The growth of litigation culture is a greater threat to British business than the growing powers of the EU, fluctuating interest rates, falling consumer confidence or the cooling property market, said AXA in its Risk Monitor Report.
The study revealed that 36% of British SMEs believe litigation is a threat, with nearly a quarter (23%) of senior executives having been involved in a litigation case.
AXA said this figure rose to 82% when all legal action, including personal liability, was included.
The Risk Monitor Report is designed to identify emerging trends and explore what new hazards mean for UK businesses, said AXA.
It said the report revealed that only two thirds (69%) of SMEs are aware of the extent of their liabilities and only one in four (25%) plan to get expert advice in the future.
AXA said this indicated a need to educate employers on where they can get advice quickly and easily in order to prepare for potential risks to their business.
AXA head of SME business, Mike O'Brien, said: “Balancing opportunity against risk is the key to a successful business.
“But with global influences affecting how companies do business more and more, small and medium sized enterprises need guidance on issues and risks that could impact on the profitability of their business.
“We felt there was a need for a regular indicator of these threats and advice or insights into how to manage them. The AXA Risk Monitor aims to do just that.”
Other issues concerning UK SMEs are the expansion of the EU and the resulting increase in competition, the growth in EU legislation, the rising cost of petrol, failure of IT systems, and the decline in the recruitment market.
“The concerns of British business highlighted in this report reveal a new, more complex area of risk has opened up in addition to the traditional risks such as fires, flood and theft, as well as supply chain and production related issues,” said O'Brien.
“To stay competitive, businesses need to keep one step ahead by constantly reviewing and evolving their risk strategy to ensure the right procedures are in place at all times.”
