There’s confusion about what type of cyber incidents are actually covered, plus worries on legal action, data breaches and more;
More than nine in ten (92%) UK business owners say worries about risks to their business are keeping them awake at night, according to new data from Hiscox.
The specialist insurer surveyed 6,250 small business owners across six countries, including 1,000 small and medium enterprises (SMEs) in the UK, as part of its inaugural Global Protection Gap report. The report explores insurance protection gaps, along with the biggest worries facing business owners.
When asked what risks are keeping them awake at night, UK SMEs highlighted a broad mix of pressures:
- Cyber attacks or data breaches (38%)
- Inflation or rising costs (37%)
- Workplace accidents or employee injuries (35%)
- Economic downturn (33%)
- Theft or property damage (33%)
- Natural disasters, such as floods or fires (29%)
- Lawsuits or legal claims (28%)
- Staff shortages (27%)
Despite this heightened awareness of risk, Hiscox’s research suggests SMEs may be more exposed than they realise, with gaps in understanding around how insurance responds to real-world scenarios.
While cyber risk tops the list of concerns, 77% of SMEs say they do not understand cyber insurance. Similarly, although legal claims worry more than a quarter of businesses, 80% say they do not understand professional indemnity cover.
Expert advice: Managing responsibility and risk in small businesses
To support business owners navigating growing operational, financial and cyber risks, Hiscox has partnered with leadership development consultants Naomi Regan and Lynsey Kitching, Co-Founders and Directors of CAPE People Development. The Stockport-based experts share practical advice on managing responsibility and risk.
Naomi comments:
“In our work with small business owners, we consistently see that they are incredibly capable and committed. But those strengths can disguise the build-up of pressure. It becomes one more decision, one more approval and one more thing that only they can sign off.
“When you’re deeply invested, financially, emotionally and reputationally, it’s easy to blur the line between ‘I care about this’ and ‘I must personally hold this’. As businesses grow, complexity and risk increase, yet many continue holding the same level of personal responsibility, only now the exposure is greater.”
Lynsey adds:
“The mistake many small business owners make is waiting for things to ‘calm down’ before reviewing governance, cover or strategic risk. In reality, things rarely calm down. Urgent work will always feel more compelling than important work.
“Risk isn’t reduced when it’s held in one person’s hands, it’s reduced when responsibility sits in the right place and is clearly owned. If responsibility isn’t clearly named, it will drift back to the small business owner.
“Build a regular rhythm into the calendar and treat it as non-negotiable. If it isn’t protected properly, it will be squeezed out. We often use the ‘glass jar’ model to illustrate this. If you fill your time with ‘sand’ (the reactive, day-to-day demands) there isn’t enough room to fit in the ‘rocks’ (the strategic priorities, risk reviews and governance tasks), they need allocated space before reactive tasks fill the space. Protecting your energy is part of protecting your business.”
55% of UK SMEs have a protection gap, and awareness of risk is not the same as understanding your cover
Alana Muir, Head of Cyber at Hiscox, says:
“Small businesses today are navigating a more complex risk environment than ever before: evolving cyber threats, changing workforces, rising legal costs, and the weight of knowing these risks exist without always knowing how to manage them. But awareness alone doesn’t equal protection. What the Global Protection Gap Report shows us is the growing gap between businesses that know something could go wrong and those that truly understand whether they’d be covered if it did.
“Unsurprisingly, the areas where we see SMEs most exposed are often the ones they feel least confident about. Cyber is a prime example. It tops the list of concerns, yet 77% of small business owners admit they don’t fully understand what a cyber policy covers. The same is true of professional indemnity, where eight in ten (80%) SMEs say they don’t understand professional indemnity cover, despite legal claims keeping more than a quarter of them awake at night.
“The reality is that misunderstanding your cover can be almost as costly as having none at all. A business that believes it’s protected, but isn’t, may be less likely to seek advice or review its policies, which can leave gaps in cover.”
Be the first to comment