The current economic climate poses a unique set of challenges for UK businesses, who are experiencing a record low in net confidence levels. High among their concerns is a cocktail of macroeconomic risks that have seen significant shifts in business stability and mounting pressures for the insurer and broker marketplace. In this article, Simon Pemberton, Chief Executive Officer, dives into the top five risks for UK businesses unearthed in the annual Aviva Risk Report, and how to future-proof your business against the evolving economic crisis.
- Economic instability
Economic disruption has long remained a top concern of UK businesses, the impacts of which can be found at the heart of six of the top ten risks identified in the 2023 Risk Report. Systemic inflation and rising energy costs have marked a time of urgency for businesses, as 63% have declared a loss of confidence in the UK economy.
Amongst nationwide efforts to cut costs, the threat of underinsurance has also emerged as a key theme of the report. For insurers, battling the many impacts of the economic downturn is two-fold. Firstly, counteracting underinsurance by equipping clients with targeted recommendations on appropriate coverage levels. This ensures clients do not fall short in the costs of rebuilding or resetting following a crisis or large-scale insurance claim. Secondly, remaining agile and engaged with risk management strategies to limit the cost of claims is a core priority for insurers at this time.
Leaning on a strategic partner to support your business through the impacts of inflation, based on years of global experience, is how you can strengthen your total cost of risk (TCOR) for what lies ahead.
- Talent / skilled-workforce shortages
Workforce shortages have reached new lows this year, as inflation forces employees to explore employment shifts in line with the rising cost of living. A third of companies have increased remuneration packages to attract (31%) and retain (25%) talent, adding further pressure to their bottom line. The effects of high turnover and resourcing issues are set to worsen supply chain challenges and business operations for some time yet.
To future-proof against an employee’s market and build a robust resource for your operations, partnering with a claims expert is a cost-effective long-term strategy. By leveraging the operational efficiencies and industry experience of a global partner, insurers can maintain operations and drive a competitive edge throughout the fluctuations of the UK talent pool.
Woven into the fabric of the economic crisis, is the very real risk of reputational shifts for UK businesses. Organisations are suffering the growing difficulties of maintaining a normal standard of operations amid a declining talent pool, rising operating costs and supply chain challenges. The report shared that 16% of businesses have identified efforts to examine and change their supply chain, to eliminate potential reputational risks. If your business is exploring avenues to protect its brand reputation through economic instability and talent shortages, seeking a claims expert partner is a multifaceted solution. In doing so, a strategic partner can power your business forward by supplying the resources, expertise, and insights to not only maintain but harness opportunities for further success.
- Supply chain and business interruption
For businesses across the country, supply chain issues have resulted in higher operational costs, business interruptions and an inability to service customers. Various economic pressures have led 54% of businesses to find alternative suppliers or conduct cost reviews to combat disruptions to their operations. For businesses recovering from high-level claims (such as flood or fire), the continued impact of inflation on the costs of replacement and materials through the supply chain is further exacerbating delays in recovery and return to operations. As 59% of businesses await further increases in supply chain costs over the next 12 months, the path for insurers is clear.
- Legislation and regulations
The ever-evolving regulatory landscape is driving increasing pressures for insurers and businesses to remain up to date with complex legislative changes. Of the businesses surveyed for the 2023 Risk Report, 19% placed legislation and regulations among their top 5 largest risks. Compounded by the many challenges discussed, we believe that keeping your finger on the pulse of regulatory changes is better managed by a trusted partner so that you can focus on what’s more important.
Our Carrier Practice team is entrusted by partners, in a host of highly nuanced regulatory and risk industries, to ensure the burden of maintaining compliance isn’t solely on your shoulders. We deliver best-in-class protection, enhancements, and opportunities to keep pace with an evolving landscape and protect your business.
There’s never been a better time to source support for your business in navigating the economic downturn and all that has come with it. To learn more about how we can support your business, contact our team for a free consultation today.