 3,293 SME's in Australia, Brazil, Germany, Indonesia, Ireland, Italy, Mexico, Portugal, Spain, Switzerland, the United Arab Emirates and the United Kingdom.
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Facing strong competition and sluggish consumer demand, small and medium sized enterprises (SMEs) are adapting with resilience by targeting new customer groups and expanding into new markets.
For further information contact:
Head of Marketing, Communications & Customer, General Insurance
Zurich Financial Services Australia Limited
Level 3, 5 Blue Street, North Sydney, NSW 2060
Phone: +61 (02) 9995 1368
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.