Inflation hitting a 40-year high will have a ‘profound impact’ on how these firms operate now and in the future, says corporate and commercial chief executive

UK SMEs’ biggest concerns this year were the impact of employee mental health and wellbeing, financial uncertainty and business health and safety, according to Marsh’s latest UK Business Risk Report 2022, published last week (20 September 2022).

Over 1,700 UK businesses with revenues of up to £20m responded to the report between May and June 2022.

It explored how economic circumstances have impacted SMEs’ risk appetite and approach to risk management over the past year.

Almost half (49%) of respondents identified employee mental health and wellbeing as a key risk – up from 30% in 2021.

One third (33%) of respondents identified business health and safety as a key concern – an increase of 32.6% compared to last year.

Meanwhile, 36% of businesses remain concerned about financial uncertainty – however, this saw a 6% drop compared to 2021.

In terms of emerging risks – 39% of SMEs pointed to increased energy costs, 32% cited inflation and 27% highlighted staff shortages.

‘Profound’ impact

Marsh corporate and commercial UK chief executive Alistair Fraser said: “Small and medium-sized businesses across the UK, in every region and sector, are navigating a hugely diverse array of risks amidst a very challenging operating environment.

“Since the survey was conducted, UK inflation has reached a 40-year high, which will have a profound impact on how these firms operate in the near and longer-term.

“As new risks emerge and current risks continue to evolve, we urge businesses to review their current insurance arrangements and approach to risk management, to build even greater resilience into their people and operations.”

Marsh further noted that rising inflation impacted firms’ risk and insurance programmes can result in underinsurance of property and other valuable assets.