Cost pressures dominate UK business risk landscape

Gallagher's 2026 UK Business Risk Index, informed by the perspectives of 1,000 UK business leaders, highlights a business risk landscape shaped by sustained economic pressure. Although there is optimism, over half (51%) of businesses believe the market environment has declined in some way in the past year, heightening the need for proactive strategies to navigate uncertainty.

Top three risks all cost-related

The cost of operating — including energy, rent, logistics and overheads — is the top risk identified in this year's Business Risk Index, cited by 65% of business leaders. Among those who identified high operational costs as a concern, more than one in three see it as a major risk to their business.

The cost-of-living impact on customer spending (60%) ranks second, having been top for the last three years. High material costs (59%) is the third most cited risk, dropping marginally from second in the 2025 Business Risk Index. The proportion was significantly higher in sectors that rely heavily on materials, with 100% of those in agriculture and 88% in manufacturing identifying this as a key concern.

In some sectors, regulatory changes are also contributing to rising material costs. In construction, The Building Safety Act 2022 was a landmark piece of legislation that has fundamentally changed the way that buildings are planned, constructed and managed in the UK. The legislation mandated detailed safety assessments and enforced stricter guidelines for the safety and performance of construction products. Condensing the pool of suitable materials has added pressure to pricing.

Tracy Keep, Managing Director of Construction at Gallagher, explains that the impact of ongoing supply chain issues is also adding pressure to construction businesses: "The costs of sustainable materials are still rising due to demand and supply chain issues. These factors are contributing to the higher material costs that increase the total price of operations."

Cyber risk shifts in ranking, but still demands attention

Cyber-crime has risen steadily as a risk to business operations since 2022, when it ranked seventh overall. This rose to sixth the following year, fifth in 2024 and peaked at third in 2025 — despite this, it places at fourteenth this year.

However, although more imminent financial pressures have superseded it, there is still significant concern around cyber breaches, with over a third (36%) of business leaders identifying it as an ongoing and serious risk to successful trading. Despite it dropping down the rankings cyber risks remain highly prevalent with Government data showing 43% of UK businesses were attacked in just the last year.¹

Sam Cheshire, Head of Cyber at Gallagher, added: "Breaches across supply chains have emerged as the critical vulnerability for business operations. Modern supply chains offer cybercriminals remarkable opportunities to inflict widespread damage through a single breach."

Less disruption but sustained, economic pressure

Supply chain issues placed ninth, having peaked at sixth in 2022 and 2025. Similarly, business leaders ranked volatility within their sector as the tenth most faced risk this year. While disruption has become less visible, its effects persist, particularly in the cost pressures prevalent throughout the index.

"Supply chain volatility is increasing raw material and transport costs; businesses are delaying orders due to the unpredictability of future costs, straining production and logistics timelines. Larger firms may hedge against these risks, but smaller manufacturers often lack the financial flexibility to absorb such shocks, leaving them disproportionately impacted," noted Tim Chance, Head of Trade Credit at Gallagher.

Top 10 risks identified by UK businesses from 2022-2026

Commenting on the findings, Neil Hodgson, Managing Director of Risk Management at Gallagher, said: "The UK business community is primarily concerned with cost-related risks, perhaps unsurprising with the UK inflation rate still above target at 2.8% and unchanged from April. And although the increase in National Insurance contributions came into effect in April last year, the data shows that this remains a significant cost that businesses are concerned about shouldering.

"It is quite surprising to see attitudes towards cyber-crime change from last year, moving down from the third most cited risk — however the numerous high-profile cyber breaches over the past year may have heightened awareness of this risk and prompted businesses to take action. As a result, many organisations appear to feel better prepared to manage the threat through improved staff training, stronger vulnerability management and enhanced third-party oversight, although this still remains a significant threat, particularly as technology continues to develop at pace. Firms should also check if they have insurance in place for cyber-attacks on the suppliers they rely upon, as if they don't, this can leave them open to significant financial risk.

"In a challenging environment such as this, it is imperative that businesses identify and measure the risks they face."

Methodology

Results taken from a survey of 1,000 UK business decision-makers by Opinium on behalf of Gallagher in late February and March 2026. Respondents were asked to select the current top risks to their organisation.