The past two years have demonstrated that the challenge of building business resilience is not just about predicting what might happen in the future, but dealing with the unpredictable and being able to adapt to change.
To find out how COVID-19 has impacted UK businesses’ attitudes towards managing risk, Gallagher commissioned research amongst leaders of UK firms about how they feel their business coped and what they have learnt in the last two years.
And there is some positive news as reflecting on the challenges of the past two years, a quarter (26%) of leaders say that their organisation fared better than they expected and a similar proportion now feel their company is more resilient to business interruption events (24%). A similar proportion say their business will be more resilient to business interruption events (24%) going forward, taking into account what they have learnt.
When asked about the steps they have taken as a result of the pandemic to weather future business interruption events, a third of (31%) bosses have reviewed their insurance arrangements in the past year, a quarter (26%) have reassessed their planning regarding business interruption events, with a similar proportion (25%) implementing new contingency plans.
Turning to the emerging risks businesses are facing as we move into 2022, economic recovery is unsurprisingly a key concern, with over half (53%)1 of UK firms feeling less confident about the state of the UK economy than they were 12 months ago. The significant changes in trading conditions during the pandemic, plus delays and disruption to supply chains, have created unforeseen and unprecedented pressure on cash flow and capital.
Mental health has also risen up the list of risks on the board room agenda, with almost half (48%) of businesses saying employee mental health and wellbeing over the past twelve months has become a key priority. This should be viewed as a positive development, as leaders learn from the upheaval of the past two years and place more focus on how their employees are feeling.
Under the Management of Health and Safety at Work Regulations, employers are responsible for the health and safety of their people and this includes their mental health and stress. Not only does it make good business sense to protect employees’ health and mental wellbeing, with the cost of mental-ill health alone costing UK employers almost £35 billion annually2 through lost productivity, absences and staff, but employers may also find themselves liable, and at risk of a claim being brought against them, if there is evidence that they’ve been negligent regarding the mental health of their workforce.
With our attention firmly focused on the pandemic, it’s easy to forget that other events outside of our control also continue to take place. In fact outside of the pandemic, half of UK companies (50%) suffered a business interruption event over the last year, with firms out of action for an average of 12 days following an incident.
Operational issues such as system failures, product issues, plus supplier and vendor related challenges top the list of most common business interruption challenges experienced by firms with one in five (20%) saying they had experienced an issue over the past year. Other common challenges experienced include cyber incidents, including cyber-attacks and data breaches (17%), plus environment-related incidents (16%), such as damage to property following floods and storms.
The repercussions for a firm following a business interruption event can be significant, with over a third of companies reporting that there was a financial impact on their organisation (34%) and over a quarter reporting that their reputation had suffered as a result of incidents (29%), with one in five losing customers (18%).
It’s a fact of life that business interruption events are unfortunately a commonplace occurrence and businesses cannot afford to be complacent when it comes to mitigating future disruption to their organisation must ensure they are ready to react and adapt to uncertainty.
There are steps that businesses can take help reduce the impact of a business interruption event affecting their company and a good place to start is speaking to an insurance broker and risk management expert. Gallagher can provide risk management advice to firms to ensure that they have undertaken the right assessments and planning to help ensure their future success. Tools such as business continuity plans, which help prepare businesses for critical issues, can help ensure firms can keep trading effectively.
Ensuring suitable insurance cover is in place to weather the impact of future business interruption events is also crucial. With innovation in product development over recent years, new types of insurance have become available which cater for both small and large businesses, making peace of mind affordable and accessible to SMEs through to larger firms.
- Research conducted by Opinium, between 11 February and 14 February, among 250 managers within UK businesses with up to 1,249 employees
- https://www.centreformentalhealth.org.uk/news/mental-health-problems-work-cost-uk-economy-ps349bn-last-year-says-centre-mental-health
