- Business leaders across the UK state that the cost-of-living crisis is the top risk to their successful trading – for the third year running - demonstrating ongoing concerns about the state of the UK finances
- Other major concerns for UK businesses include high cost of materials, high costs of salaries and cyber-crime
- The changes in national insurance contributions have led to salaries being cited as a top five risk for the first time since the index began
- Cyber-crime has consistently moved up the list of concerns and is now the third largest risk for UK businesses - reflecting the major increase in sophistication and number of attacks by hackers
The annual Gallagher Business Risks Index asked 1,000 leaders at UK businesses to identify the top risks affecting their firm. The current cost-of-living crisis came first for the third year running with one in four (26%) business leaders naming it as their top risk this year.
When asked specifically why the cost-of-living crisis is their top risk, the top influencing factors were the inflation issues the country has suffered (cited by 56% of affected businesses), unstable economic conditions (33%) and the change in national insurance (NI) contributions which was stated by 22% of respondents.
NI contributions and the increased costs facing UK firms are now a regular feature in a number of different risk areas, with the cost of salaries also appearing in the list of top five risks for the first time. Nearly half of all leaders (47%) said increased NI contributions were the root cause behind this concern, demonstrating that this Government policy has not landed positively amongst the business community.
Despite salaries being a cause of concern, the data would seem to report that from a jobs perspective, it’s an ‘employers market’ more so than in previous years with both employee retention and lack of skilled talent falling down the list of boardroom concerns. Both were voted as higher rated risks in 2022 and 2023 as the country recovered from the lockdown and other associated issues due to COVID-19.
Cyber-crime has steadily grown as a concern over the last four years and now appears near the top of many risk registers across the UK. Four in ten leaders (40%) pointed to their increased risk on technology as the underlying reason this worries them, but a very similar number (39%) said that cyber-crime fears were worsening because of an increase in crime and decrease in crime prevention, marking a nod to authorities that they need to do more to help protect UK businesses from malevolent online criminals.
Risks to successful trading due to the US tariffs made an appearance for the first time, having been introduced following the US elections in November last year. One in five business leaders said this was a risk to successful trading with continued uncertainty particularly affecting those firms that are involved in import and export. Tariffs were a big concern in the retail, transport and manufacturing sectors as a result.
Looking at how the risks depend on company size, large businesses cite cyber-crime as their biggest concern (31% of all firms naming it their number one risk) with small firms saying the cost of salaries is the largest risk, possibly reflecting lower financial resources and the potential impact on already slim profit margins.
Table 1: Top 10 risks identified by UK businesses in 2022, 2023, 2024 and 2025
| Rank | 2022 | 2023 | 2024 | 2025 | % of businesses saying this was one of their top risks |
| 1 | Cost of materials | Cost of living crisis | Cost of living crisis | Cost of living crisis | 26% |
| 2 | Employee retention | Cost of salaries | Competition in sector | Cost of materials | 20% |
| 3 | Cash-flow | Lack of skilled talent | Cost of materials | Cyber-crime | 16% |
| 4 | Cost of salaries | Cost of materials | Cash flow | Competition | 28% |
| 5 | Competition within sector | Employee retention | Cyber-crime | High cost of salaries | 15% |
| 6 | Supply chain issues | Cyber-crime | Late payments | Supply chain issues | 13% |
| 7 | Cyber-crime | Late payments | Volatility | US tariffs | 13% |
| 8 | Lack of skilled talent | Supply chain failures | High cost of salaries | Cash flow | 12% |
| 9 | Data breaches | Debt | Supply chain issues | Lack of skilled talent | 11% |
| 10 | Cost of transportation | Fraud | Lack of skilled talent | Fraud | 10% |
1,000 business leaders were asked to select the current top risks to their organisation – this is the percentage that selected each risk factor.
Commenting on the findings, Neil Hodgson, Managing Director of Risk Management at Gallagher, said: “UK bosses are facing challenging and changeable risks to successful trading. The cost-of-living crisis has been ongoing for a number of years now, and although there isn’t an official recession, it is clearly having an ongoing impact on spending levels.
“NI contributions are very much a theme being reported as impacting on expansion plans with many firms saying the impact on salaries is a major issue for them. This is also evident in the current cooling of the jobs market and the knock-on effect it is having on the availability of new jobs as firms try to make the books balance.
“Cyber quite rightly also takes centre stage when it comes to issues of note, and with headlines over recent months involving hackers targeting some of the UK best known retail names, leaders are concerned about the impact of this type of crime much more so than physical crime. Risk management is key for firms when it comes to preventing a cyber-attack and businesses should with a cyber specialist to help protect their business. Insurance is readily available if they do fall victim to an attack and will not only protect firms against loss revenues, it will also help the business get back up and running securely.
“There are a number of preventative risk management steps businesses can take to become more resilient to the tricky economic environment we are all operating in, and leaders should speak to their insurance broker to help them understand what measures they can take.”